Wednesday, 21 August 2019

AT&T misses revenue estimates as pay-TV subscribers bleed away

Mike Mozart / Flickr

NEW YORK: AT&T Inc’s first-quarter revenue fell short of Wall Street estimates after it lost subscribers in nearly all of its main businesses except wireless, where it paid heavily to gain customers through price promotions.

AT&T lost a net 544,000 premium TV subscribers, a category that includes DirecTV satellite and U-verse television customers. Analysts had expected a loss of 385,000 customers across DirecTV and U-verse, according to research firm FactSet.

Pay-TV providers have struggled to keep customers as viewers move to streaming services like Netflix Inc. AT&T has launched its own streaming service, but that too lost customers in the quarter.

Total revenue for the quarter rose nearly 18 percent to $44.83 billion but fell short of expectations of $45.11 billion.

Revenue in AT&T’s wireless business was hurt by aggressive smartphone promotions. The company has tried to reduce its dependency on its phone business, which now brings in roughly 40 percent of total operating revenue, by adding media content through its $85 billion acquisition of Time Warner.

“Altogether, AT&T’s collection of assets remains challenged,” Jonathan Chaplin, an analyst with New Street Research, said in a note on Wednesday. AT&T’s business wireline segment saw declines in the top and bottom line, and even WarnerMedia trends “were just okay,” Chaplin wrote.

AT&T’s WarnerMedia unit, which includes Turner and premium TV channel HBO, reported revenue of $8.38 billion in the quarter, but that was short of analysts’ estimates of $8.45 billion, according to IBES data from Refinitiv.

The company added a net 80,000 phone subscribers, beating analysts’ forecast of a loss of 44,000 subscribers, as it leaned on the smartphone promotions to combat competition in a saturated US market.

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