AT&T continued to lose postpaid subscribers in the second quarter, but the impact of its bundling efforts helped it slow the bleeding to beat analyst expectations.
The carrier on Tuesday reported postpaid net phone losses of 98,000, marking a significant improvement over its first quarter losses of 348,000 phone subs. The figure also handily beat analyst expectations, including Wall Street predictions of 256,000 handset losses and Wells Fargo estimates of 275,000 postpaid net losses. BTIG’s Walter Piecyk noted the figure marked the fifth consecutive quarter of year-over-year improvement in its net add numbers.
Postpaid phone churn was also down to a record low of 0.79 percent. Total postpaid churn, including tablets, stood at 1.01 percent.
Wells Fargo Senior Analyst Jennifer Fritzsche and Jeffries analysts both attributed the improvements to the effect of the carrier’s move to bundle wireless and wireline services.
“Postpay phone losses were better than feared, predominantly driven by the lower churn profile of customers who bundle wireless with either broadband or TV product,” Fritzsche wrote in a Wednesday morning note.
AT&T also managed to pull off a win in prepaid, beating rival T-Mobile with 267,000 prepaid net additions. T-Mobile posted 94,000 prepaid net additions for the same period. However, AT&T’s prepaid additions were down both sequentially and year over year from 365,000 in the second quarter of 2016 and 282,000 in the first quarter.
AT&T CFO John Stephens touted the results on Tuesday earnings call.
“It was another highly competitive quarter in wireless. Our competitors tried just about every promotion in the marketing book. In fact, one of them even offered to give away their service for free for a year,” Stephens said. “We were prudent with our promotional activity. Instead, our focus was on giving customers a great video entertainment experience bundled with mobility. Our results speak for themselves.”
Overall, AT&T noted 2.8 million wireless net additions, including 2.3 million in the United States and 476,000 in Mexico. Consolidated revenue for the company dipped 1.7 percent year over year and came in just under Wells Fargo expectations at $39.8 billion, but earnings per share of 79 cents surpassed estimates.
On the wireless side specifically, AT&T posted service revenue of $14.5 billion, which was down 2.5 percent year over year for the 13th consecutive quarter of decline. Additionally, the postpaid upgrade rate in the quarter was a near-record low at 4.1 percent. However, wireless earnings before interest, taxes, depreciation, and amortization (EBITDA) beat forecasts to hit a record 50.4 percent.