AT&T closed its third quarter with an increase in U-verse revenue of 23.8 percent compared to the third quarter last year. The company recorded 601,000 U-verse high speed Internet subscriber net adds, including 44,000 business customers, pushing its total of broadband customers past 12 million.
AT&T also tallied 216,000 U-verse TV subscribers added, for a total of more than 6 million.
Total third-quarter wireline revenues were $14.6 billion, down 0.4 percent versus the year-earlier quarter and down slightly versus the second quarter of 2014. AT&T’s wireline operating income totaled $1.3 billion, down 17.2 percent versus the third quarter of 2013. Third-quarter wireline operating income margin was 8.8 percent versus 10.6 percent in the year-earlier quarter, primarily due to U-verse content cost increases, declines in legacy services, success-based growth costs and expenses incurred as part of Project VIP, the company reported.
As with Verizon, AT&T experienced a drop (2 percent) in total revenue from business customers. Analysts believe this is due to increased competition from cable.
CFO John Stephens said the company’s Project VIP initiatives are moving ahead, and in the case of its LTE wireless build-out, is ahead of schedule. On the wireline side, Stephens said, “Our high-speed IT broadband network now reaches 57 million customer locations. About two thirds of our U-verse video footprint now has access to 45 megabit per second speeds.”
He noted that the company plans to extend GigaPower to parts of 17 markets, and said the company’s fiber to the business expansion “also is going strong. We now pass more than 600,000 new business customer locations with fiber, well on our way to our one million goal.”
Stephens said that AT&T’s Digital Life home security and automation service is available in 82 markets and has about a 140,000 subscribers.
“And AT&T has completed a Network On Demand trial in Austin that will enable companies to easily order, add or change services on their own in mere real time. A commercial roll out of Network On Demand enabled Ethernet services is expected in Austin by the end of this year,” he said.
Stephens also noted that the connected car is ready to take off. “In the third quarter alone we added more than 500,000 connected cars as the 2015 model start to roll off the assembly lines.”
At the corporate level, the company grew its overall revenue by 2.5 percent compared to the like quarter a year ago, to $33 billion, but it missed its EPS target by a penny and missed its revenue target of $33 billion by $242 million, or 0.7 percent, which made most analysts unhappy. Even though Verizon also missed its estimates by similarly negligible margins, AT&T suffered by comparison in the estimation of many analysts, given that Verizon managed growth in a few more wireless metrics than AT&T. Wireless results for both companies was driven by higher tablet sales.
Stephens also said that more wireless customers are subscribing to higher wireless broadband tiers. “I think the biggest issue with the improvement is really the people buying the bigger buckets and buying – upping plans, as we’ve mentioned. We had over 50 percent of the customer base at the 10-gig or bigger plans. We believe that that is really helping on the ARPU side,” Stephens said.
John Stephens’ quotes were from the transcript of the company’s Q3 earnings call with analysts compiled by Seeking Alpha.
