U-verse subscriber growth helped AT&T generate an increase of over 20 percent in U-verse revenue, steadying AT&T’s wireline operations in the company’s fourth quarter.
In comments with analysts, CEO Randall Stephenson allowed that there might be ways for the FCC to reclassify broadband under Title II of the Communications Act without damaging the industry; he just wants to see the plan first. This is a significant modulation from previous statements, in which he threatened AT&T would stop investing in infrastructure if the FCC were to try to reclassify broadband.
The company’s wireless operations – its main engine – performed solidly. Overall, AT&T reported a $4 billion Q4 loss, attributed in part to adjustments on pensions and benefits (Verizon earlier reported a Q4 loss, citing the same accounting considerations).
AT&T said it added another 405,000 U-verse Internet accounts, to reach a total of 12.2 million (add DSL subscribers, and total broadband subscribership is over 15 million).
On the U-verse video side, the company reported a net addition of 73,000 subscribers.
Total U-verse revenue in the fourth quarter was $3.9 billion, with adjusted revenues up 21.9 percent year over year.
Wireline or wireless, video is as much a driver of AT&T’s strategy as any other product. The company remains sanguine that its acquisition of DirecTV will be approved.
Earlier this year, the company purchased mobile provider Cricket. CEO Randall Stephenson said that was a video maneuver. “It’s proven to be a cost effective way to strengthen our spectrum portfolio which is a prerequisite for in the mobile video delivery business,” he said during the company’s earnings call with analysts (transcript provided by Seeking Alpha).
“Today our customers are expecting us to deliver video across all of our platforms whether it’s traditional linear video or over the top on U-verse broadband or video to the mobile device,” Stephenson said. “So we’ve been assembling the pieces that we need to do exactly that. DirecTV quickly and significantly shores up the economics of our U-verse video product and it brings us the best content relationships in the industry.”
He later repeated the importance of the content relationships DirecTV has, in the context of expanding distribution rights to mobile devices. “We envision customers being able to walk out of our stores with content available to them on devices that they have purchased in our store. You are familiar with the order deal that we have done with the Chernin Group, where we are developing over the top content with them and taking advantage of ways of delivering that to our customers as well, so it’s going to be a multi-faceted approach in terms of how we bring video to our customers, but we’re looking at multiple channels and channel line-ups that we’d be able to accommodate into our wireless customers both tablet as well as handsets as well as our broadband customer base 16 million broadband customers.”
In AT&T’s third quarter analyst call, Stephenson threatened to stop investing in infrastructure if the FCC reclassified broadband under Title II regulations. Asked again about Title II, Stephenson’s response was far more measured this time around.
He agreed with the network neutrality principles reiterated by President Barack Obama, but expressed caution about regulation, to the point where he allowed that Title II reclassification might be done in such a way that it would not cause business, investment or innovation to slow down. AT&T just plans to be cautious with investment until it sees the plan, is all. “That kind of regulatory oversight is what causes us pause, and when we say we are pausing investment till we understand where this is going, that’s what we’re referring to,” he said.
