AT&T: U-verse Now $6 Billion Annual Business Telco Adds 218,000 U-verse TV Subs to Reach 3.2 Million
By Todd Spangler Multichannel News 4/20/2011 11:11:53 AM http://www.multichannel.com/article/467064-AT_T_U_verse_Now_6_Billion_Annual_Business.php As Wall Street focused on AT&T's iPhone numbers in the first quarter of 2011 after losing device exclusivity, the telco reported continued growth in U-verse -- adding 218,000 TV subscribers in the period -- even as legacy DSL and phone line connections continued to slide. AT&T had 3.2 million U-verse TV subscribers at the end of March. That's just behind Cablevision Systems, which with the addition of Bresnan Communications, counted 3.31 million basic video subs at the end of 2010. U-verse video, voice and data services in the first three months of 2011 generated about $1.5 billion in revenue, representing about $6 billion on an annualized basis, AT&T said. That's up more than 50% from the first quarter of 2010, but U-verse still represents only about 10% of AT&T's total wireline segment, which tallied revenue of $14.95 billion in the quarter (down 3.2% from the first quarter of 2010). Moreover, AT&T's residential phone lines fell to 23.48 million at the end of March, a year-over-year decline of 11.8%. While the telco posted a net gain of 175,000 wireline broadband connections that was down 31% from the year-ago period "and leaves legacy DSL in almost certain decline," Sanford Bernstein senior analyst Craig Moffett wrote in a research note. In "a return to a familiar theme, the Wireline segment continues to struggle," Moffett wrote. "Taken together, Wireline revenues of $14.95B were just under consensus of $15.01B, but margins of 31.3% were a clear disappointment versus consensus of 33.2% and us at 33.7%." AT&T is banking on U-verse grabbing more share from cable competitors to shore up the wireline segment. The telco said the U-verse network deployment now reaches 28 million living units. Penetration of eligible living units is 15.3%, and across areas marketed to for 30 months or more, overall penetration is 23.8%. AT&T said average revenue per unit for U-verse triple-play customers was $168, up 14.3% year over year. About two-thirds of broadband subscribers have a plan of 3 Mbps or higher. Satellite TV connections, through the telco's current reseller deal with DirecTV and the now-expired one with Dish Network, dropped 11.3% to 1.89 million at the end of the first quarter. The storyline many investors were following was how well AT&T fared on the iPhone front given that Verizon Wireless began selling the smartphone during the quarter. AT&T touted that it had the best-ever first-quarter increase in total wireless subscribers, up 2.0 million to reach 97.5 million. The telco said iPhone activations increased nearly 1 million year over year to 3.6 million, with 23% new AT&T subscribers and that iPhone subscriber churn was flat. However, it had only 62,000 net new subscribers on contract-based plans -- down 88% from 512,000 a year ago and a record low. "AT&T began aggressively upgrading subscribers more than a year ago, locking the base into long-term contracts. Then, they began aggressively spending on advertising, selling their wireless data speed advantages," Moffett wrote. "The strategy appears to have worked...growth metrics were relatively good, but at a clear cost to Wireless margins." AT&T last month announced plans to acquire rival wireless carrier T-Mobile in a $39 billion deal, which must still clear regulatory approvals. AT&T's earnings growth "will likely accelerate even more in 2013 and 2014 as merger synergies from its T-Mobile deal work their way to the bottom line," Moffett noted. Overall, for the first quarter of 2011, AT&T posted revenue $31.2 billion (up 2.3% year-over-year) and net income attributable to AT&T of $3.4 billion versus $2.5 billion in the year-ago period, which included a $995 million charge related to the tax treatment for Medicare. AT&T's capital spending increased 31.3% in the period, to $4.13 billion compared with $3.15 billion in the year-ago quarter. Headcount declined to 260,690 employees at the end of March, down 5.6% from Q1 2010. -- ================================================= George Antunes Voice (713) 743-3923 Associate Professor Fax (713) 743-3927 Political Science Mail: antunes at uh dot edu University of Houston Houston, TX 77204-3011 _______________________________________________ Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
