AT&T Continues to Lose Subscribers -- Update
April 25 2017 - 6:44PM
Dow Jones News
By Drew FitzGerald and Anne Steele
AT&T Inc. continued to shed wireless and television
subscribers in the first quarter of the year as cheaper data plans
and cord cutting took a toll.
AT&T, the biggest U.S. pay-television operator after its $49
billion acquisition of DirecTV, reported its video business lost
233,000 customers in the quarter. It declined to say how many
people subscribed to DirecTV Now, though company executives said
they weren't giving up on the online TV service and plan to
advertise it more heavily later this year.
AT&T's wireless business, its main moneymaker, lost 348,000
mainstream wireless phone customers, marking a return to the large
losses characteristic of the past two years after an easing in the
previous period. Phone additions are considered important because
they are the most lucrative mobility accounts, and customers with
postpaid phone accounts tend to stay longer.
AT&T, like its telecommunications rival Verizon
Communications Inc., faced heightened competition from
unlimited-data plans offered by T-Mobile US Inc. and Sprint Corp.
Both of the larger companies rolled out their own unlimited offers,
though AT&T Chief Executive Randall Stephenson said during a
call with analysts that "this has made an already competitive
market even more so, and our response to the unlimited data plans
was probably a little slow."
AT&T in October agreed to buy Time Warner Inc., a tie-up
that would transform the phone company into a media giant and make
it less dependent on the lagging phone business. Mr. Stephenson
said the deal, currently under review by the U.S. Justice
Department, was "moving along as expected" and that AT&T
expected its approval this year.
The deal for Time Warner -- owner of CNN, TNT, HBO and the
Warner Bros. film and TV studio, among other things -- is seen
helping AT&T potentially find new areas of growth as its core
wireless business has become saturated and its share of the mobile
market leaves little room for acquisitions. In the competitive
consumer wireless market, AT&T has been focused on retaining
its most profitable customers and shying away from promotional
offers to grab market share.
AT&T earned a first-quarter profit of $3.5 billion, down
from $3.8 billion a year earlier. Revenue fell 2.7% to $39.37
billion. Analysts were looking for $40.53 billion.
The company also rescinded its 2017 sales growth target, blaming
the unpredictability of wireless handset sales as customers hold on
to their smartphones for longer. It had previously said it expects
revenue to grow in the low single digits.
Shares climbed 0.4% after hours to $40.08.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Anne
Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
April 25, 2017 18:29 ET (22:29 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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