Service Bundles Help AT&T Boost Its Profit -- WSJ
July 26 2017 - 3:02AM
Dow Jones News
By Drew FitzGerald and Maria Armental
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 26, 2017).
AT&T Inc. kept losing phone and TV subscribers in its core
U.S. market but enjoyed a more profitable second quarter, thanks to
customers with bundled services.
"Our competitors tried just about every promotion in the
marketing book, " finance chief John Stephens said on a conference
call with analysts, citing discounts from rivals that have
pressured industry revenues and profits.
For many consumers, the cost of cellular services is plunging
this year after AT&T and Verizon Communications Inc. brought
back unlimited data plans. Sprint Corp. last month launched an
offer that promised a year of free wireless service.
AT&T countered those deals with bundle offers designed to
keep customers satisfied with savings from combined phone, TV and
internet service. The company lost another 199,000 video customers
in the U.S., though its new DirecTV Now streaming service gained
152,000 subscribers to end the quarter with 491,000 accounts.
Mr. Stephens said "the vast majority" of DirecTV Now customers
were bundling the online TV package with wireless service. About
half of them had no traditional pay-TV at all before signing up for
the streaming service, he added. The gains weren't enough to grow
AT&T's total video customer base, which stayed flat at 25.2
million.
AT&T is counting on bundled-service offers to stanch
customer losses that have sapped its top line for two years.
The company, already the biggest pay-television operator in the
U.S. since it acquired satellite provider DirecTV, is now looking
to add Time Warner Inc. to the fold, which would give the Dallas
company high-profile media brands including CNN, HBO and the Warner
Bros. film and TV studio.
The company is still waiting for government authorities to
approve the deal, worth $85 billion when it was announced last
year. Executives offered few details Tuesday about the review's
progress but said they still expect it to close by the end of this
year.
The country's No. 2 wireless company still posted a net loss of
89,000 postpaid phone subscribers, the type of customers who get
billed for past service and tend to be more profitable. The company
ended the quarter with 136.5 million U.S. wireless subscribers.
The results followed last week's quarterly report from T-Mobile
US Inc., which showed the No. 3 domestic carrier had added 786,000
postpaid phone subscribers in the latest period. The No. 1 U.S.
carrier by subscribers, Verizon Communications Inc., will report
its results on Thursday.
AT&T's overall second-quarter profit rose 15% to $3.92
billion, or 63 cents a share. Excluding merger and integration
costs and other items, profit rose to 79 cents a share, from 72
cents a year earlier. Revenue fell 1.7% to $39.84 billion, its
third consecutive quarterly decline.
The company's Latin American operations helped improve those
results. Revenue in the international segment increased 11% to $2
billion, fueled by growth in the Mexican wireless business.
Shares rose 2.5% to $37.15 in after hours trade. The stock has
slipped 15% this year.
Corrections & Amplifications AT&T had $130 billion in
debt at the end of June. An earlier version of this article
incorrectly stated the debt level as $130 million.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com and Maria
Armental at maria.armental@wsj.com
(END) Dow Jones Newswires
July 26, 2017 02:47 ET (06:47 GMT)
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