T AT&T Inc

By Austen Hufford and Drew FitzGerald 

AT&T Inc.'s quarterly revenue declined as growth in the company's streaming video service wasn't enough to offset losses of more profitable wireless and satellite accounts.

The company's streaming DirecTV Now service added 312,000 subscribers to reach nearly 1.5 million in the first quarter. The new additions more than covered the 188,000 satellite-TV customers it lost, though the shift to the low-price online service has pressured the Dallas company's results.

Revenue in its video business fell by $660 million from a year ago to $8.36 billion in the quarter.

"We're going to continue to see new challenges in the satellite, in the linear pay-TV models we've talked about," finance chief John Stephens said on a call with analysts. The company has warned that cord-cutting would sap the traditional pay-TV market and used that argument to defend its proposed takeover of media company Time Warner Inc.

Comcast Corp., which also reported results Wednesday, suffered its fourth straight quarter of cable-TV subscriber losses. It lost 96,000 customers, compared with a gain of 42,000 in the prior-year quarter.

AT&T also lost 22,000 so-called postpaid phone customers in the March quarter after reporting a surge of phone customers at the end of last year. Rival Verizon Communications Inc. on Tuesday said it lost 24,000 of those valuable phone accounts in the first quarter.

"We've seen some moderating of the competitive environment over the last few months," Mr. Stephens said of the U.S. wireless market. Both AT&T and Verizon introduced unlimited data plans in early 2017 to stem defections to T-Mobile US Inc. and Sprint Corp., which offers such plans.

AT&T added 192,000 prepaid customers, who buy phones loaded with data and call minutes ahead of time. Those accounts also tend to generate less revenue than customers on monthly plans.

Investors are also closely following AT&T's continued defense of its $85 billion Time Warner acquisition. The U.S. Department of Justice is challenging the deal on antitrust grounds. The trial is almost over, with closing arguments expected next week and a federal judge's ruling weeks later.

"Based on the court's determination, we stand ready to close," Mr. Stephens said. The company continued to spend on the potential deal, with Time Warner and other merger costs totaling $67 million in the quarter.

AT&T's revenue took a hit after the company reclassified some reimbursements from the federal Universal Service Fund. Under new accounting rules, its first-quarter revenue totaled $38.04 billion, compared with $39.37 billion in the year-ago quarter. On a comparable basis, the company said revenue fell 1.1% to $38.9 billion.

Overall profit reached $4.7 billion, or 75 cents a share, compared with $3.5 billion, or 56 cents a share, in the same quarter last year.

Shares fell 4.4% to $33.65 in after-hours trading.

Write to Austen Hufford at austen.hufford@wsj.com and Drew FitzGerald at andrew.fitzgerald@wsj.com

(END) Dow Jones Newswires

April 25, 2018 18:14 ET (22:14 GMT)

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