Poor Performance in First Quarter for AT&T

Wireless revenue was down 4% year over year on a 2% decline in service revenue and a 17% decline in equipment revenue. While ongoing adoption of installment plans caused part of the drop in service revenue, average revenue plus billing per customer also declined 1% year over year, reflecting the tough pricing environment in the quarter. AT&T lost 191,000 net postpaid wireless customers in the U.S., better than Verizon but much worse than T-Mobile in the quarter, on flat postpaid customer churn.

AT&T’s consumer broadband business was almost flat year over year on stable profitability. Excluding DirecTV NOW, the firm lost 233,000 video customers in the U.S., whereas broadband Internet access business only added about 115,000 subscribers this quarter. This is consistent with our belief that product cannibalization could limit the potential lift on revenue from DirecTV NOW.

AT&T is moving along with the Time Warner acquisition as it has cleared the regulatory hurdle in Europe and only awaits approval from the U.S. Department of Justice.

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