AT&T Continues to Lose Subscribers -- Update

By Anne Steele Features Dow Jones Newswires

AT&T Inc. posted an unexpected top-line decline in the first quarter of the year as it continued to shed phone subscribers.

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In the U.S., AT&T 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 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.

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, the biggest U.S. pay-television operator after its $49 billion acquisition of DirecTV, reported its linear video business lost 233,000 customers in the quarter. The company said gains in the DirecTV Now streaming service helped offset the linear TV subscriber decline.

In all for the March quarter, AT&T's earned $3.5 billion, or 56 cents a share, down from $3.8 billion, or 61 cents a share, a year earlier. Excluding merger-and integration-related and other items, AT&T earned 74 cents a share, up two pennies the year-ago period and in-line with the average analyst estimate on Thomson Reuters.

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Revenue fell 2.7% to $39.37 billion. Analysts were looking for $40.53 billion.

For 2017, the AT&T said it is no longer providing consolidated revenue guidance "due to the unpredictability of wireless handset sales." It had previously guided for consolidated revenue growth in the low-single digits. The company backed its guidance for adjusted earnings growth in the mid-single digit range, excluding the impact of Time Warner.

Shares climbed 1% after hours to $40.35.

Write to Anne Steele at Anne.Steele@wsj.com

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)