Picture: REUTERS/SHANNON STAPLETON
Picture: REUTERS/SHANNON STAPLETON

Bengaluru — AT&T exceeded analyst expectations on Wednesday for net wireless subscribers who pay a monthly bill, as it eked out some growth in a saturated market and continued to bundle media content from Time Warner into new wireless plans.

However, the second-largest US wireless carrier by subscribers lost more premium TV subscribers than the previous quarter as viewers moved to streaming services such as Netflix.

AT&T lost 778,000 premium TV subscribers, a category that includes DirecTV satellite and U-verse TV customers, much more than the 544,000 lost in the first quarter. The company also lost 168,000 streaming DirecTV Now accounts. AT&T said it expects a similar level of video losses to continue in the current quarter.

Still, it added a net 72,000 phone subscribers, beating analyst estimates for 27,000, according to research firm FactSet. Post-paid phone churn, or the rate of customer defections, was 0.86%, up from 0.82% in the previous year.

Shares of the company were up 2.1% at $32.77.

AT&T closed its $85bn acquisition of media company Time Warner in June 2018, creating a new business segment called WarnerMedia to house assets that include the Turner TV networks and premium channel HBO. WarnerMedia reported revenue of $8.4bn, against analyst expectations for $8.3bn, according to IBES data from Refinitiv.

The company said WarnerMedia’s new streaming service HBO Max is slated to launch in spring of 2020.

AT&T has been focused on paying down its debt after the purchase of Time Warner, which pushed its net debt load to about $180bn 2018. The company spent $6.8bn on paying off the debt in the second quarter, and said it was on track to cut its net debt load to about $150bn by the end of 2019.

AT&T also raised its free cash flow guidance for 2019 to about $28bn.

“The debt we have will be at a very reasonable place as we exit this year, [and] I fully expect that we’ll be buying some stocks back as we go on this year and [expect] cash flows to continue,” CEO Randall Stephenson said in a conference call with analysts.

He also said that AT&T strategy will not be impacted by the result of the proposed merger between T-Mobile and Sprint for the next three years. The US department of justice is expected to make a decision on the merger this week.

Total operating revenue in the second quarter rose 15.3% to $44.96bn. Analysts were expecting $44.85bn, according to IBES data from Refinitiv. Net income attributable to AT&T fell to $3.71bn, or 51c per share, from $5.13bn, or 81c per share, a year earlier. Excluding items, AT&T earned 89c per share, in line with estimates.

Reuters