AT&T Tops Expectations, Adds Customers as It Folds in DirecTV

By Lisa Beilfuss 

AT&T Inc. logged stronger-than-expected earnings growth in its latest quarter as the company added new customers and benefited from its DirecTV acquisition.

AT&T has been facing fierce competition as carriers seek out new ways to attract customers -- and retain existing ones -- without just cutting prices. Last year, AT&T moved to beef up its video offerings with its $49 billion acquisition of DirecTV, and earlier this year the company said it would bring back unlimited wireless data plans for certain customers after years of moving customers away from such plans.

With the integration of DirecTV, AT&T has been directing customers to its DirecTV satellite service and de-emphasizing its old U-Verse service. In the first quarter, the company reported 328,000 in U.S. DirecTV net adds. A quarter earlier, AT&T said more people left U-Verse than joined DirecTV, leading to a loss of 26,000 households, a trend it had said would reverse.

Chief Executive Randall Stephenson attributed the company's better-than-expected quarter largely to the DirecTV business.

Meanwhile, the company has worked to boost its presence in Mexico, a strategy that helped it add customers in the quarter. The company said it added about 12,000 wireless subscribers in the first quarter, with Mexican wireless subscriptions surging 60%.

Total mobility subscribers rose 7% to 130.4 million as postpaid subscribers edged 1.3% higher. Churn held steady at 1.4%. By contrast, Verizon Communications Inc. last week reported a first-quarter loss of about 8,000 postpaid phone customers, while T-Mobile earlier Tuesday said mainstream phone additions declined 12% from a year earlier.

In all, AT&T reported a quarterly profit of $3.89 billion, up from $3.34 billion a year earlier. On a per-share basis, earnings slipped to 61 cents from 63 cents, due to a higher share count. Excluding merger related costs and a gain on spectrum transfers, among other items, earnings per share rose to 72 cents from 65 cents in the year-ago quarter.

Revenue climbed 24% to $40.54 billion. Analysts projected 69 cents in adjusted earnings per share and $40.47 billion in sales, according to Thomson Reuters.

AT&T said it is on track to meet its previously issued targets for the year.

Shares in the company, up 10% since the start of the year, edged 1.4% lower in after-hours trading.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

April 26, 2016 17:07 ET (21:07 GMT)

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