INTERNATIONAL - AT&T Inc’s quarterly revenue fell short of Wall Street estimates on Wednesday after it lost more than half a million pay-TV subscribers and its main wireless business reported lower-than-expected sales.
AT&T lost a net 544,000 premium TV subscribers, a category that includes DirecTV satellite and U-verse television customers. Analysts had only expected a loss of 385,000 customers across DirecTV and U-verse, according to research firm FactSet.
Pay-TV providers have been struggling to keep customers as viewers move to streaming services like Netflix Inc. AT&T has launched its own streaming service, but that too lost customers in the quarter.
Revenue in AT&T’s wireless business for the quarter was hurt by aggressive smartphone promotions. The company has tried to reduce its dependency on its phone business, which now brings in roughly 40 percent of total operating revenue, by adding media content through its $85 billion acquisition of Time Warner.
AT&T’s WarnerMedia unit, which includes Turner and premium TV channel HBO, reported revenue of $8.38 billion in the quarter, but that was short of analysts’ estimates of $8.45 billion, according to IBES data from Refinitiv.
The company added a net 80,000 phone subscribers, beating analysts’ forecast of a loss of 44,000 subscribers as it leaned on the smartphone promotions to combat competition in a saturated US market.
But Mobility, AT&T’s largest segment which includes its wireless business, had revenue of $17.57 billion during the quarter, missing estimates of $17.65 billion, as those promotions hurt phone sales for the unit.
Shares of the company were down about 2 percent before the bell.
Postpaid phone churn, or the rate of customer defections, was 0.93 percent during the first quarter, up from 0.84 percent the previous year.
AT&T’s entertainment segment, which includes satellite TV provider DirecTV, has been in continuous decline. Revenue from the segment fell nearly 1 percent to $11.33 billion.
AT&T also continued to lose subscribers for its DirecTV Now streaming service, which shed a net 83,000 customers during the quarter as viewers abandoned the service after their introductory price promotion plans ended.
Total revenue rose nearly 18 percent to $44.83 billion but fell short of expectations of $45.11 billion.
Rival Verizon Communications Inc on Tuesday raised its 2019 profit forecast and beat Wall Street estimates for quarterly profit although it lost more phone subscribers than analysts had expected.
Net income attributable to AT&T fell to $4.1 billion, or 56 cents per share, from $4.66 billion, or 75 cents per share, a year earlier. Excluding items, the company earned 86 cents per share, in line with estimates.