AT&T Hikes U-verse TV To 4 Million Subs As DSL Woes Persist


AT&T tallied 3.99 million U-verse TV subscribers at the end of the first quarter of 2012 -- after netting a healthy 200,000 in the period -- and reeled in 718,000 U-verse Internet customers, while its legacy digital subscriber line business and total voice connections continued to lose ground.

And while the U-verse subscriber base and revenue continued to climb, AT&T had substantially completed its fiber-to-the-node U-verse network deployment at the end of 2011 to pass about 30 million living units, indicating the growth will begin to taper off.

The telco lost 615,000 DSL connections in the first three months of the year. Total wireline broadband connections stood at 16.53 million at the end of March, up 0.3% from a year ago. About 45% of broadband customers have a plan delivering up to 6 Mbps or higher versus 35% in Q1 2011. Meanwhile, AT&T shed nearly 3 million consumer phone line connections on an annual basis, with voice connections falling 12.5% year over year to 20.5 million.

Still, AT&T said, growth in consumer IP data services in the first quarter offset lower revenues from voice and legacy products -- but very slightly. Revenue from residential customers was $5.4 billion in Q1, an increase of 1% versus the year-ago quarter. U-verse broadband, video and voice-over-IP revenue now represents 55% of wireline consumer revenues, up from 47% in the first quarter of 2011.

"Wireline results were hardly reason for celebration, but neither were they a cause of undue concern," Sanford Bernstein senior analyst Craig Moffett wrote in a research note.

Consistent with recent quarters, about 75% of AT&T U-verse TV subscribers have a triple- or quad-play bundle. ARPU for U-verse triple-play customers was $169, up slightly year over year. U-verse penetration of eligible living units was 16.8% in the first quarter (versus 15.3% a year ago). AT&T's satellite TV connections, sold through DirecTV and a legacy deal with Dish Network, declined 8.2% year over year, to 1.73 million at the end of March.

Total first-quarter wireline revenues were $14.9 billion, down 0.8% versus the year-earlier quarter and down slightly sequentially. Wireline operating income totaled $1.8 billion, up 2.4% year over year but down 1.2% sequentially, and operating income margin was 12.2% compared with 11.8% in the year-earlier quarter.

On the commercial front, AT&T said the wireline business segment had its lowest year-over-year decline in three years, with total business revenue dropping 0.8%, to $9.2 billion. Total business data revenue increased 4.2% year over year, which AT&T said was the strongest showing in four years.

Overall, AT&T beat consensus Wall Street earnings estimates on growth from the wireless side of the house.

For the first quarter, the telco's total revenue was $31.82 billion, up 1.8% year over year, just shy of analyst expectations of $31.85 billion, according to Thomson Reuters. Net income attributable to AT&T was $3.6 billion (60 cents per diluted share versus Wall Street consensus estimate of 57 cents), which was up 5.2% from $3.4 billion in the year-ago quarter.

AT&T's total first-quarter wireless revenue (including equipment sales) increased 5.4% year over year to $16.1 billion. Wireless service revenue was up 4.3%, to $14.6 billion, and the telco touted higher wireless operating income margin of 27.2% versus 25.8% in the year-earlier quarter.

AT&T reported 41.2 million total smartphone subscribers at the end of March, after selling a record 5.5 million smartphones in the first quarter of 2012. The company said both Android and iPhone device sales remain strong, with 4.3 million iPhones activated in the period.

However, AT&T added just 187,000 post-paid wireless subscribers -- which included 180,000 tablets.

For the first quarter of 2012, AT&T's total capital expenditures in Q1 increased 3.1%, to $4.26 billion. AT&T had 252,330 total employees at the end of the period, down 3.2% from Q1 2011.