AT&T Racks IPTV, iPhone Gains In Q2

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AT&T's video service continued to pack on pounds in the second quarter, adding 248,000 net U-verse TV subscribers, and while the telco touted strong wireless results it also lost 921,000 voice lines in the period.

The company counted 1.577 million IPTV subscribers as of June 30. It added just 5,000 net satellite TV customers in Q2, ending the quarter with 2.210 million; DirecTV is the telco's sole satellite partner, after AT&T ended its Dish Network partnership in January.

On the wireless side, AT&T reported 1.4 million net additions overall -- to reach 79.6 million subscribers -- and activated 2.4 million Apple iPhone devices. AT&T's total DSL connections were 13.454 million as of June 30, up 6.9% versus 12.581 million a year ago.

"AT&T's report offers few signs of recovery in the broader economy, but reveals surprising nimbleness with respect to cost reduction, especially on the wireline side," Sanford Bernstein analyst Craig Moffett wrote in a note.

The wireless results "were nothing short of spectacular," Moffett said, although he cautioned that it's uncertain whether AT&T can maintain iPhone exclusivity beyond 2010.

The U-verse TV net additions "were a touch light," he added, although AT&T's 112,000 net broadband additions were better than expected. "Squint hard enough and its almost possible to argue that things are improving" in the wireline segment, he said.

According to AT&T, U-verse TV's broadband attach rate continues to top 90%, and its U-verse Voice attach rate was more than 65% in the second quarter. More than 75% of U-verse TV subscribers have a triple- or quad-play option from AT&T, meaning video, plus two or three additional services, whether broadband, wireline voice and/or wireless.

Overall, AT&T reported quarterly revenue of $30.7 billion -- down 0.5% versus a year ago -- while net income attributable to AT&T fell 15.2%, to $3.2 billion.

Capital spending was $3.86 billion for the second quarter, down 24.9% compared with $5.14 billion a year ago. AT&T told investors earlier this year that 2009 capex would be as much as 15% lower than last year.