AT&T Sheds 649K DSL Subs, Adds 150K To U-verse TV In Q2

Telco Blames Seasonality in Part for Decline in Wireline Broadband Connections

AT&T pulled in 155,000 new U-verse TV subscribers in the second quarter of 2012, while the nation's No. 1 telco dropped a whopping 649,000 DSL subscribers in the period for a net loss of 96,000 broadband customers.

For the three months ended June 30, AT&T's U-verse revenue grew 38% to $2.3 billion, representing 57% of consumer wireline revenue for the period. Overall, consumer wireline revenue increased far less at 1.7% year over year, to $5.5 billion -- although that was the segment's strongest growth in more than four years, according to the company.

Cramping AT&T's wireline growth were its substantial DSL losses, which it blamed partly on "seasonality." The company's U-verse High Speed Internet service had a quarterly net gain of 553,000 subscribers to reach a total of 6.5 million, which wasn't enough to offset losses from DSL. Total wireline broadband connections dropped 0.2% year over year, to 16.43 million.

In addition, AT&T lost a net 1 million legacy wireline voice connections in the quarter, to stand at 36.8 million (down 10.8% from 41.3 million last year).

AT&T now has 4.15 million U-verse TV subscribers in service, with a 17.3% penetration rate of eligible living units. About three-fourths of TV subscribers have a triple- or quad-play option, with average revenue per subscriber for U-verse triple-play customers about $170, up slightly year over year.

AT&T's satellite subscribers, through a deal with DirecTV and a previous one with Dish Network, were 1.68 million at the end of June, down 9.1% from 1.85 million a year prior.

Total business revenue for AT&T's wireline segment was $9.1 billion, down 1.5% year-over-year. The telco noted that business data revenue grew 2% versus the year-earlier quarter, "continuing the transition from legacy data products to next-generation data services."

On the wireless side of the house, AT&T touted data revenue growth of 18.8% to $1 billion, record low churn and best-ever service margins in the second quarter. Total wireless revenue, including equipment sales, was up 4.8% year over year to $16.4 billion. Wireless service revenues increased 4.3%, to $14.8 billion, in Q2.

AT&T's wireless division sold 5.1 million smartphones in the second quarter, which represented 77% of postpaid device sales. In the quarter, the company activated 3.7 million iPhones, with 22% new customers.

Overall, AT&T's consolidated revenue for the second quarter was $31.6 billion, up 0.3% from the year-earlier quarter. Net income attributable to AT&T totaled $3.9 billion, or $0.66 per diluted share, up from $3.6 billion in Q2 2011.

The telco on May 8 closed the sale of its Advertising Solutions unit to an affiliate of Cerberus Capital Management; year-over-year comparisons include full Q2 2011 revenue from the ad unit. Excluding Advertising Solutions, AT&T's consolidated revenue grew 2%.

Capital expenditures in the second quarter of 2012 were total $4.48 billion, down 15% from $5.27 billion a year ago. AT&T reported 242,380 total employees, down 6.4% from June 2011.