U-verse TV Reaches 2.3 Million Subscribers

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AT&T keeps gaining ground on the IPTV front, adding 231,000 U-verse TV subscribers in the first quarter of 2010 to reach 2.3 million, while its wireline broadband business expanded even as the telco lost 699,000 total residential phone-line connections in the period.

The nation's No. 1 telco now serves approximately as many video subscribers as the sixth-biggest U.S. cable operator, Bright House Networks.

AT&T's U-verse network deployment, which uses Very High Bit-Rate DSL 2 (VDSL2) technology for last-mile delivery, now reaches approximately 24 million living units. Companywide penetration of eligible living units is 13%, and across areas marketed to for 24 months or more, overall penetration exceeds 20%, according to the company.

The company said more than 75% of AT&T U-verse TV subscribers have a triple- or quad-play option, and it claimed to see a "rebound" in broadband subscriber growth. AT&T posted a 255,000 net gain in wireline broadband connections in the first quarter, to stand at 13.99 million consumer wired broadband connections (including U-verse Internet) at the end of March. That's compared with 167,000 net adds for wireline consumer broadband in the fourth quarter of 2009.

AT&T's U-verse TV results were in-line with expectations and broadband was "surprisingly strong," Sanford Bernstein analyst Craig Moffett wrote in a research note. Still, he added about the telco's wireline results, "a fixed-cost business losing revenues at a nearly 5% annual rate is tough to love."

Overall, AT&T's consolidated revenue was $30.6 billion, up 0.3%, while net income dropped 20.8%, to $2.5 billion, for the quarter ended March 31. AT&T blamed the decline in net income on a $995 million charge related to the tax treatment for Medicare.

"AT&T continues to set the pace in mobile broadband, the industry's number one growth driver, and our wireless business continues to perform at a high level, with improved margins, lower churn and overall revenues growing at a healthy clip," AT&T CEO Randall Stephenson said in announcing the results Wednesday.

AT&T posted a net gain in total wireless subscribers of 1.9 million, the highest first-quarter total in its history, to reach 87.0 million in service. In the period the telco had 2.7 million iPhone activations, with more than one-third of the activations for customers who were new to AT&T.

However, "the question of what AT&T will do if and when they lose iPhone exclusivity is hard to escape," Moffett said, noting that the iPhone accounted for 174% of AT&T's post-paid wireless net additions.

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