AT&T Profit, Revenue Fall Due to Low Wireless Equipment Sales

AT&T on Tuesday reported decreases in profit and consolidated revenues for the first quarter of this year compared to the same quarter in 2016.

First-quarter profit was $3.5 billion compared to $3.8 billion for the year-ago quarter. Consolidated revenues totaled $39.4 billion compared to $40.5 billion.

That revenue number fell below analysts’ expectations. AT&T attributed the decrease primarily to record-low equipment sales in wireless.

“In a very competitive quarter, we continued to execute on our goals of driving efficiencies in our business while growing adjusted earnings per share,” said Randall Stephenson, AT&T’s chairman and CEO. “But just as important, the strategic moves we’ve made over the last few months to expand our wireless capacity and fortify our 5G leadership will be felt for years to come. FirstNet gives us access to 20 megahertz of valuable, low-band spectrum and allows us to deploy our spectrum assets more efficiently as we build a high-quality, mobile broadband network for our first responders. And our planned acquisitions of Fiber Tower and Straight Path will add valuable millimeter wave spectrum assets to our 5G tool kit as we lead the way to the next generation of wireless technology.”

However, Straight Path Tuesday reported that an unsolicited bid from a “multinational telecommunications company” is “superior” to AT&T’s buyout offer. AT&T has five business days to match or exceed the bidder’s offer.{ad}

For the first quarter, AT&T’s wireless revenues totaled $17.2 billion, down 4.4 percent year over year due to decreases in service and equipment revenues. Wireless service revenues of $14.5 billion were down 1.8 percent with pressure from adoption of Mobile Share and unlimited plans, partially offset by continued growth in branded smartphones and tablets.

The telco reported 2.7 million wireless net adds, including 2.1 million in the United States and 633,000 in Mexico.

Revenue from consumer mobility customers totaled $7.7 billion, down 7.1 percent versus the year-earlier quarter, reflecting fewer phone sales and upgrades, and lower postpaid service revenues mostly due to migrations to business plans.

First-quarter revenue from business customers was $16.8 billion, down 4.3 percent due to declines in legacy wireline services and fewer wireless equipment upgrades. Growth in wireless service revenues and strategic business services helped offset declines in legacy wireline services and equipment sales and the second-quarter 2016 sale of certain hosting operations.

Business wireless revenue was down 2.1 percent year over year to $9.4 billion, reflecting lower equipment revenues from lower sales. Wireless service revenues were up .9 percent, reflecting smartphone and tablet gains, and continued migration from consumer plans.

Total business wireline revenues were $7.4 billion, down 7 percent year over year. Declines in legacy products were partially offset by continued growth in strategic business services.

Revenues from strategic business services, including VPNs, Ethernet, cloud, hosting, IP conferencing, voice over IP, MIS over Ethernet, U-verse and security services, increased by $223 million, or 8 percent, compared to the year-ago quarter. These services represent an annualized revenue stream of nearly $12 billion.

During the quarter, AT&T added nearly 4,000 high-speed IP broadband business subscribers. Total business broadband had a loss of 25,000 subscribers in the quarter.

The telco ended the quarter with more than 82 million business wireless subscribers. Business Solutions lost 125,000 postpaid subscribers, mostly due to tablet losses, and added 2.6 million connected devices in the first quarter. This was the highest-ever increase in connected devices.

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