AT&T Q2 Earnings Beat Analysts’ Estimates, Wireless Rebounds

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AT&T reported an increase in profit and a drop in revenue for the second quarter of this year compared to the same quarter in 2016.

Second-quarter profit was $3.9 billion compared to $3.4 billion for the year-ago quarter. Consolidated revenue totaled nearly $40 billion compared to $40.5 billion, primarily due to declines in legacy wireline services and consumer mobility.

AT&T posted record wireless margins and topped analysts’ earnings estimates for the quarter. The telco gained 127,000 wireless customers in the second quarter, compared with analysts’ average projection for a loss of more than 22,700.

“Once again our team delivered expanded consolidated margins and, as a result, grew adjusted earnings per share by nearly 10 percent as we executed well against our business priorities,” said Randall Stephenson, AT&T’s chairman and CEO. “And in a quarter where our competitors used promotions aggressively, we added more than 500,000 branded smartphones to our base and more than 100,000 IP broadband subscribers, achieved record EBITDA (net income with interest, taxes, depreciation and amortization added back to it) wireless margins and had the lowest postpaid phone churn in our history. We continue to expect the Time Warner deal to close by year-end and further transform the company.”

For the second quarter, AT&T’s wireless revenue was $17.5 billion, down 2.3 percent year over year, due to decreases in service and equipment revenue. Wireless service revenue of $14.5 billion was down 2.5 percent year over year, but was flat sequentially.

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The telco reported nearly 2.8 million wireless net adds, including 2.3 million in the United States and 476,000 in Mexico.

Revenue from consumer mobility customers totaled $7.8 billion, down 4.8 percent versus the year-earlier quarter, reflecting lower postpaid service revenues mostly due to migrations to business plans.

Second-quarter revenue from business customers was $17.1 billion, down 2.7 percent due to declines in legacy wireline services. Growth in wireless service revenue and strategic business services helped offset declines in legacy wireline services and wireless equipment sales.

Business wireless revenue was flat year over year, at $9.7 billion, with service revenue growth largely offsetting lower equipment revenues. Wireless service revenue was up .5 percent year over year, reflecting continued migration from consumer plans.

Total business wireline revenue was $7.4 billion, down 5.9 percent year over year. Declines in legacy products were partially offset by continued growth in strategic business services.

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

During the quarter, AT&T added 12,000 high-speed IP broadband business subscribers. Total business broadband had a loss of 17,000 subscribers in the quarter.

The telco ended the quarter with more than 84 million business wireless subscribers. Business Solutions added 36,000 postpaid subscribers and added 2.2 million connected devices in the second quarter.

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