Published: Wed, April 26, 2017
Business | By Jorge Reeves

AT&T sheds more lucrative wireless customers in 1Q

AT&T sheds more lucrative wireless customers in 1Q

AT&T delivered mixed first quarter financial results on Tuesday, with revenues falling below market expectations.

AT&T Inc. maintained its 2017 earnings forecast despite losing wireless customers for the first time ever, reflecting the rising competitive pressure in the mobile-phone business.

AT&T did not disclose updated sub numbers for DirecTV Now, the OTT TV service it launched last November, but noted that DirecTV Now gains helped to offset its decline in linear TV subscribers.

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During Q1, AT&T reported 2.7 million wireless net adds, with 2.1 million net adds in the US, driven by prepaid and connected devices, and 633,000 net adds in Mexico. Phone additions are considered important because they are the most lucrative mobility accounts, and customers with postpaid phone accounts tend to stay longer.

AT&T, like its telecommunications rival Verizon Communications Inc., faced heightened competition from unlimited-data plans offered by T-Mobile US Inc. and Sprint Corp.

At the closing bell, AT&T had a market capitalization of $245.3 billion compared with Time Warner's $77.5 billion.

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It's dropped providing consolidated revenue guidance due to "unpredictability" of wireless handset sales, but following its FirstNet contract award, it's forecasting full-year EPS (without any Time Warner impact) growing in mid-single digits, expansion in its adjusted operating margin, capex of around $22B and free cash flow around $18B.

Excluding items, earnings per share matched analysts' consensus estimate of 74 cents according to Thomson Reuters I/B/E/S. Revenue was expected at $40.53 billion.

Overall, the Dallas company reported first-quarter earnings of $3.47 billion, or 56 cents per share, down from $3.8 billion, or 61 cents, the year before. The customer erosion still weighed on sales, with the company posting revenue of $39.4 billion, trailing the $40.6 billion seen by analysts.

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AT&T added 115,000 broadband connections. AT&T says that because it can not predict handset sales in advance, it no longer will forecast revenue for future quarters.

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