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Connected Cars Boost AT&T's Subscriber Count, but Q1 Wireless Profit Margins Fall

The company did beat Wall Street earnings estimates by a penny per share.


AT&T said Wednesday that it added 1.2 million wireless connections to its network during the first quarter, including 684,000 connected cars.

Revenue was largely flat from a year ago, at $32.6 billion, though it was up a little over 1 percent considering the year-ago results include some since-sold assets. Net income was $3.2 billion, or 61 cents per share, compared to net income of $3.7 billion, or 70 cents per diluted share, in the year-ago quarter. Excluding certain charges as well as tax gain, net income would have amounted to 63 cents per share, or a penny ahead of Wall Street estimates.

On the wireless side, the company saw a notable drop in its profit margins amid growth in its Cricket prepaid business as well as a shift to shared-data plans. Operating margins were 24.5 percent in the wireless business compared to 28.3 percent a year ago.

AT&T said it added 441,000 postpaid customers, with 70 percent of new smartphones joining the network doing so without a hardware subsidy — either those taking part in monthly device installment payments, paying up front or bringing their own device to the network.

Last quarter, AT&T added two million customers, although only about 150,000 of those were core postpaid smartphone customers.

The company is in the midst of several big changes, including its pending deal to buy DirecTV, expected to close this quarter, and moves to expand into Mexico. AT&T said it now expects more than $2.5 billion in annual cost synergies by the third year after the deal close, up from its prior estimate of $1.6 billion in savings.

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