clock menu more-arrow no yes

AT&T Adds 2.8 Million Customers but Wireless Revenue Falls

Overall revenue and earnings were in the ballpark of what analysts were expecting.

Asa Mathat

AT&T said Tuesday that it added 2.8 million wireless customers as it continues to add a large number of non-phone devices to its network.

Although its U.S. cellular business added 2.2 million customers, wireless revenue was down 4.9 percent year over year to $18.9 billion. The company blamed this in part on lower equipment sales, although revenue from service declined as well, off 1.7 percent from the prior year.

The company also lost core AT&T phone subscribers during the quarter, adding 526,000 total postpaid customers thanks to the addition of 696,000 tablets and computing devices. AT&T, which has put a lot of focus on deals with automakers, said it added 1 million connected cars last quarter. A deal with Ford should add another 10 million cars over the next five years, AT&T said.

Overall, AT&T said that it earned $4 billion, or 65 cents per share, on revenue of $42.1 billion, for the quarter ended Dec. 31. Adjusted for certain items, the per-share earnings would have been 63 cents, just below analyst expectations of around 64 cents per share, with revenue also seen slightly higher at $42.75 billion, according to Yahoo Finance.

Shares of AT&T were trading lower in after-hours trading following the earnings report, changing hands recently at $34.44, down 96 cents or 2.7 percent.

CEO Randall Stephenson praised the company’s ability to deliver TV, business services, connected cars as well as traditional wireline and wireless service.

“We think we are a company with no obvious peer,” he said on a conference call.

Stephenson also hinted at new video options that will be added later this year, saying that the combination of DirecTV’s content deals and AT&T’s network allow it to deliver the best content over traditional TV “or streamed over internet to essentially any mobile device.”

The company said its financial outlook remains the same as what it provided following the completion of its DirecTV acquisition last year, including a forecast of double digit revenue gains and per-share earnings growth in the “mid-single-digit” range.

AT&T said that its entertainment unit, buoyed by the DirecTV purchase, accounted for $13 billion in revenue or more than 30 percent of the company. AT&T added 214,000 satellite subscribers but lost 26,000 video subscribers overall as it focuses more on DirecTV and less on its older U-Verse TV service.

In Mexico, where AT&T also made purchases last year, the company added 638,000 net customers and saw revenue increase 10 percent.

Update: A bit more from the conference call.

AT&T said the company has seen more than 500,000 people sign up for a new offer that lets cell phone customers get unlimited data, but only if they also subscribe to AT&T’s TV service.

“This is only our first move,” Stephenson said.

Also of note, AT&T said that nearly 700,000 customers in the quarter brought an existing device onto AT&T’s network. That also includes those that are getting their device directly from the phone maker, led by Apple’s effort to offer a combination of phone lease and AppleCare through its stores.

As for its upcoming mobile video service, AT&T said the first look should come within the next 45 days, but added that it is still putting the final needed content deals in place.

The company also said sponsored data, where customers don’t directly pay for the data they use to see specific content, could play a big role in the offer. AT&T has been doing small-scale trials of sponsored data for a couple years now but has declined to talk about broader plans.

Net Neutrality advocates have voiced concerns over such efforts, saying they could hurt competition, and the FCC has also said it will closely look at such offers.

Rival Verizon also started testing a sponsored data program this month.

AT&T

This article originally appeared on Recode.net.