AT&T saw a net loss of 348,000 postpaid phone customers in the first quarter and said revenue dipped due to record-low equipment sales in wireless.
The No. 2 wireless carrier in the U.S. posted $39.4 billion in consolidated revenues during the quarter, down from $40.5 billion during the prior year and shy of the $40.09 predicted by Wells Fargo Securities analysts. It saw record-low postpaid phone churn of .9%, though, and overall wireless postpaid churn of 1.12% including tablets.
AT&T finally made its unlimited-data plan available to all customers in the first quarter after offering it only to subscribers of its DirecTV service. And like Verizon, the carrier said the launch of unlimited helped slow the loss of customers to T-Mobile and Sprint, both of which introduced unlimited plans in August.
“Our response to the unlimited data plans was probably a little slow,” CEO Randall Stephenson said during AT&T’s earnings call. “It appears the industry has gone through a lot of activity during the quarter and essentially ended up back where it started.”
Shares of AT&T jumped roughly 1% following the announcement. Here’s a closer look at some of AT&T’s key quarterly metrics:
Subscribers: AT&T lost 67,000 postpaid net phone customers in the last quarter of 2016, and the bleeding increased in the latest quarter due to the proliferation of unlimited-data plans. The carrier posted 2.1 million overall wireless net adds in the U.S., however, driven primarily by prepaid and connected devices, and other 633,000 net wireless adds in Mexico. AT&T also said it had 1.8 million connected devices on the 2G network it shut down in January; those 2G customers were removed from the company’s subscriber count at the beginning of the year.
Financials: Total wireless revenues were $17.2 billion, down 4.4% year over year due to decreases in service and equipment revenues. Earnings per share came in 74 cents, matching the expectations of Thomson Reuters, CNBC reported. AT&T posted an operating margin of 30.1% and a best-ever EBITDA margin of 41.8%, and cash from operations came in at $9.2 billion. Operating income was $6.9 billion, down from $7.1 billion a year ago.
Straight Path: AT&T earlier this month announced plans to acquire Straight Path Communications in a deal aimed at bulking up its portfolio of millimeter-wave spectrum. But reports surfaced Monday indicating Verizon has outbid AT&T, agreeing to pony up $1.8 billion. AT&T said it will reconsider its offer in the coming days and may decide to up its bid.
Summary: AT&T suffered significant wireless losses in the first quarter, although it appears to have regained its footing—partially, at least—with the launch of its unlimited-data plan. The company is laying the foundation for 5G, though, and its fiber and DirecTV Now businesses are gaining ground. The major question for AT&T is still whether it can find a way to combine its disparate businesses to differentiate itself from the competition. And that question isn’t likely to be answered any time soon.