AT&T expects around 2M wireless net adds in Q3, will 'maintain momentum' in wireless margins

AT&T (NYSE: T) said it expects to add more than 2 million new wireless customers across all of its wireless segments in the third quarter. The company added that the number of its branded voice customers also grew during the period. The news highlights what appears to be another successful quarter for AT&T following the close of the carrier's acquisition of DirecTV.

In a filing with the Securities and Exchange Commission, AT&T said that it "expects more than 2 million total net adds in the third quarter with gains in every customer category (postpaid, prepaid, connected devices and reseller)." The company also said it expects "positive branded voice net adds in the quarter."

The results are ahead of what Wall Street had expected. As Jefferies analysts pointed out in a research note on AT&T's announcement, Wall Street analysts had expected AT&T to report around 1.8 million total new customers during the quarter. "It is likely that stronger prepaid additions drove the performance as AT&T decommissioned the Cricket CDMA network in the quarter and promoted aggressively," the analysts wrote.

"As a result, and with a continued focus on efficiency initiatives, the company expects to maintain momentum in wireless service EBITDA margins," AT&T said.

AT&T also reiterated its guidance for full-year adjusted earnings per share, double-digit revenue growth and continued consolidated margin expansion. The company added that it expects its capital spending to increase from second-quarter levels.

The carrier added that it expects to report growth in its DirecTV subscriber base as well as its wired broadband subscriber base, but a decline in the number of its U-verse TV customers.

"We view the business update positively as it reiterates expectations of bringing in the DTV assets, as well as highlights positive momentum seen in Wireless," Wells Fargo analysts said of AT&T's announcement. "Specifically, the +2MM total net adds in Q3 and positive handset adds are notable and commentary on Wireless margins continuing its momentum speak to T's focus on efficiency initiatives."

AT&T's subscriber figures put the carrier close to T-Mobile US (NYSE:TMUS) in terms of third-quarter performance. Earlier this month, T-Mobile CEO John Legere said that T-Mobile had already exceeded the total net customer additions it reported for the second quarter, when it had 2.1 million. Speaking at the Goldman Sachs Communacopia Conference Sept. 18, Legere said that with 12 days still left in the third quarter T-Mobile had already matched the number of branded postpaid net customer additions and branded postpaid phone net customer adds it had in the second quarter, which were 1 million and 760,000, respectively.

In the second quarter of this year, AT&T added 2.141 million net customers, which included 410,000 postpaid additions, 331,000 prepaid customer additions and 1.4 million connected devices, including 1 million connected cars.

In the third quarter of last year, AT&T added 2 million total wireless subscribers in the quarter. Of its 785,000 net postpaid adds, the company added 466,000 smartphones and 434,000 tablets, implying the company lost 115,000 feature phone customers, who typically generate lower revenue.

AT&T is scheduled to report its full third-quarter results Oct. 22.

For more:
- see this AT&T SEC filing
- see this Cnet article

Related articles:
T-Mobile's Legere: We'll have at least 2.1M net adds in Q3
AT&T adds fewer postpaid subs in Q2 than expected as it loses 322K postpaid phone customers
AT&T's postpaid net adds fall below expectations in Q3, and shift from subsidies continues

Article updated Sept. 30 with analyst commentary.

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