AT&T's Q1: Business revenue down but still saved by cloud, other IP services

Summary:AT&T also added 64,000 business U-verse high speed broadband subscribers during the first quarter.


Following reports that it is breaking into the streaming TV business , à la Netflix, AT&T published its first quarter earnings report after the bell on Tuesday.

The Dallas, Texas-headquartered corporation reported a net income of $3.7 billion, or 70 cents per share (statement).

Non-GAAP earnings were 70 cents per share on a revenue of $32.5 billion, up 3.6 percent annually. AT&T boasted this was the "best revenue growth in more than two years."

Wall Street was looking for earnings of 70 cents per share on a revenue of $32.44 billion.

AT&T added 64,000 business U-verse high speed broadband subscribers during the first quarter.

Revenue from business customers overall slipped by 2.7 percent year-over-year to $8.7 billion for the first quarter.

AT&T admitted that "declines in legacy products were partially offset by continued double-digit growth in strategic business services."

It is here where AT&T is starting to pick up more revenue with a 16.1 percent uptick in Q1 on a year-over-year basis. This department includes VPN, Ethernet, cloud, hosting and other advanced IP services. AT&T boasted this line of services now account for an annualized revenue stream of more than $9 billion.



On the consumer side, AT&T added 625,000 postpaid subscribers, touted by the mobile brand as its "best first-quarter net adds in five years." Other gains included 313,000 more customers on tablets and over half a million on smartphones added during the quarter.

AT&T now retains nearly 60 million total branded smartphone subscribers and 11.3 million total U-verse subscribers (TV and high-speed Internet).

While speculating that customers are looking to "move off device subsidies to simpler pricing," chairman and CEO Randall L. Stephenson reflected on the quarter in prepared remarks:

Wireless postpaid net adds were more than twice as many as a year ago, AT&T Next sales surpassed our expectations, and we had a tremendous surge in Mobile Share plans of 10 gigs or higher. We also had our best wireline consumer revenue growth since we first introduced U-verse in 2006 as our Project VIP build continues to make progress.

For the current quarter, Wall Street expects AT&T to deliver earnings of 72 cents per share on a revenue of $33.08 billion.

AT&T followed up with guidance projecting revenue to grow by at least four percent.

Only two days into the week and it's been a busy one for the nation's second largest wireless provider.

On Monday, AT&T revealed plans to explore deployment of its petite but expanding ultra-high fiber network.

In a play that heavily ramps up the game against Google , among other Internet service providers and telecommunications companies nationwide, AT&T is now targeting 25 major metropolitan areas, equating to a little more than 100 cities and surrounding suburbs.


Much more quietly, AT&T announced that it would be adding billing software provider Amdocs and Juniper Networks, which also reported Q1 earnings on Tuesday , to the list of vendors for its User-Defined Network Cloud architecture. The pair join Ericsson, Tail-F Systems AB, Affirmed Networks, and Metaswitch Networks.

Slides via AT&T Investor Relations

Topics: Mobility, Networking, Social Enterprise, Telcos


Rachel King is a staff writer for CBS Interactive based in San Francisco, covering business and enterprise technology for ZDNet, CNET and SmartPlanet. She has previously worked for The Business Insider,, CNN's San Francisco bureau and the U.S. Department of State. Rachel has also written for, Irish Americ... Full Bio

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