AT&T reports mixed Q3 results as pay TV business declines
AT&T posted mixed third quarter financial results on Wednesday, beating revenue expectations but falling short on profit. The second largest US wireless carrier reported adjusted earnings of 90 cents per share on revenue of $45.7 billion. A year prior, the company reported earnings of 74 cents per share on revenue of $39.7 billion.
Wall Street was expecting earnings of 75 cents per share on revenue of $45.6 billion.
The company had a total of 4.3 million wireless net adds for Q3, with 3.4 million coming from the US and just over 900,000 from Mexico. The wireless carrier ended the quarter with 69,000 postpaid phone net adds and a churn rate of .93 percent.
Revenues were up on a year-over-year basis but the growth was offset by declines in the company's domestic video, legacy wireline services and Vrio businesses. Operating expenses for the quarter were $38.5 billion, compared with $33.9 billion a year prior.
In its entertainment segment, AT&T lost a net 346,000 pay TV subscribers as viewers continue to choose streaming video services like Netflix and Hulu over more expensive packages. The company said its focus now is on improving profitability as it begins beta testing its new streaming video device.
However, AT&T's WarnerMedia segment -- the new name for post-acquisition Time Warner -- delivered revenue of $8.2 billion, up 6.5 percent from last year. Broken down, Turner revenue came to $3.0 billion on growth in subscription, content and other revenue, while HBO revenue came to $1.6 billion, with subscription revenue rising seven percent. Revenue from Warner Bros. grew to $3.7 billion on increased TV licensing revenues, the company said.
"I'm pleased with the progress we made on a number of fronts in the third quarter," said Randall Stephenson, AT&T chairman and CEO. "Our U.S. wireless business is growing and it's the single biggest contributor to our earnings and cash flow. WarnerMedia was immediately accretive in its first full quarter, contributing 5 cents to EPS, and our free cash flow grew by double digits."
AT&T's shares were down nearly four percent in pre-market trading.