IP Democracy: AT&T U-verse TV Penetration is About 3%
Telco giant AT&T issued its Q1 07 earnings report this morning showing relatively flat revenues, healthy growth in profits and a mixed performance for its high-growth broadband and wireless products. Revenues for the telco stayed relatively flat at $28.97 billion while net income jumped 46% year-over-year to $2.9 billion.
(Note: AT&T still has the annoying habit of not releasing key financials on an apples-to-apples basis, despite the fact that over the past two years SBC absorbed AT&T, BellSouth and Cingular Wireless to form the new AT&T. Some press reports repeat company statistics that compare a combined AT&T-BellSouth for Q1 07 to only AT&T alone for Q1 06, and tend to show much bigger growth as a consequence. All numbers presented in the table below are apples-to-apples, i.e. the data assumes a combined AT&T-BellSouth for all quarters.)
Even as AT&T continued to lose local access lines at a rate of about one million per quarter, the company posted very healthy gains in broadband. Total broadband subscribers jumped by 691,000 to reach 12.9 million by quarter’s end, a run rate that tops every preceding quarter of the year. Most of these gains were of the garden variety DSL kind, although AT&T’s new high-speed option, U-verse High-Speed Internet, which is available only to U-verse customers, jumped by 10,000, comporting with the 10,000 net U-verse TV customer net additions.
U-verse TV, has as been already widely reported, hit the 13,000 customer mark by the end of the quarter and now reaches 20,000 customers, highlighting an accelerating take-rate for the controversial IP-based video service. Installs have hit 2,000 per week and company execs said during the earnings call that they expect U-verse installs to ramp up to 10,000 per week by year-end.
At year-end 2006, the fiber-to-the-node U-verse network had been built out to a little over 2 million homes by year-end 2006, and is now built out to around 3 million homes and will reach 8 million homes by year-end 2007, CFO Rick Lindner said during the earnings call. However, AT&T is marketing to only 25% to 30% of the homes with U-verse TV capability, he noted.
Assuming that 25% of the 3 million capable homes are being marketed today, AT&T’s current U-verse TV subscriber count, 20,000, is roughly 3% of homes marketed, a slow-start for a service that AT&T hopes will achieve 25% penetration by 2011.
The other high-growth prospect for AT&T, wireless service, seems to have hit a bit of a lull during the quarter. AT&T Wireless added 1.3 million net new wireless customers during the quarter, about one million less than the service added during Q4 06. This slow-down is a surprising, although possibly anomalous, drop-off, given that one motivation behind the AT&T-BellSouth merger was to gain momentum in the wireless field by putting Cingular, formerly owned jointly by both companies, under one corporate umbrella.
| AT&T Key Statistics | |||||
| 1Q06 | 2Q06 | 3Q06 | 4Q06 | 1Q07 | |
| Total access lines (mil.) | 70.00 | 68.66 | 67.53 | 66.47 | 65.43 |
| DSL customers (000) | 10,576 | 11,047 | 11,597 | 12,161 | 12,842 |
| Quarterly adds (000) | na | 471 | 550 | 564 | 681 |
| Consumer DSL Lines (000) | 8,841 | 9,255 | 9,750 | 10,269 | 10,899 |
| % of consumer primary lines | 27.70% | 29.50% | 31.30% | 31.50% | 33.70% |
| Consumer Quarterly adds (000) | na | 414 | 495 | 519 | 630 |
| AT&T U-Verse High-Speed Internet (000) | - | 1 | 3 | 3 | 13 |
| Satellite Broadband (000) | - | - | 4.0 | 5.0 | 6.0 |
| Total Broadband (000) | 10,576 | 11,048 | 11,604 | 12,170 | 12,861 |
| Quarterly adds (000) | na | 472 | 556 | 566 | 691 |
| Video Customers (000) | 1,180 | 1,280 | 1,400 | 1,510 | 1,697 |
| Net Adds | na | 100 | 120 | 110 | 187 |
| Satellite Video | 1,180 | 1,280 | 1,397 | 1,507 | 1,684 |
| U-Verse Customers (000) | - | 1 | 3 | 3 | 13 |
| Video Penetration of Consumer Primary Lines | 3.5% | 3.8% | 4.2% | 4.6% | 5.2% |
| Wireless Voice Customers (mil.) | 55.8 | 57.3 | 58.7 | 61.0 | 62.2 |
| Quarterly adds (mil.) | na | 1.5 | 1.3 | 2.3 | 1.3 |
| Wireless Data Subs (mil.) | 25.4 | 26.5 | 30.3 | 32.2 | 33.4 |
| Wireless Revenues (bil.) | $ 8.0 | $ 8.3 | $ 8.7 | $ 8.8 | $ 9.1 |
| Total operating revenues (mil.) | $28,900 | $29,204 | $29,392 | $29,558 | $28,969 |
| Net Income | $ 1,953 | $ 1,674 | $ 2,220 | $ 2,204 | $ 2,848 |
| Source: Emerging Media Dynamics Inc. analysis of company data. (c) 2007. | |||||
Posted by Cynthia Brumfield on April 24, 2007 11:24 AM to IP Democracy