AT&T issued its Q2 07 earnings report this morning and the news wasn’t that great. (Ignore most of what you read in the business press about AT&T’s earnings — the giant telco consistently puts out, and the press merely repeats, apples-to-oranges financial data that compare AT&T prior to its acquisition of BellSouth to AT&T after its acquisition of BellSouth, making the telco look like it has surged in growth year-over-year.)
From what I can see from the earnings release and associated reports, AT&T continued losing local access lines at a healthy clip, broadband growth slowed substantially and wireless growth only stayed steady during the quarter. Total access lines dropped to 64.08 million, down 7% year-over-year. Total broadband subscribers advanced to 13.3 million, up 439,000 during the quarter, a run-rate down 7% from the 472,000 net broadband adds during Q2 06 and down 36% from the 691,000 net broadband adds during Q1 07.
Video growth was strong during the quarter, with AT&T adding a net new 200,000 multichannel video customers. But, the company’s vaunted U-verse fiber-to-the-node video initiative wasn’t responsible for most of this gain — plain old DBS drove the majority of the growth.
Wireless was the relative bright spot for AT&T, even though the impact of the iPhone, which went on sale June 29, had yet to be felt during the quarter. AT&T added 1.5 million net new wireless customers during the quarter, on par with year-ago levels and up 17% from Q1 07 levels, to wrap up the quarter with 63.7 million wireless customers.
Bottom-line for the telco: Operating revenues rose 1% year-over-year to $29.5 billion, but net income soared by 73% to $2.9 billion as the newly combined company benefitted from reduced overhead, labor and operational costs.
The good news for AT&T: the company activated 146,000 iPhones during the last two days of the month, and I would posit that most of these activations occurred on a single day, June 30. Although some analysts are apparently concerned that this number is too low, my guess is that it presages a very, very robust Q3 07 for AT&T, with activations during the month of July easily topping the 1.5 to 2.0 million mark. A good chunk of those new customers are no doubt completely new customers for AT&T wireless.
Company execs confirmed during the earnings call that activations were robust in July and that traffic in AT&T stores was above historic levels. But, however many iPhone activations AT&T ultimately implements for the quarter, the iPhone obviously came at the right time for the carrier, given the continued loss of access lines and slow-down in broadband growth.
| AT&T Key Statistics | |||||
| 2Q06 | 3Q06 | 4Q06 | 1Q07 | 2Q07 | |
| Total access lines (mil.) | 68.66 | 67.53 | 66.47 | 65.43 | 64.08 |
| Net access line change (mil.) | (1.34) | (1.13) | (1.06) | (1.04) | (1.35) |
| DSL customers (000) | 11,047 | 11,597 | 12,161 | 12,842 | 13,203 |
| Quarterly adds (000) | 471 | 550 | 564 | 681 | 361 |
| AT&T U-Verse High-Speed Internet (000) | 1.0 | 3.0 | 4.0 | 13.0 | 50.0 |
| Satellite Broadband (000) | - | 4.0 | 5.0 | 6.0 | 8.0 |
| Total Broadband (000) | 11,048 | 11,604 | 12,170 | 12,861 | 13,300 |
| Quarterly adds (000) | 472 | 556 | 566 | 691 | 439 |
| Video Customers (000) | 1,280 | 1,400 | 1,510 | 1,697 | 1,897 |
| Quarterly adds (000) | 100 | 120 | 110 | 187 | 200 |
| Satellite Video | 1,280 | 1,397 | 1,507 | 1,684 | 1,846 |
| U-Verse Customers (000) | - | 3 | 3 | 13 | 51 |
| Video Penetration of Consumer Primary Lines | 3.8% | 4.2% | 4.6% | 5.2% | 5.9% |
| Wireless Voice Customers (mil.) | 57.3 | 58.7 | 61.0 | 62.2 | 63.7 |
| Net Adds | 1.5 | 1.3 | 2.3 | 1.3 | 1.5 |
| Wireless Data Subs (mil.) | 26.5 | 30.3 | 32.2 | 33.4 | 36.8 |
| Wireless Revenues (bil.) | $ 8.3 | $ 8.7 | $ 8.8 | $ 9.1 | $ 10.4 |
| Wireless Data Revenues (mil.) | 1,456 | 1,651 | |||
| Total operating revenues (mil.) | $29,204 | $29,392 | $29,558 | $28,969 | $29,478 |
| Net Income | $ 1,674 | $ 2,220 | $ 2,204 | $ 2,848 | $ 2,904 |
| Source: Emerging Media Dynamics, Inc. analysis of company data. © 2007. | |||||
Cynthia Brumfield at 12:42 PM|Comments(0)
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