AT&T issued its Q3 07 earnings report this morning and the news was good, relatively speaking. The nation's number one telco posted undeniable revenue growth, not always a given for incumbent telcos these days. AT&T's revenues rose by 3% year-over-year and 2% sequentially to $30.1 billion.
Net income jumped 38% over Q3 06 levels and 5% over Q2 07 levels to reach $3.1 billion.
The fuel behind the growth was wireless -- AT&T posted a record-breaking net gain of two million wireless customers during the quarter, boosted hugely by the 1.1 million new iPhones sold during Q3 07. By quarter's end, AT&T served 65.7 million wireless voice customers, a 12% spike over year-ago levels.
The rise of mobile data services fueled wireless revenue growth even faster. AT&T generated $10.9 billion in wireless revenues during the quarter, up 26% over Q3 06 wireless revenues.
Another strong performer for AT&T was its multichannel video service, particularly its fiber-to-the-node U-verse TV service. During the quarter, AT&T added 215,000 net new video customers, a run-rate 79% higher than the net video adds for Q3 06 and 8% higher than the net video customers added during Q2 07. At the end of the quarter, AT&T served 2.1 million video customers representing 6.7% of its consumer household footprint.
The number of U-verse customers more than doubled during the quarter, with AT&T gaining 75,000 net new U-verse video subscribers. At quarter's end, AT&T had 126,000 U-verse customers.
Another growth segment for AT&T, broadband service, continued to post gains, although at a slower rate. During the quarter, AT&T added 499,000 net new broadband customers, a run-rate that is 10% lower than the 556,000 net adds during the year-ago quarter, but up by 14% over Q2 07 levels. At the end of the quarter AT&T counted 13.76 million high-speed customers.
The customary weakness for the telco (and all incumbent telcos), continued erosion in local access lines, continued during Q3 07. AT&T lost 1.21 million local access lines during the quarter, up from a loss of 1.13 million lines during Q3 06.
During the earnings call, EVP Rick Lindner sounded optimistic about the company's ability to continue growing its wireless business even if the scorching growth rate of this quarter isn't repeated. "We would expect some slowing in terms of penetration but still a very strong market in terms of gross adds and a very competitive market in terms of handset pricing and devices," he said.
Interestingly, Lindner wouldn't answer any questions about the rumors that AT&T is about to buy its DBS partner, EchoStar. He did, however, note that AT&T is on tap to make a decision by year-end about whether to stick with only one DBS partner (as it stands now, AT&T has deals with both EchoStar and DirecTV, mostly as a result of the company's acquisition of BellSouth). "As those contracts [with EchoStar and DirecTV] expire…we will announce plans going forward. I would expect that to occur at the end of this year, beginning of next year."
Finally, Lindner provided background details on a massive U-verse TV outage that occurred this weekend. The fault stemmed not from the controversial architecture of the U-verse network, but from a software glitch. " The U-verse outage was caused by a software load put into our systems on Saturday night and that software load unfortunately impacted the database that tracks and maintains the programming packages that customers are subscribed to," he said.
Service was fully restored by late-Sunday and customers are getting credits to compensate for the inconvenience.
| AT&T Key Statistics | |||||
| 3Q06 | 4Q06 | 1Q07 | 2Q07 | 3Q07 | |
| Total access lines (mil.) | 67.53 | 66.47 | 65.43 | 64.08 | 62.87 |
| Net access line change (mil.) | (1.13) | (1.06) | (1.04) | (1.35) | (1.21) |
| Retail Consumer Access Lines | 38.74 | 38.23 | 36.70 | 36.40 | 35.81 |
| Net access line change (mil.) | (0.52) | (0.51) | (1.53) | (0.30) | (0.59) |
| Total Broadband (000) | 11,604 | 12,170 | 12,861 | 13,300 | 13,760 |
| Quarterly adds (000) | 556 | 566 | 691 | 439 | 499 |
| Penetration of Consumer Primary Lines | 29.6% | 31.5% | 33.7% | 35.0% | 37.0% |
| Video Customers (000) | 1,400 | 1,510 | 1,697 | 1,897 | 2,112 |
| Net Adds | 120 | 110 | 187 | 200 | 215 |
| Satellite Video | 1,397 | 1,507 | 1,684 | 1,846 | 1,986 |
| Net change | 117 | 110 | 177 | 162 | 140 |
| U-Verse Customers (000) | 3 | 3 | 13 | 51 | 126 |
| Net change | 3 | - | 10 | 38 | 75 |
| Video Penetration of Consumer Primary Lines | 4.2% | 4.6% | 5.2% | 5.9% | 6.7% |
| Total Consumer Revenue Connections (000) | 49,578 | 49,650 | 49,309 | 49,555 | 49,639 |
| Wireless Voice Customers (mil.) | 58.7 | 61.0 | 62.2 | 63.7 | 65.7 |
| Net Adds | 1.3 | 2.3 | 1.3 | 1.5 | 2.0 |
| Wireless Revenues (bil.) | $ 8.7 | $ 8.8 | $ 9.1 | $ 10.4 | $ 10.9 |
| Wireless Data Revenues (mil.) | 1,106.0 | 1,288.0 | 1,456 | 1,651 | 1,813 |
| Wireless Data ARPU | $ 6.32 | $ 7.19 | $ 7.88 | $ 8.77 | $ 9.34 |
| Total operating revenues (mil.) | $29,392 | $29,558 | $28,969 | $29,478 | $30,132 |
| Net Income | $ 2,220 | $ 2,204 | $ 2,848 | $ 2,904 | $ 3,063 |
| Source: Emerging Media Dynamics, Inc. analysis of company data. © 2007. | |||||
Cynthia Brumfield at 11:30 AM|Comments(0)
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