AT&T Beats Estimates Buoyed by Internet, Phone Subscribers

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(Bloomberg) — AT&T Inc. reported revenue and profits in the first quarter that beat analysts’ estimates, as the No. 3 US wireless carrier continued to expand its fiber footprint and sell customers on its convergence strategy of subscribing to multiple products at once.

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Dallas-based AT&T said revenue rose 2.9% to $31.5 billion, just ahead of Wall Street’ projections of $31.25 billion. Sales were buoyed by growth in wireless phone and home internet service, including accounts from last year’s purchase of the fiber business of Lumen Technologies Inc., which closed in February, the company said in a statement on Wednesday.

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Adjusted earnings per share were 57 cents, compared with estimates of 55 cents, and up from 51 cents a year ago. 

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“We’re uniquely positioned to deliver more of what customers want — fiber and 5G all from one provider,” Chief Executive Officer John Stankey said in a statement. 

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The company has rolled out aggressive perks and incentives over the last year amid an escalating price war in a tight market for mobile customers. In such a competitive environment, all three major US telecom providers are offering home internet and wireless services packaged as a one-stop-shop for connectivity. The shares have languished over the past 12 months and are down 1.7% over that time.

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AT&T announced a new all-in pricing structure for broadband and wireless service last month, styling the OneConnect “subscription” model after apps like Netflix and Peloton. AT&T added 294,000 new mobile customers in the quarter, beating expectations of 262,000.

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To better reflect AT&T’s focus on so-called convergence, the company adopted a new reporting framework this quarter. Metrics around its declining copper business will now be broken into a “legacy” segment, and financials tied to the fiber and wireless home broadband units will be combined into an “advanced connectivity” segment.

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In the latter category, the company added 512,000 residential internet customers. Almost 45% of home internet subscribers also buy AT&T wireless service, the company said.

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AT&T has said it will see a 70% reduction in energy consumption and a 35% saving in maintenance costs from retiring its legacy copper lines and transitioning those customers to fiber and wireless products. 

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It has also set aggressive fiber buildout targets — reaching 40 million locations by the end of the year and 60 million by the end of the decade —positioning the company to offer more customers both home and mobile connectivity. The company has pledged to spend $250 billion over the next five years to expand its telecom infrastructure and business operations.

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