Thursday, October 21, 2021

AT&T Tops Q3 Earnings Forecasts

AT&T posted a big jump in cellphone customers during the September quarter, while the number of domestic subscribers to its HBO services declined and it spun off its DirecTV business, reports The Wall Street Journal.

AT&T posted a net gain of 928,000 postpaid phone connections, a key figure for investors who watch the growth of subscribers under contracts for signs of overall business strength. The company also added 249,000 prepaid phone connections.

Rival Verizon Communications Inc on Wednesday reported a net gain of 429,000 postpaid phone connections. Its relatively small prepaid-phone business could grow larger if regulators approve its pending purchase of TracFone from Mexico’s América Móvil SAB. T-Mobile US Inc. is slated to post its quarterly results on Nov. 2.

T-Mobile’s 2020 merger with Sprint Corp. reshaped the wireless business into a three-player market, leaving carriers with fewer paths to poach each other’s customers. AT&T has grown its wireless base by offering customers sharply discounted smartphones in exchange for long-term commitments, a tactic rivals have copied to varying degrees.

AT&T’s overall quarterly revenue fell about 5.7% compared with a year ago, when it still ran DirecTV, a massive but shrinking satellite brand that had burdened its financial results. Excluding that effect, the remaining company’s revenue rose 4.7% to $38.07 billion.

AT&T gave up a 30% stake and operational control of its U.S. pay-TV business to a joint venture with private-equity firm TPG in August, which skewed results in the full September quarter.

The DirecTV asset sale was the first in a string of deals struck this year to point the telephone giant away from the media business and toward its core cellular and fiber-optic services. A sale of its Latin American pay-TV operations is awaiting regulatory approval, while the biggest of those divestitures—the spinoff of its WarnerMedia unit—is expected to close before the middle of next year.

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