AT&T Meets Expectations in Q2

Quarterly reports ideally should be about consistency and meeting expectations, and one would have to say that is what AT&T has reported, especially given the tougher recessionary pressures all firms are facing.

 

AT&T’s (News - Alert) wireless, broadband, and U-verse TV subscription businesses all did well in the second quarter. As expected, wireline voice units continued to dip. AT&T had 46.3 million total consumer connections at the end of Q2, compared with 48.4 million at the same time a year ago.

 

About 43 percent of AT&T revenue comes from wireless services, 24 percent from wired network data services, 27 percent from wireline voice and six percent from other revenue sources.

 

Voice revenue dropped over 13 percent to $8.26 billion. You might think a mass migration to VoIP would help AT&T, and in some ways it might. Customers looking for additional features or lower prices would have less incentive to switch. On the other hand, what would amount to an across-the-board price cut would put new pressure on average revenue and gross revenue from the segment.

 

For the period, AT&T’s consolidated revenues totaled $30.7 billion, compared with $30.9 billion in the year-earlier quarter. Net income attributable to AT&T totaled $3.2 billion versus $3.8 billion in the year-earlier quarter.

 

In the company’s wireless business, retail postpaid net adds totaled 1.2 million, up 29 percent compared to the year-earlier second quarter and up 31.8 percent versus the first quarter of 2009. 

 

AT&T activated more than 2.4 million iPhones in the quarter, with more than a third of those activations being customers new to AT&T. The firm’s wireless revenues from messaging, Internet access, access to applications and related services increased $934 million, or 37.2 percent. Wireless service revenue was up almost 10 percent to $11.96 billion.

 

U-verse TV subscribers in service increased by 248,000 in the second quarter to reach 1.6 million, up more than 1 million over the past year.

 

Despite the fact that consolidated revenues were essentially flat year over year, the real story observers are looking for is AT&T's ability to replace declining wireline voice revenues with alternate sources. So far, AT&T is doing that.