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AT&T Hits 550K IPTV Subs

Raymond McConville
News Analysis
Raymond McConville
7/23/2008

The fallout from the weak U.S. economy has yet to affect AT&T Inc. (NYSE: T), as the carrier reported another strong quarter on Wednesday that was in line with Wall Street expectations. (See AT&T Reports 2Q08.)

And the operator says it's still on course to hit the 1 million mark for its U-verse IPTV service by the end of the year, having achieved 549,000 U-verse subscribers by the end of June.

For the second quarter of 2008, AT&T earned $3.77 billion, or 63 cents per share on revenues of $30.86 billion.

In the same quarter last year, the company earned $2.9 billion, or 47 cents per share, on revenues of $29.48 billion. Analysts were expecting similar earnings but on slightly higher revenues of $31.16 billion according to Thomson Reuters .

Table 1: AT&T's Q2 '08 Results

2Q08 2Q07 y/y Change
Revenue (Millions) $30,866 $29,478 4.7%
Earnings (Millions) $3,772 $2,904 29.9%
GAAP EPS $0.63 $0.47 34.0%
Access Lines 58,860,000 64,078,000 -8.1%
Broadband Subscribers 14,693,000 13,261,000 10.8%
U-Verse Subscribers 549,000 51,000 976.5%
DISH Network Subscribers 2,235,000 1,846,000 21.1%


Wireless was again the star for AT&T, with a 15.8 percent gain in revenues to reach $12 billion. More importantly, wireless data revenues surged 52 percent to $2.5 billion. This is key for AT&T since it essentially put a cap on its wireless voice revenues when it unveiled a $99 unlimited voice plan earlier this year.

In all, AT&T's mobile operations gained another 1.3 million net subscribers to hit an overall total of 72.9 million wireless customers. Its churn rate, which has typically been one of the higher ones in the industry, slowed to a record low 1.1 percent.

In wireline, as expected AT&T continues to bleed access line subscribers while broadband subscriber gains continue to slow. The one bright spot in consumer wireline was U-verse which continues to ramp up on schedule.

Investors are satisfied for now with AT&T's results. The stock is up $0.83 (2.61 percent) to $32.65 in pre-market trading.

One area that could cause concern later today though is the company's guidance on capital expenditures. Some analysts have suspected lately that AT&T could lower its planned capex for the remainder of the year due to softness in the economy. (See Report: AT&T Slowing on U-verse.)

There was no mention of capex in the earnings release, but details could come later during the company's conference call at 10:00 AM E.T.

— Raymond McConville, Reporter, Light Reading

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