U-verse Growth Slows, but Still Gaining
Although its growth pace is clearly slowing down on an annualized basis, AT&T U-verse is continuing to make great strides against cable operators, Verizon FiOS and other US pay-TV providers -- and it's aiming to do more.
AT&T Inc. (NYSE: T) reported last week that it signed up another 216,000 subscribers for U-verse TV in the third quarter. While that's up from the 190,000 TV subs it picked up in the second quarter and the 201,000 TV subs it added in the first quarter, it's down from the 265,000 video customers it signed up in the year-ago period.
Yet even with the slower pace, AT&T put more distance between U-verse and Verizon Communications Inc. (NYSE: VZ)'s comparable FiOS platform, which added a relatively paltry 114,000 video subscribers in the summer quarter. As a result, U-verse now has nearly 6.1 million TV subs, as opposed to 5.5 million for FiOS. U-verse also has more pay-TV subs than all US cable operators except for the two biggest, Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Time Warner Cable Inc. (NYSE: TWC).
Likewise, on the broadband side, AT&T enjoyed a weaker, but still very solid, quarter. It signed up 601,000 U-verse high-speed data subscribers, down from the whopping 655,000 it picked up a year ago, but still among its strongest quarterly gains ever. It's also far more than the 162,000 Internet subs that FiOS gained in the third quarter.
With that increase, U-verse now boasts 12.1 million broadband customers, or 73% of AT&T's total wireline broadband base. Overall, though, the company added just 38,000 wireline broadband subs, as most of the U-verse gains came from converting over its DSL customers.
Thanks to these latest gains, U-verse TV's penetration rate is now nearly 22% of homes marketed, while U-verse Broadband's penetration rate is now 24% of homes marketed. Plus, almost two-thirds of U-verse TV subs take three or four services from AT&T.
Unlike Verizon, AT&T is still expanding U-verse's fiber footprint. So between that expansion and today's relatively low penetration rates of its two prime U-verse services, the carrier is looking for continued strong growth in quarters to come.
In addition, AT&T is counting on help from the accelerating rollout of GigaPower, its new 1Gbit/s broadband service. On the earnings call last week, company officials said GigaBlast has now launched in three major Texas cities -- Austin, Dallas and Fort Worth. Plans call for expanding service to 14 markets, including Atlanta, Chicago, Houston and Miami. (See AT&T's Austin GigaPower Debuts at 300 Mbit/s and AT&T Grows Gigabit Goals.)
— Alan Breznick, Cable/Video Practice Leader, Light Reading