Wireless Pumps AT&T's Q1

With fears of a weakening economy and fixed access line connections shrinking across the industry, AT&T Inc. (NYSE: T) once again delivered strong quarterly results mainly due to its strength in wireless. Total net income was up more than 20 percent.

For the first quarter of 2008, AT&T earned $3.46 billion, or 58 cents per share, on revenues of $30.74 billion. In the same quarter last year, it earned $2.85 billion, or 46 cents per share, on revenues of $28.97 billion. This is the first quarter in which AT&T’s results for both this year and the previous year contain the combined results of the old AT&T and Bellsouth.

Table 1: AT&T's 2008 First Quarter Results
1Q08 1Q07 y/y Change
Revenue (Millions) $30,744 $28,969 +6.1%
Earnings (Millions) $3,461 $2,848 +21.5%
GAAP EPS $0.58 $0.46 +26.1%
Access Lines 60,415,000 65,429,000 -7.7%
Broadband Subscribers 14,647,000 12,861,000 +13.9%
U-Verse Subscribers 379,000 13,000 +2815.4%
DISH Network Subscribers 2,232,000 1,684,000 +32.5%

AT&T’s U-verse IPTV service growth continues to accelerate as planned. The company added 148,000 customers to reach a total of 379,000. That makes for about 12,000 subscriber adds per week -- a number AT&T expects to grow to 25,000 by the end of the year to reach its goal of 1 million subscribers.

Some analysts think this target is modest. UBS AG ’s John Hodulik wrote in a note yesterday that he estimates AT&T’s IPTV connections will exceed 1.1 million by year’s end.

But wireless was the star financially, as it has been in recent quarters. AT&T’s wireless operating income rose 94 percent from $1.4 billion to $3 billion. Wireless revenues were up 16.9 percent to $10.6 billion. AT&T added 1.3 million wireless customers and now has a total of more than 71.3 million.

Traditional voice services weakened as AT&T lost nearly 1.2 million fixed access lines -- a 12.2 percent faster rate than the same quarter last year. Revenues from voice services are off 7.3 percent -- which is the only sector where AT&T posted a loss. (See Landline Landslide Will Lead to More Layoffs.)

Another area for concern is broadband where despite posting double-digit gains in both revenue and subscriber adds, the growth continues to decline. Broadband subscribers were up 13.9 percent but this number is down from 17.9 percent last quarter and 74.1 percent in the same quarter last year.

AT&T’s stock is up $0.61 (1.62%) to $38.20 in pre-market trading.

— Raymond McConville, Reporter, Light Reading

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