AT&T reported first quarter results that showed better-than-expected performance in its wireless business, with net customer additions and churn surpassing most analyst expectations.
That's noteworthy considering AT&T generated nationwide headlines in February when its wireless network collapsed for hours. "Nationwide AT&T cell phone outage prevents emergency calls," reported The Washington Post. "AT&T Says It's 'Working Urgently' to Fix Widespread Cellular Disruption," noted The New York Times.
AT&T said the outage was "caused by the application and execution of an incorrect process used as we were expanding our network, not a cyber attack," and the operator said it would offer affected customers a $5 credit.
The outage wasn't AT&T's only first quarter problem. The company also reported the theft of personal information of 73 million current and former customers during the period.
But those events didn't seem to affect the operator's performance in the marketplace. AT&T reported the addition of 349,000 new postpaid phone customers during the first quarter of 2024, which was down from the 424,000 AT&T reported in the same quarter a year ago but up from the 308,000 that most financial analysts expected.
Moreover, AT&T's churn figure – the measure of the number of customers leaving the operator – was far below expectations and also a record-low for the operator in the first quarter.
"I'm upset we had it," AT&T CEO John Stankey said during the operator's quarterly conference call Wednesday, in response to a question about the operator's network outage. "We can do better."
But he noted that AT&T's customer and financial metrics during the first quarter were generally solid. "I'm sure there were a couple of days of suppressed activity," he said, but he added the slump was "measured in days, not weeks and months."
And what of the operator's data breach? "The bad actors have stepped up a level," Stankey said, explaining that he expects the "noise" around cybersecurity and cyber hacks to increase in the coming months. Indeed, regional Internet service provider Frontier recently reported a cybersecurity incident.
But Stankey said that, so far, such cybersecurity issues haven't significantly affected Wall Street's view of AT&T.
Stankey addressed three other hot-button issues:
He appeared to take a subtle swipe at AT&T rival Verizon, noting that AT&T's customer additions "aren't empty calorie additions." That may be a reference to Verizon's recent introduction of a $10 per month second line of service, which customers can add to their existing Verizon phone. Analysts estimate that Verizon reported roughly 35,000 of those second line customers among its postpaid phone customer additions in the first quarter, surprising investors and helping to send Verizon's shares down.
Stankey suggested AT&T is working to profit from network convergence across its 5G and fiber network, though he didn't provide specific details. "Convergence presents clear benefits," he said, arguing that AT&T gains more value out of customers in markets where it offers both fiber and 5G.
Finally, Stankey appeared to obliquely address a question about Apple's next iPhone, which is expected to be released in the fall with new AI capabilities. Stankey said AT&T doesn't expect any "out of pattern" activities based on new phone launches in the fall.
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