AT&T unexpectedly loses postpaid subscribers in first quarter

AT&T unexpectedly loses postpaid subscribers in first quarter

AT&T (T) this afternoon reported Q1 revenue that missed analysts' expectations and profit that was in line with consensus, citing "challenging" market conditions.

AT&T finally made its unlimited-data plan available to all customers in the first quarter after offering it only to subscribers of its DirecTV service. It declined to say how many people subscribed to DirecTV Now, though company executives said they weren't giving up on the online TV service and plan to advertise it more heavily later this year.

AT&T, the biggest US pay-television operator after its $49 billion acquisition of DirecTV, reported its video business lost 233,000 customers in the quarter.

AT&T added 2.7 million customers, on a "gross" basis, of which 2.1 million in the US, driven by the "pre-paid" variety.

AT&T is trying to diversify by buying Time Warner Inc TWX.N in a $85.4 billion deal that would give it control of cable channels like HBO and CNN as well as film studio Warner Bros. In the competitive consumer wireless market, AT&T has been focused on retaining its most profitable customers and shying away from promotional offers to grab market share.

More news: Honeywell beats Street 1Q forecasts

Net income attributable to AT&T was $3.47 billion, or 56 cents a share, down from $3.80 billion, or 61 cents a share, in the year-ago period. Twenty analysts surveyed by Zacks expected $40.66 billion.

Business wireless revenue was down 2.1 percent year over year to $9.4 billion, reflecting lower equipment revenues from lower sales.

T-Mobile US Inc TMUS.O and Sprint Corp S.N also offered new unlimited promotions, and AT&T cut the price on its own plan.

Looking ahead, AT&T reiterated its previously announced full-year earnings guidance. AT&T also said it had 1.8 million connected devices on the 2G network it shut down in January; those 2G customers were removed from the company's subscriber count at the beginning of the year. AT&T says that because it can not predict handset sales in advance, it no longer will forecast revenue for future quarters. AT&T reported its best ever first-quarter postpaid phone churn of 0.9 percent and wireless postpaid churn of 1.12 percent.

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