AT&T -1.7% AH; postpaid adds increase, but service rev. growth slows

|About: AT&T Inc. (T)|By:, SA News Editor

AT&T (T) had 625K postpaid net adds in Q1 (313K via branded tablets), up from 566K in Q4. Connected device net adds totaled 693K; prepaid and reseller net losses respectively totaled 50K and 206K.

However, wireless service revenue rose just 2.2% Y/Y, down from 4.8% in Q4 (did price cuts play a role?). Meanwhile, wireless op. margin only rose 30 bps to 28.3% after growing 690 bps in Q4.

Churn was at 1.39% vs. 1.43% in Q4 and 1.38% a year ago. Smartphones now account for 78% of AT&T's postpaid base, up from 77% in Q4 and 72% a year ago. AT&T's Next upgrade program saw 2.9M sign-ups. That contributed to a 52% Y/Y increase in equipment sales (pressured margins).

Total wireless subs +8% Y/Y to 116M. Postpaid subs +4% to 73.3M.

Wireline revenue fell 0.4% Y/Y vs. 1.4% in Q4; op. margin fell 110 bps to 10%. 634K and 201K U-verse Internet and TV subs were added vs. 630K and 194K in Q4. Total U-verse revenue rose 29% Y/Y.

Wireline voice connections -11% Y/Y to 27.7M, broadband connections nearly flat at 16.5M, video connections +19% to 5.7M.

$1.2B was spent on buybacks, down from $1.9B in Q4. AT&T is reiterating full-year capex and free cash flow guidance of $21B and $11B, respectively.

Q1 results, PR