AT&T slips following guidance; no wireless service growth in Q2

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

AT&T's (T -0.6%)  forecast for 2014 EPS growth to be at the low end of a prior mid-single digit growth is overshadowing its revenue guidance hike.

Also: AT&T says it expects no wireless service revenue growth in Q2, as a T-Mobile-fueled price war pressures its ARPU. Service revenue grew 2.2% Y/Y in Q1, and 4.8% in Q4.

Q2 wireless service EBITDA margin (already under pressure in Q1) to be dinged in Q2 by service revenue weakness and higher equipment sales; the latter stems from strong adoption of AT&T's Next smartphone upgrade plans. The margin is expected to be above 40% from Q2-Q4; it was at 45.4% in Q1.

One bright spot: Q2 wireless postpaid net adds are expected to top 800K, after coming in at 625K in Q1. Postpaid churn is expected to be at 0.95% or lower, down from 1.02% a year ago.

Next smartphone sales are expected to rise to 3.2M from Q1's 2.9M, and make up ~50% of total sales. Roughly half of all postpaid smartphone subs are now on subsidy-free Mobile Share Value plans, and ~2/3 are expected to be on one by year's end.