AT&T -1.8% AH on Q2 miss, wireless service revenue decline

AT&T (NYSE:T) had 1.03M mobile postpaid net adds in Q2, above June guidance of 800K+. 707K smartphone net adds and 366K tablet net adds fueled the increase, which compares with 1.4M postpaid adds for Verizon.

However, prepaid subs fell by 405K, a decline much worse than Q1's 50K. Part of the decline stemmed from the loss of Cricket (Leap Wireless) subs. Reseller sub losses totaled 164K vs. 206K in Q1.

Wireless service revenue -1.4% Y/Y to $15.1B (46% of total revenue), and contributing to the Q2 miss; AT&T previously guided for no Q2 growth, as the adoption of cheaper Mobile Share plans take their toll. Phone-only postpaid ARPU fell 7.7%.

On the bright side, postpaid churn fell to 0.86% from 1.02% a year ago. 80% of postpaid phone subs have smartphones vs. 73% a year ago.

Wireless equipment sales (pressure margins) +44.8% to $2.8B thanks to strong adoption of AT&T's Next smartphone upgrade plans (drove 3.1M smartphone gross adds/upgrades). Wireless EBITDA margin fell 220 bps to 35.5%.

Wireline revenue -0.9% to $14.6B (45% of total) . Wireline voice connections fell by 758K to 27M, and broadband connections by 55K to 16.4M. U-verse TV connections grew by 190K to 5.9M.

U-verse revenue +24.8% Y/Y, allowing residential revenue to rise 3% to $5.7B. Business revenue fell 2.9% to $8.7B.

Only $159M was spent on buybacks, a big slowdown from recent quarters.

AT&T is reiterating guidance for 2014 free cash flow of ~$11B, and capex of $21B.

Q2 results, PR

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Comments (6)
  • dostoevsky228
    , contributor
    Comments (330) | Send Message
    Just proves once again how lame Randi Stephenson is as CEO compared to Lowell McAdam at VZ! Reflected in the stock price of both....Thanks once again Randi!
    23 Jul 2014, 09:19 PM Reply Like
  • bucs_2205
    , contributor
    Comments (70) | Send Message
    I always love people with a short-term perspective. Keep on selling things like T - I'll keep buying. I really do hope you're not making investment decisions on the "lameness" of a CEO.
    23 Jul 2014, 09:35 PM Reply Like
  • dostoevsky228
    , contributor
    Comments (330) | Send Message
    Like the bucs...$4.3 billion reasons to dislike the so called lame CEO.


    Check out T vs. the S&P 500 the past 5..6...7..years


    I suppose you like Dogs of the Dow as well
    24 Jul 2014, 03:46 PM Reply Like
  • bucs_2205
    , contributor
    Comments (70) | Send Message
    It's not about what I like and don't like. I was just saying that I hope you're not making financial decisions based on the "lameness" of a CEO. What I invest in has no bearing on what you invest in and the same goes for me with regard to what you invest in. There's a billion different strategies but, just as hope is not a strategy, neither is investing based on the "lameness" of a CEO.


    As for T, I'm not in this for the short-term. Every company goes through ups and downs. I'm going to continue to stick with this 130-year old winner and the fantastic dividends they pay. The same goes for VZ (another one of my holdings). I have a pretty good feeling in 30 years, when I'm 57, that if I stick to my DGI strategy then I won't regret my decision.
    24 Jul 2014, 05:24 PM Reply Like
  • dostoevsky228
    , contributor
    Comments (330) | Send Message
    I am a long-time and long-term T holder, (my 2nd largest holding). So, i am and have been frustrated with Mr. Stephenson and the Board for some time, given recent...and recent being the past 5-7 years, is not 10, 15,20 (where T looks stronger) performance and company direction. I own VZ as well, less than T, and just see how VZ has clearly outdistanced itself from T in operations, earnings, merger synergies and feel that T is now so ensconced as #2 carrier, that t-Mobile is now it's most pertinent rival and persistent gadfly.


    When stephenson barks out on the conference call about T having the lowest churn rate in 5 years, well of course, i bundle with T and they just lowered my monthly call plan, so of course people are not going to leave when there bill gets lower, but that then of course that reduction is reflected in the revenue, earnings, misses! It just seems it is all smoke and mirrors and i know it is his job to present the best face, i just wish he presents a more coherent and cohesive vision and plan.


    Over the yeas how many different companies was T in talks with or possibly merger options. I wonder if DTV is his makeup/do over for the T-mobile fiasco?


    But indeed the dividend makes one sleep well, even with the recent paltry increases.
    25 Jul 2014, 11:26 AM Reply Like
  • Veritas1010
    , contributor
    Comments (3352) | Send Message
    Yes, bucks_2205 otherwise who would buy GE?


    Just waiting for T to drop again...give me your unloved dividend aristocrats yearning to increase payouts.


    disc.: long T, VZ.
    23 Jul 2014, 10:37 PM Reply Like
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