AT&T cites decline in DirecTV domestic video

AT&T reported Q1 2019 of $44.8 billion versus $38.0 billion in the year-ago quarter, up 17.8%, primarily due to the Time Warner acquisition.

AT&T cited declines in legacy wireline services, Vrio, wireless equipment and domestic video. Growth areas included WarnerMedia, domestic wireless services and Xandr. Operating income was $7.2 billion versus $6.2 billion in the year-ago quarter, primarily due to the Time Warner acquisition, with operating income margin of 16.1% versus 16.3%.

First-quarter net income attributable to AT&T was $4.1 billion, or $0.56 per diluted share, versus $4.7 billion, or $0.75 per diluted share, in the year-ago quarter. Adjusting for $0.30, which includes merger-amortization costs, merger- and integration-related expenses, a non-cash actuarial loss on benefit plans and other items, earnings per diluted share was $0.86 compared to an adjusted $0.85 in the year-ago quarter.

Cash from operating activities was $11.1 billion, and capital expenditures were $5.2 billion. Capital investment – which consists of capital expenditures plus cash payments for vendor financing – totaled $6.0 billion, which includes about $800 million of cash payments for vendor financing. Free cash flow — cash from operating activities minus capital expenditures — was $5.9 billion for the quarter.

Highlights:

Mobility

• Service revenues up 2.9%; operating income and EBITDA growth with postpaid phone and prepaid net adds
• 179,000 postpaid smartphone net adds in the U.S.
• 80,000 postpaid phone net adds
• 96,000 prepaid net adds of which 85,000 are phones

Entertainment Group:

• 13% operating income growth with solid ARPU gains
• 6.9% EBITDA growth as company targets stability
• Focus on long-term value customer base
• 22.4 million premium TV subscribers – 544,000 net loss
• 1.5 million DIRECTV NOW subscribers – 83,000 net loss
• Nearly 300,000 AT&T Fiber gains; 45,000 broadband net adds with broadband revenue growth of more than 8%
• 12.4 million customer locations passed with fiber

WarnerMedia

• Solid revenue growth with strong operating income growth with gains in all business units
• Turner subscription revenue growth
• HBO digital subscriber growth continued as last season of Game of Thrones begins
• Strong Warner Bros. revenue and operating income growth

Latin America

• 93,000 Mexico wireless net adds

Xandr

• Advertising revenues grew by 26.4% largely due to the AppNexus acquisition