Phone sales

AT&T beats revenue estimates as reopening helps phone sales

The AT&T company logo is displayed on a floor screen at the New York Stock Exchange (NYSE) in New York, U.S., September 18, 2019. REUTERS/Brendan McDermid

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April 22 (Reuters) – AT&T Inc (TN) beat Wall Street revenue targets as the reopening of the U.S. economy following pandemic-related restrictions boosted smartphone sales and the media sector.

AT&T shares jumped 5.3% to $31.70 in morning trading.

The company said Thursday it added 595,000 net wireless phone subscribers in the first quarter, more than double what analysts had expected.

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AT&T’s controversial decision to make its entire slate of 2021 theatrical movies available to streaming customers has at the same time helped the company attract 2.7 million new subscribers for HBO and HBO Max.

The theatrical release of “Godzilla vs. Kong,” which was also available to HBO Max subscribers, grossed over $80 million at the US box office and over $300 million worldwide as the No. 1 over the past three weekends, and represented an early endorsement of WarnerMedia CEO Jason Kilar’s strategy.

In an interview, Kilar said that the company’s slate of 2022 films, especially big hits, will return to theaters, but a portion will be offered the same day on HBO Max.

“I don’t think we would go back to…2016 where the windows were quite long and tall,” he said.

Shares of streaming rival Netflix fell 11% on Monday after reporting a sharp slowdown in new customer additions globally. In the United States and Canada, Netflix added 450,000 new paid subscribers.

HBO and HBO Max now have 63.9 million subscribers worldwide, compared to more than 100 million for Walt Disney Co’s Disney+ and 207.6 million for Netflix.

A cheaper version of HBO Max supported with ads is set to launch in June.

AT&T has invested heavily in its new 5G wireless network and bundles its HBO Max streaming service for free with certain phone plans to retain customers and prevent them from switching to competitors.

Wireless phone churn, or the rate of customer no-shows, fell 0.1% in the first quarter to 0.76%. The improvements were partly due to the bundling of HBO Max with more expensive phone plans.

Ahead of HBO Max’s launch last year, AT&T Chief Executive John Stankey said a single basis point, or 0.01%, of churn improvement is about $100 million. wireless revenue. The improvement this quarter would have represented approximately $1 billion in wireless revenue.

AT&T’s revenue rose nearly 3% to $43.9 billion, beating analysts’ average estimate of $42.69 billion, according to IBES data from Refinitiv.

Excluding items, AT&T earned 86 cents a share, above analysts’ estimate of 78 cents.

WarnerMedia, which includes HBO, has begun to recover from the ravages of the pandemic during which sporting events and film productions were halted. WarnerMedia’s revenue rose 9.8% to $8.5 billion.

AT&T added 235,000 new fiber internet customers as Americans continued to work from home during the pandemic, driving demand for home Wi-Fi.

The company’s net debt reached $169 billion at the end of the first quarter, due to its purchase of more wireless spectrum or airwaves that carry data.

Separately, rival Verizon Communications Inc (VZ.N) said it lost more wireless subscribers than expected in the first quarter as it battled intense competition from T-Mobile US Inc (TMUS.O). and AT&T to attract customers. Read more

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Reporting by Akanksha Rana in Bengaluru and Sheila Dang; Editing by Shinjini Ganguli

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