AT&T Inc. reported a 17% increase in quarterly profit on Tuesday after the company acquired DirecTV however the company did fumble its efforts to add new customers for its wireless and video subscription services.
In an attempt to diversify the telecom giants’ business from wireless services (which currently accounts for nearly 50% of total revenue) the company is integrating its $49 billion acquisition of DirecTV making AT&T the largest pay-TV provider in the United States.
During the quarter, AT&T’s wireless business saw a drop in 363,000 mainstream phone connections whilst the telco saw 54,000 video subscribers leave despite seeing gains from DirecTV.
Wells Fargo did forecast an estimated loss of 200,000 phone customers after Verizon announced a loss of 8,000 last week and T-Mobile US Inc. boasted new additions of 877,000 customers in the quarter.
New phone customers are seen as a key performance indicator for the company as they feed in more revenue than other products/services and contracts are typically for longer durations. During the period overall mainstream connections which includes tablets increased by 129,000 totalling overall numbers at 77.1 million.
Within its new video focus AT&T developed its DirecTV service whilst taking its emphasis off U-verse, its old product away. During the final quarter more customers left U-verse than was gained on their DirecTV offering as 382,000 connections were lost and just 328,000 were gained.
Despite the overall drop the company does plan to report additional video customers by the end of the year according to CFO John Stephens.
For the quarter ended March 31, net income increased to $3.8 billion, or 61 cents a share, from $3.26 billion, or 63 cents in the same period in the prior year. Revenue was boosted by 24% to $40.54 billion following the DirecTV acquisition whilst wireless service revenue remained the same at $14.8 billion. Analysts who were polled were expecting revenue of $40.47 billion with earnings per share of 69 cents.
At current wireless carriers are developing their video proposition as it drives the majority of wireless traffic and in turn increases revenue. Verizon has launched go90 which is its own mobile videos service while T-Mobile offers free video streaming for customers who wish to use major video services.
Looking forward AT&T said it is planning to save $1.5 billion annually by the end of the year following its acquisition of DirecTV.