AT&T first quarter 2014 results will provide reason for both optimism and concern. AT&T posted better earnings than anticipated by analysts, with revenues up about 3.5 percent.
Mobile revenues grew seven percent. But service revenues grew about 2.2 percent, compared to four percent, in the same quarter a year ago. That, some would say, is evidence that pricing in the U.S. mobile market has gotten more challenging.
Mobile subscriber growth of eight percent was lead by an increase in prepaid subscribers and net additions from the company’s Leap Wireless acquisition.
Total net adds of more than one million included more than half a million branded smartphone accounts (both postpaid and prepaid) and 313,000 branded tablet net adds
On an “organic” basis, net subscriber growth was driven by a 16 percent increase in “connected device” users.
Total wireless average revenue per user declined two percent year over year from $46.89 to $45.98, while the total churn rate was 1.4 percent, and postpaid churn rate was 1.07 percent.
Revenues from fixed network residential customers totaled $5.7 billion, an increase of 4.3 percent year over year, as well.
U-verse, which includes TV, high speed Internet and voice over IP, now, represents 59 percent of fixed network consumer revenues, up from 48 percent a year earlier, while consumer U-verse revenues grew 28.3 percent year over year.
Total fixed network broadband ARPU was up nine percent year over year. Total U-verse high speed Internet subscribers now represent more than 66 percent of all fixed network broadband subscribers, compared with 51 percent in the same quarter a year ago.
That is performance many tier-one service providers would love to tout.
But some will note slowing growth in the mobile segment. Where year over year mobile revenues grew seven percent, AT&T says it will see rest-of-year revenue growth, overall, of about four percent.
In fairness, AT&T now faces several key developments that could well affect near term subscriber growth, revenues and profits.
An accounting change for AT&T “Next” plans, shifting from a carrier subsidy to end user installment plan buying of devices, means that AT&T that will recognize a bigger chunk of the device revenues upfront.
In the past, AT&T accounted for only the subsidized price of mobile device as “revenue.” With an installment plan approach, AT&T books the full cost of the device as revenue. And that is why device revenues likely surged in the first quarter.
But, eventually, that also could result in lower device revenue in coming quarters.
Edited by
Maurice Nagle
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