Quarterly Report: U-verse Subs Just Keep On Growing

AT&T added 202,000 net U-verse TV subs during the second quarter, raising that platform’s total to approx 3.41 million while penetration sits at 15.5 percent.

Miller Tabak’s David Joyce notes the telco’s loss of 34,000 co-marketed satellite subs that “so far keeps us satisfied with our cable company video subscriber estimates.” That outlook includes year-per-year basic customer improvement for Comcast, Time Warner Cable and Charter plus digital acceleration for Charter.

With U-verse largely defined by soaring wireline revenue growth (+57 percent) and its $6.5 billion annualized revenue stream, AT&T’s senior executive vice president/CFO John Stephens insists the platform has the telco “on the cusp” of overall wireline growth. Perhaps most impressive was the company’s net addition of 439,000 U-verse Internet customers, significantly more than had been estimated. Stephens underscores
a notable influx of small business Internet customers, saying the broadband speeds his company offers coupled with other business services proffers “a competitive advantage for us.”

However, Sanford Bernstein’s Craig Moffett douses some of the bullishness, saying the “very strong” U-verse results “weren’t enough to offset losses in legacy DSL (a very weak -451,000, much worse than consensus of -190,000).” Joyce contends AT&T likely retained a lot of those subs through upgrades, and Stephens notes that while LTE will help stem the tide, the T-Mobile merger represents “the longer-term answer” to DSL’s demise.

As the telco added 162,000 U-verse voice subs and shed approximately 516,000 traditional voice lines, U-verse’s triple-play customers, who represent 75 percent of the platform’s total subscriber base, pushed ARPU to $170 (up 8.3 percent).

On the wireless side, AT&T delivered 1.1 million net adds, including 379,000 connected devices, while tallying 5.6 million smartphone sales. Smartphones now make up more than half of the carrier’s contract base. Wireless data revenues increased 23 percent to $5.4 billion.

In separate but related AT&T news, AT&T General Counsel Wayne Watts believes the pending merger with T-Mobile USA remains on track to close in 1Q12, even though it’s being opposed by Senate Antitrust Subcommittee Chairman Herb Kohl (D-Wisc.) and other lawmakers.

 “We simply disagree,” says Watts of Kohl’s stance, noting the senator is “not a decision maker.” However, the Federal Communications Commission is, and it stopped the 180-day deal-review clock two days ago because it has yet to receive information concerning of the efficiencies made possible by the merger as weighed against the potential anti-competitive effects.”