AT&T wireline rises 2.4% with strong gains in next-gen consumer, business services

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The saving grace for AT&T's (NYSE: T) wireline unit in Q1 2012 continues to be its IP-based consumer U-verse service and next-gen businesses services, the company's Tuesday morning report shows.

AT&T Q1 2012

Click here for selected slides from AT&T's investor presentation.

AT&T's wireline operating income was $1.8 billion, up 2.4 percent over Q1 2011, yet down 1.2 percent from Q4 2011. Likewise, total Q1 wireline revenues were $14.9 billion, down 0.8 percent versus the same period in 2011 and down slightly sequentially.

However, AT&T said that "improved consumer and business strategic services revenue trends and execution of cost initiatives helped to partially offset declines in voice revenues provider relates the expected declines in its traditional wireline voice business."

Here's a breakdown of the service provider's key metrics:

  • Landline losses: As expected, AT&T continued to see revenue decline in its wireline voice subscriber base. During the quarter, AT&T's voice lines declined to 37.8 million.  
  • Broadband and video: U-verse broadband and TV services continued to perform well in Q1 2012, driving up total wireline consumer revenues up 1 percent to $5.4 billion. As of the end of the quarter, AT&T had total of 6.2 million U-verse subscribers (both TV and Internet). During the quarter, it added 200,000 U-verse TV subscribers to reach 4.0 million in service. What was also revealing about the Q1 numbers was that the U-verse high speed Internet attach rate was over 90 percent and about half of the new subscribers took AT&T U-verse voice services. What's more, about three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option, driving up ARPU for U-verse triple-play customers to $169 a month. It also added 718,000 new U-verse high speed subscribers to reach a total of 5.9 million, offsetting losses from DSL. Overall, AT&T added 103,000 wireline broadband connections.
  • Business services: Business service revenues declined 0.3 percent year-over-year, narrower than the 4.4 percent in Q1 2011, a factor that's attributable to declines in legacy products like Frame Relay. However, revenues from strategic business services, including Ethernet, VPNs, hosting, IP conferencing and application services grew 19 percent in the quarter. Next-gen services represent a $6.2 billion annualized revenue stream.

From an overall financial perspective, AT&T reported consolidated revenues of $31.8 billion, up $575 million, or 1.8 percent, over Q1 2011. Diluted earnings per share came in at $0.60, up 3 cents year over year.

Wall Street liked AT&T's results as the service provider's shares rose up $1.04, or 3 percent, to $31.65 in morning trade on the New York Stock Exchange (NYSE).

For more:
- see the release
- Reuters
has this article

Special report: Wireline in the first quarter of 2012

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