AT&T will announce its third-quarter results on Oct. 25 and at least one analyst firm is predicting broadband subscriber losses will be a part of it.
In a new research note, Wells Fargo analyst Jennifer Fritzsche said she expects AT&T will lose a net 15,000 broadband subscribers. Specifically, Fritzsche anticipates 160,000 IP broadband additions will be offset by 175,000 DSL losses.
The loss would sharply contrast with the 74,000 net broadband additions that AT&T recorded in the second quarter. Following that most recent quarter, AT&T’s total wireless broadband subscriber sits right around 14.2 million.
Losing broadband subs would be somewhat of a setback for AT&T, which was the only telco out of the top four that didn’t give up broadband subs in the second quarter. CenturyLink lost 65,000, Verizon lost 13,000 FiOS internet subscribers, and Windstream lost 16,000.
In addition to expected broadband subscriber losses, Wells Fargo also predicts AT&T’s entertainment group will see its margins shrink during the third quarter. The firm adjusted its estimates from 24.5 percent to 23.5 percent, due in part to the cost impact of NFL Sunday Ticket.
“The seasonal impact from the NFL Sunday Ticket is expected to weigh more on 2H results than 1H. Legacy DTV accounting used to smooth revenue over the length of the contract whereas now T will recognize revenue as it’s realized from the customer,” wrote Fritzsche. “COGS will be realized pro rata over the number of NFL weeks in each quarter. There were 3 weeks of NFL games in Q3, and will be 13 in Q4, hence we expect continued pressure in Q4 from the Sunday Ticket.”
At the same time NFL programming agreements are putting pressure on AT&T, the league is apparently seeing a somewhat unprecedented dip in viewership. According to research firm CivicScience, NBC’s Sunday Night Football average audience dropped 10 percent through the first four games of the season, while viewership of the NFL’s Thursday night games has dropped 15 percent and ESPN’s Monday Night Football viewership fell 19 percent.