AT&T U-verse, IP business services drove Q3 2011 wireline growth

AT&T's (NYSE: T) wireline success in Q3 2011 was largely driven by ongoing growth in its U-verse IPTV and IP-based business services.

As has been the case in the most recent quarters, IP-based consumer and business services were the star performers in AT&T's wireline portfolio, with strong gains in its IP-based U-verse TV and voice services and strategic business services such as Ethernet and IP/VPNs.

AT&T's Business Solutions unit saw its first sequential revenue gain since 2008.

John Stephens, AT&T's CFO said that he was "very optimistic" that the increase in wireline business customers, a segment that represents 29 percent of its overall revenue, would continue.

"The fact we grew sequential revenue in wireline business this quarter. That is important," Stephens said in a Reuters article.

AT&T Q3 2011 slides

Click here for a detailed view of AT&T's Q3 2011 results

Here is a rundown of AT&T's key wireline metrics in the quarter:

Consumer Services: The consumer wireline segment was driven by ongoing growth in IP data services. Residential revenues totaled $5.3 billion, an increase of 0.2 percent versus the third quarter a year ago, the fifth consecutive quarter of year-over-year growth. As expected, AT&T reported a decline in total consumer revenue connections due to ongoing declines of traditional voice access line revenue, a factor slightly offset by increases in U‑verse TV, broadband and VoIP connections. During the quarter, AT&T added 119,000 U-verse voice connections in the quarter and 648,000 over the past four quarters. At the end of Q3 2011, there were 41.9 million total consumer revenue connections, compared with 43.7 million at the end of the third quarter of 2010 and 42.5 million at the end of the second quarter of 2011.

Video Services: Once again, the star performer in AT&T's consumer portfolio was U-verse TV. During the quarter, the telco added 176,000 subscribers to reach 3.6 million in service. What was more revealing about these numbers was the U‑verse High Speed Internet attach rate was 90 percent and about half of new subscribers took AT&T U‑verse Voice. About three-fourths of AT&T U‑verse TV subscribers have a triple- or quad-play option from AT&T. These factors drove up U‑verse triple-play ARPU to almost $170, up 5.7 percent year over year. As of the end of the quarter, AT&T's total video subscriber count, which combines U-verse and satellite customers, reached 5.4 million households.

Business Services: While business service revenues increased 0.7 percent sequentially, on a year-over-year basis they declined 2.7 percent from Q3 2010. The service provider attributes the year-over-year decline to economic weakness in voice and legacy data projects that were slightly offset by growth in IP-based data services like Ethernet and IP VPNs. Representing an almost $5.8 million annualized revenue stream in the business segment, Ethernet and IP VPN services revenue, in particular, grew 19.3 percent over Q3 2010.

From an overall financial perspective, AT&T reported that operating revenue declined slightly from $31.58 billion in Q3 2010 to $31.48 billion, missing analyst's expectations of $31.60 billion.

Meanwhile, the service provider reported a profit of $3.6 billion, or 61 cents a share, which met Wall Street analyst expectations.

For more:
- see the release
- Reuters has this article
- see these slides from the AT&T presentation

Earnings summary: Wireline in the third quarter 2011

Related articles:
AT&T integrates social media apps with U-verse TV service
AT&T video services lead J.D. Power customer satisfaction study, but cable wins with voice
Battling for subscribers: Cable MSOs and telcos square off
Telcos make progress with IPTV, but cable gains upper hand in triple play battle
AT&T recruits 100 technicians to build out U-verse in Kansas

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