Business, consumer IP help lift AT&T's Q1 wireline results

AT&T's (NYSE: T) Q1 2010 wireline revenues, while nothing to write home about, were buoyed by credible gains in both its consumer U-verse and IP-based business service segments. IP services overall made up 37 percent of its wireline revenue, up from 27.8 percent from the previous quarter.

During the quarter, AT&T reported $30.6 billion in sales, missing analyst expectations of $30.7 billion. At the same time, net income declined 21 percent to $2.48 billion, from $3.12 billion in Q1 09. AT&T attributes the revenue decline to a non-cash, one-time charge related to the treatment of taxation on the Medicare Part D subsidy.

On the business side, IP data revenue was the star performer. During the quarter, business IP data revenues grew 5.5 percent, led by 16.7 percent growth in VPN revenues. Also contributing to IP business growth was a 9.4 jump in global enterprise IP data revenue. Another factor that could lead to more IP growth is the fact that about two-thirds have transitioned over from legacy Frame Relay to all IP-based data solutions, a transition that will enable these customers to bolt on other new managed services including network security, hosting and IP conferencing.

Consumer IP revenues were also up in Q1 2010. Not surprisingly, the big contributor to consumer IP-based services growth was U-Verse. In Q1 2010, AT&T added 231,000 new U-Verse subscribers, bringing its total IPTV subscriber base to 2.3 U.S. homes. Along with IPTV, AT&T also added 255,000 U-verse Internet subscribers, the company's strongest quarterly net additions in a year.

Still, wireline revenue was off by 12 percent and income declined 17 percent over 2009. These factors can be attributed to the ongoing telecom industry's trend of consumers cutting the landline cord in favor of either cable voice or wireless voice substitution.

AT&T's consumer wireline segment results weren't all doom and gloom, however. Rick Lindner, AT&T's CFO, said the company's "first sequential growth in wireline consumer revenues in quite some time," is attributable to the ongoing growth of its U-Verse product set. 

For more:
- see the earnings release here
- FierceIPTV has this article

Related articles:
AT&T: Wireless, IP-based data drive Q4 09 performance
AT&T: U-Verse on track - Fiber to the X