AT&T US down 297k; Vrio down 73k video subs in 3Q 2018

Wednesday, October 24th, 2018 
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AT&T Reports Third-Quarter Results

  • 49,000 DIRECTV NOW net adds with 346,000 net losses in traditional video as company focuses on improving profitability and begins beta test of new streaming video device
  • More than 10 million customer locations passed with fiber

DALLAS — AT&T Inc. (NYSE:T) reported solid revenue, earnings and free cash flow growth in the third quarter led by gains in Mobility and WarnerMedia. Wireless results in the third quarter included positive postpaid phone net adds, strong prepaid phone gains and growing service revenues. (On a GAAP basis, service revenues declined 3.4%; however, on a comparable basis, service revenues grew 2.3%.)

Entertainment Group

Entertainment Group revenues were $11.6 billion, down 7.0% versus the year-earlier quarter, reflecting the impact of ASC 606 revenue recognition, declines in linear TV subscribers and legacy services and the revenue impact of the Mayweather-McGregor event in the year-ago quarter. On a comparative basis, excluding the impact of revenue recognition, revenues were down 5.4%.

Total video subscribers declined by 297,000 in the quarter as DIRECTV NOW subscriber additions partially offset linear video declines. The Entertainment Group ended the quarter with 25.2 million total video subscribers.

  • Linear video subscribers declined 346,000 in the third quarter due to an increase in customers rolling off promotional discounts as well as competition from over-the-top services. Satellite subscribers declined by 359,000 in the quarter, and IPTV subscribers increased by 13,000.
  • DIRECTV NOW added 49,000 subscribers and has a total subscriber base of nearly 1.9 million. AT&T WatchTV, the newest video product, also added subscribers in the quarter.

Video (in thousands)

                                                                                     Three Months Ended
               ----------------------------------------------------------------------------------------
               9/30/16  12/31/16   3/31/17   6/30/17   9/30/17  12/31/17   3/31/18   6/30/18    9/30/18
               --------  --------  --------  --------  --------  --------  --------  --------  --------
Connections
 Satellite       20,777    21,012    21,012    20,856    20,605    20,458    20,270    19,984    19,625 
 U-verse          4,515     4,253     4,020     3,825     3,691     3,631     3,632     3,656     3,669
 DIRECTV NOW          -       267       339       491       787     1,155     1,467     1,809     1,858
               --------  --------  --------  --------  --------  --------  --------  --------  --------  
Total            25,292    25,532    25,371    25,172    25,083    25,244    25,369    25,449    25,152
                                    
Net Adds                  
 Satellite          323       235         0      -156      -251      -147      -188      -286      -359
 U-verse           -326      -262      -233      -195      -134       -60         1        24        13
 DIRECTV NOW          -       267        72       152       296       368       312       342        49
               --------  --------  --------  --------  --------  --------  --------  --------  --------
Total                -3       240      -161      -199       -89       161       125        80      -297

Latin America

The Latin America segment includes wireless services in Mexico and pay-TV entertainment services in Latin America under Vrio. AT&T is a leading provider of pay television services in Latin America with satellite operations serving Argentina, Brazil, Chile, Colombia, Ecuador, Peru, Uruguay, Venezuela and parts of the Caribbean. The company also owns 41% of Sky Mexico. Sky Mexico financial results are accounted for as an equity-method investment.

Vrio revenues reflect price increases driven by macroeconomic conditions with generally depreciating local currencies. Total Vrio revenues were $1.1 billion, down 19.1% year over year due primarily to foreign exchange pressures. Operating income was $57 million with continued positive free cash flow year to date.

  • Third-quarter subscriber net losses were 73,000 with gains in Brazil offset by losses in other regions due to the completion of the World Cup. Total subscribers at the end of the quarter were 13.6 million. Sky Mexico had approximately 8.0 million subscribers as of June 30, 2018.

Video (in thousands)

                                                                                     Three Months Ended
               ----------------------------------------------------------------------------------------
                9/30/16  12/31/16   3/31/17   6/30/17   9/30/17  12/31/17   3/31/18   6/30/18   9/30/18
               --------  --------  --------  --------  --------  --------  --------  --------  --------
Connections      12,476    12,455    13,678    13,622    13,490    13,629    13,573    13,713    13,640
Net Adds            -48       -21        91       -56      -132       139       -15       140       -73

More: Results release

Links: AT&T