AT&T US down 658k; Vrio up 198k video subs in 4Q 2018

AT&T Reports Fourth-Quarter Results

DALLAS — AT&T Inc. (NYSE:T) reported strong Mobility and WarnerMedia results in the fourth quarter, including solid domestic wireless service revenue growth with record fourth-quarter wireless service margins. (On a GAAP basis, domestic service revenues declined 3.0%; however, on a comparable basis, service revenues grew 2.9%.)

Entertainment Group

Entertainment Group revenues were $12.0 billion, down 4.8% versus the year-earlier quarter, reflecting the impact of ASC 606 revenue recognition and declines in TV subscribers and legacy services. On a comparative basis, excluding the impact of revenue recognition, revenues were down 3.0%.

Total video revenues were down mostly due to declines in linear TV subscribers partly offset by higher advertising sales. Total video subscribers declined by 658,000 in the quarter. The Entertainment Group ended the quarter with 24.5 million total video subscribers.

• Linear video subscribers declined 391,000 in the fourth quarter due to an increase in customers rolling off promotional discounts as well as competition from over-the-top services. Satellite subscribers declined by 403,000 in the quarter, and IPTV subscribers increased by 12,000.
• DIRECTV NOW lost 267,000 subscribers as the company scaled back promotions and the number of customers on entry-level plans declined significantly; however, the number of customers on higher-tiered plans remained stable. AT&T WatchTV has more than 500,000 established accounts and engagement from those subscribers actively using the service has been increasing.

Video (in thousands)

                                                                           Three Months Ended
               ------------------------------------------------------------------------------
                3/31/17   6/30/17   9/30/17  12/31/17   3/31/18   6/30/18   9/30/18  12/31/18
               --------  --------  --------  --------  --------  --------  --------  --------
Connections
 Satellite       21,012    20,856    20,605    20,458    20,270    19,984    19,625    19,222
 U-verse          4,020     3,825     3,691     3,631     3,632     3,656     3,669     3,681
 DIRECTV NOW        339       491       787     1,155     1,467     1,809     1,858     1,591
               --------  --------  --------  --------  --------  --------  --------  --------
Total            25,371    25,172    25,083    25,244    25,369    25,449    25,152    24,494

Net Adds                  
 Satellite            0      -156      -251      -147      -188      -286      -359      -403
 U-verse           -233      -195      -134       -60         1        24        13        12
 DIRECTV NOW         72       152       296       368       312       342        49      -267
               --------  --------  --------  --------  --------  --------  --------  --------
Total              -161      -199       -89       161       125        80      -297      -658

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.

Vrio revenues reflect price increases driven by macroeconomic conditions with generally depreciating local currencies. Total Vrio revenues were $1.1 billion, down 22.8% year over year due primarily to foreign exchange pressures. Operating income was $56 million with continued positive cash flow for the year.

Fourth-quarter subscriber net adds were 198,000 with gains in the South Region and Brazil. Total subscribers at the end of the quarter were 13.8 million. Sky Mexico had approximately 7.8 million subscribers as of September 30, 2018.

Video (in thousands)

                                                                           Three Months Ended
               ------------------------------------------------------------------------------
                3/31/17   6/30/17   9/30/17  12/31/17   3/31/18   6/30/18   9/30/18  12/31/18
               --------  --------  --------  --------  --------  --------  --------  --------
Connections      13,678    13,622    13,490    13,629    13,573    13,713    13,640    13,838
Net Adds             91       -56      -132       139       -15       140       -73       198