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AT&T: Money? Oh, sure, no I'm fine – I'm doing great (if you ignore my phone business)

Wireless drops bolstered by DirecTV cash

AT&T says wireless revenues are down in what was an otherwise solid quarter for the US telecom giant.

Its second quarter of 2016 [PDF] period was, overall, a success thanks to solid returns from the newly-acquired DirecTV. They were, however, tempered by falling revenues in other areas.

  • Quarterly revenues were $40.5bn, up 22 per cent on the year-ago quarter.
  • Net income of $3.4bn represents a 10 per cent gain over last year's $3.1bn.
  • The Entertainment Group, which includes DirecTV, logged $12.7bn in revenue, a 120 per cent jump from the year-ago quarter (before the acquisition was complete).
  • Business Solutions, a group that includes both mobile and land-line services, was flat at $17.6bn in revenue, a 0.5 per cent decrease from last year.
  • Consumer wireless revenues of $8.2bn were down 6.5 per cent on the year-ago quarter. AT&T added 1.4 million subscribers, but said it suffered from slower hardware sales.
  • Non-GAAP earnings per share of 72 cents matched analyst estimates for the quarter.

In talking up the quarter, AT&T CEO Randall Stephenson was careful to omit the dropping mobile revenues.

"Second-quarter results continued our strong track record of delivering revenue, adjusted earnings and free cash flow growth," he said.

"This steady execution done at scale gives us the financial strength to grow our business while returning substantial value to our shareholders."

Part of the drop in mobility revenues was blamed on changes in consumer behavior – particularly the changing upgrade cycle. AT&T says that as customers are opting to keep old devices longer and new users are bringing their existing devices into new plans rather than buying another phone, this led to a 5.5 per cent decrease in wireless revenues for AT&T on the quarter.

Such a trend has been noted by analysts and vendors alike recently, as smartphone shipments have been down globally.

AT&T stock was down one per cent in after-hours trading. ®

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