Revenue for telecommunications giant AT&T missed Wall Street expectations on Wednesday (April 24), due to a loss in subscribers throughout all of its various businesses besides wireless, according to a report by Reuters.
Even with the wireless customer gain, the company paid significantly with price promotions. AT&T lost about 544,000 premium TV subscribers, which includes its DirecTV satellite and U-verse television businesses.
It’s been difficult for traditional TV companies to keep subscribers as customers migrate to streaming services like Netflix, and AT&T is no exception. The company recently launched its own streaming service, but that also lost customers in the quarter.
Smartphone promotions also hurt revenue, and the company has been trying to move away from its dependence on the sector, which brings in about 40 percent of its operating revenue. AT&T’s attempt to add media content illustrates this, as it recently acquired Time Warner for $85 billion.
“Altogether, AT&T’s collection of assets remains challenged,” Jonathan Chaplin, an analyst with New Street Research, said in a note.
The company saw reductions in its wireline segment in both the top and bottom lines. WarnerMedia trends “were just okay,” Chaplin wrote.
The WarnerMedia unit, which includes Turner and HBO, reported a revenue of $8.38 billion for the quarter, which fell short of the analyst-predicted $8.45 billion.
The phone segment of AT&T’s business was a bright spot, however, adding a net of 80,000 subscribers, which easily beat analysts’ prediction of a loss of 44,000. The company heavily pushed promotions to break through in a market with steep competition.
However, Mobility, which is AT&T’s largest segment, saw revenue of $17.57 billion, which was lower than the estimated $17.65 billion predicted by analysts.
Shares in the company were down 3.9 percent on the news, at $30.84. The rate of customer defections, called postpaid phone churn, was up 0.84 percent from 2018, at 0.93 percent.
Another segment that saw decline was DirecTV Now, which lost an estimated 83,000 customers.
“AT&T’s first-quarter earnings give a clear signal that the company is willing to compromise on growth in the short term as it struggles to cut its heavy load of debt,” said Haris Anwar, senior analyst at Investing.com. “And it’s a wise thing to do considering the market is very concerned about the company’s balance-sheet risk.”