U.S. telco looks ahead to close of Time Warner deal, more compelling bundled offerings

AT&T saw its video customer base decline in the third quarter of the year as the popularity of its streaming service failed to offset the growing trend of U.S. consumers abandoning traditional satellite and U-verse subscriptions.

The U.S. telco is focusing squarely on becoming a major content player, with its US$85.4 billion acquisition of Time Warner due to close very soon, but it cannot ignore the fact that its traditional telecoms business is under threat. AT&T saw group revenues fall due to declines in turnover from legacy services and its postpaid mobile phone business lost more customers.

Comments made by chief executive Randall Stephenson alongside the publication of the numbers suggest that AT&T is banking on the Time Warner takeover to turn things around.

"We look forward to closing our acquisition of Time Warner and bringing together premium content with world-class distribution to deliver a better entertainment experience for consumers and more effective targeted advertising," Stephenson said.

"We’re also on track to have one of the largest high-speed Internet networks in the U.S., reaching more than 50 million customer locations with competitive high speeds," he added. "This expansion will make our bundled video, mobile and broadband services even more compelling."

Having predicted as much a fortnight ago, AT&T recorded 89,000 video customer net losses in Q3, its customer base shrinking to just over 25,000. Its satellite business, acquired as part of the 2015 DirecTV deal, lost 251,000 customers while U-verse connections dropped by 134,000; both businesses were cannibalised by the growing popularity of DirecTV Now, which added 296,000 customers to take its total to 787,000, a year after launch.

On the mobile side, where the telco is vying for customers with arch-rival Verizon, as well as with soon-to-be-merged (probably) Sprint and T-Mobile US, AT&T saw revenues slide by just over 4% to US$17.44 billion.

AT&T Mobility saw its total number of connections grow by 5.49 million to 138.83 million, but the closely-watched postpaid phone net adds figure – essentially, the telco’s most valuable customers – came in at a loss of 97,000.

At group level, AT&T posted consolidated revenues of $39.67 billion, down by 3% on the year-ago quarter, while operating income as flat at $6.4 billion. Net profit attributable to the company stood at $3.03 billion, compared with $3.33 billion a year ago.