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AT&T Q1 Profit Tops View, But Revenues Miss

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AT&T Inc. (T) reported a profit for the first-quarter that increased 11.8 percent from last year, while quarterly operating revenues declined 4.6 percent.

Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates.

The company's net income attributable to common stock for the first-quarter increased 11.8 percent to $4.58 billion from the prior year's $4.10 billion, with earnings per share improving to $0.63 from $0.56 in the previous year.

Adjusting for $0.21, which included merger-amortization costs, a one-time spectrum gain, merger- and integration-related expenses and other items, earnings per share was $0.84 compared to an adjusted $0.86 in the year-ago quarter.

Adjusted earnings per share for the latest-quarter were $0.89. Analysts polled by Thomson Reuters expected the company to report earnings of $0.85 per share for the first-quarter. Analysts' estimates typically exclude special items for the quarter.

Operating expenses were $35.3 billion, down 6.1 percent from last year, primarily due to a one-time gain on a spectrum transaction, lower costs of revenues at Entertainment Group business unit and WarnerMedia segment, lower wireless equipment costs resulting from lower device sales and cost efficiencies.

First-quarter operating income was $7.5 billion compared to $7.2 billion in the comparable 2019 period.

But, total operating revenues declined 4.6 percent to $42.78 billion from $44.83 billion last year. Growth in domestic wireless service revenues and strategic and managed business services revenues partially offset declines in revenues from WarnerMedia, domestic video, legacy wireline services, domestic wireless equipment and Vrio. Analysts expected revenues of $44.21 billion for the quarter.

Mobility revenues for the first quarter were $17.4 billion, up 0.2 percent from the prior year, driven by higher service revenues resulting from prepaid subscriber gains and postpaid phone average revenue per subscriber (ARPU) growth, partially offset by decreased equipment revenues with lower handset upgrade rates including impacts from store closures related to COVID-19.

In Mobility business unit, the company reported a net gain of 3.3 million wireless subscribers during the first quarter of 2020. At March 31, 2020, wireless subscribers totaled 169.2 million compared to 154.7 million at March 31, 2019.

During the first quarter, total phone net adds were 120,000. Postpaid subscriber net adds were 27,000, with phone net adds of 163,000 offsetting losses from tablets. Prepaid subscriber net adds were a loss of 45,000, with phone net losses of 43,000.

For the quarter ended March 31, 2020, postpaid phone-only ARPU increased 0.7 percent versus the year-earlier quarter.

Postpaid phone-only churn was 0.86 percent, compared to 0.92 percent in the first quarter of 2019. Total postpaid churn was 1.08 percent, compared to 1.16 percent in the year-ago quarter.

Entertainment Group revenues for the first quarter of 2020 were $10.5 billion, down 7.2 percent versus the year-ago quarter, reflecting continuing declines in video subscribers and legacy services that were partially offset by higher broadband revenues.

Approximately 19.4 million video connections--including 788,000 AT&T TV Now subscribers-- at March 31, 2020 compared to 23.9 million at March 31, 2019. During the first quarter of 2020, premium TV video subscribers, which included AT&T TV, had a net loss of 897,000. AT&T TV NOW, over-the-top video service, subscribers had a net loss of 138,000.

The company's WarnerMedia segment consists of Turner, HBO and Warner Bros. business units. First-quarter 2020 operating revenues were $7.4 billion, down 12.2 percent versus first-quarter 2019.

The company had withdrawn its fiscal year 2020 financial guidance, due to the uncertainty of the COVID-19 pandemic and recovery.

In Wednesday pre-market trade, T is trading at $30.10, up $0.23 or 0.77 percent.

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