AT&T reported lower results for the third quarter, hurt by weakness in the consumer market and costs for hurricane damage. However, the company said it's on track to meet its full-year targets and is confident of closing its takeover of Time Warner soon.
Revenues for the third quarter totaled USD 39.7 billion, down from USD 40.9 billion a year ago due mainly to declines in legacy wireline services and consumer mobile. Hurricanes and earthquakes in the third quarter took another USD 100 million off revenue.
A reduction in operating costs led to flat operating profit of USD 6.4 billion, and the margin increased to 16.1 percent from 15.7. OIBDA fell to USD 8.1 billion from USD 8.3 billion, with a flat margin of 20.3 percent.
AT&T's net profit totaled USD 3.0 billion, or USD 0.49 per diluted share, down from USD 3.3 billion or USD 0.54 per share a year ago. Adjusting for USD 0.25 of costs for amortization, merger and integration expenses and other items including hurricane and earthquake impacts, earnings per share was USD 0.74, the same as in the year-ago quarter.
Operating cash flow totaled USD 11.1 billion in the third quarter and USD 29.3 billion year to date. Capital expenditures rose slightly to USD 5.3 billion in the quarter, leaving free cash flow of USD 5.9 billion for the period.
Cord-cutting hurts, Time Warner deal delayed
As flagged earlier, AT&T lost TV customers for a third quarter running, down by 89,000 in the third quarter to 25.08 million. The losses at the satellite TV service DirecTV accelerated to 251,000 in the three months, and the U-verse also lost 134,000, while the online service DirecTV Now continued to grow, gaining 296,000 subscribers for a total 787,000.
Broadband customer growth also remained weak, with only 29,000 net additions for a total 14.33 million customers at the end of September. The expansion of fibre services helped AT&T add 125,000 subscribers, while DSL lost another 96,000 customers.
The weak customer growth and continued declines in voice services led to a fall in total revenues at the Entertainment division of 0.5 percent to USD 12.65 billion. EBITDA dropped 10 percent to USD 2.695 billion, and the margin fell to 21.3 percent from 23.5 a year ago.
AT&T is banking on its proposed takeover of Time Warner to help turn around its results in the video and broadband market. In a SEC filing earlier this week, the company said it's extended the deadline for completing the merger as it awaits US regulatory clearance still in the US. The companies previously targeted a closing of 22 October, but now aim for completing the deal by year-end.
Mobile results lower
AT&T's results were also down in the consumer mobile market. Service revenues dropped 5.9 percent to USD 6.51 billion, and EBITDA fell 9.1 percent to USD 3.197 billion. The company reported net additions of just 14,000, for a total 51.428 million, down by some 2.5 million from a year ago. While branded net adds in Q3 totaled 426,000, this was offset by a loss of 412,000 connections for connected devices and resellers. Churn increased to 2.37 percent, but postpaid churn was relatively stable year-on-year at 1.17 percent.
