AT&T reported higher profits for the second quarter, as lower costs helped offset falling sales in its legacy fixed and consumer mobile activities. Revenues fell 1.8 percent to USD 39.8 billion, while operating profit improved to USD 7.3 billion from USD 6.6 billion a year ago, thanks to reductions in operating costs. The adjusted operating margin, which excludes merger-related costs and other one-time items, rose by 150 basis points year-on-year to 21.6 percent.
Net profit improved to USD 3.9 billion, or USD 0.63 per diluted share, from USD 3.4 billion, or USD 0.55 per share, in the year-ago quarter. Adjusted EPS rose to 79 cents from 72 cents a year earlier. AT&T reported free cash flow of USD 3.7 billion after capex of USD 5.2 billion in the quarter.
The Consumer mobile division reported service revenue down 6 percent to USD 6.5 billion, slightly less than the over 7 percent fall in the previous quarter. The EBITDA service margin was down to 50.1 percent from 50.5 a year ago.
AT&T added a net 81,000 consumer mobile customers in the quarter, for a total 51.706 million at the end of June. The operator gained 91,000 postpaid subscribers and 267,000 prepaid users in the three months, while losing 277,000 wholesale customers. Churn was down slightly from the previous quarter to 2.15 percent.
In the business market, AT&T also added 36,000 postpaid mobile customers, as well as another 2.170 million connected devices. Business mobile service revenue was slightly higher year-on-year, helping the EBITDA margin improve to 41.6 percent.
At the Entertainment division, which includes DirecTV and consumer fixed, revenues were little changed year-on-year at USD 12.7 billion, as the drop in legacy services offset growth in video and broadband. The EBITDA margin was down slightly to 24.6 percent.
The number of TV subscribers dropped by 199,000 in the three months to 25.172 million, with only the OTT service DirecTV Now growing (now almost half a million customers). Broadband customers rose by 8,000 to 14.302 million, thanks to growth in fibre, while voice lines were down by 307,000 from March to 10.696 million.
