AT&T earnings unchanged, but revenue grows in 1Q

ANICK JESDANUN

NEW YORK (AP) — AT&T said Tuesday that its first-quarter earnings were unchanged from the first three months of last year, but revenue grew as the wireless business added more than 1 million subscribers.

First-quarter net income was $3.7 billion, or 70 cents per share, compared with $3.7 billion, or 67 cents, a year earlier, when AT&T had more shares outstanding. Adjusting for one-time items, including costs related to its March acquisition of Leap Wireless, income was 71 cents per share, compared with 64 cents in the same period last year. Analysts expected 70 cents.

Revenue grew 4 percent to $32.5 billion, better than the $32.4 billion analysts expected, according to FactSet.

Nonetheless, AT&T's stock fell 1.9 percent to $35.60 in afterhours trading after the release of results.

AT&T added 1,062,000 wireless subscribers in the quarter. That includes 625,000 smartphones and tablets in "post-paid" plans. These are the high-value customers on contracts or long-term installment plans. Wireless service revenue grew 2 percent to $15.4 billion. Total wireless revenue, including phones and tablets sales, grew 7 percent to $17.9 billion.

AT&T said its installment plan, Next, was popular and grew during the quarter. Although Next customers aren't locked into traditional two-year service contracts, they pay the entire cost of phones in installments, so AT&T doesn't have to pay hundreds of dollars per customer in subsidies.

Among new customers of post-paid smartphones and those upgrading to new devices, more than 40 percent, or about 2.9 million, signed up for Next. That was up from 15 percent in the last three months of 2013.

AT&T also has been pushing customers into more expensive plans that offer larger amounts of data —by reducing prices at the high end.

"Customers really like the new mobility value proposition and are choosing to move off device subsidies to simpler pricing while at the same time, they are continuing to move to smartphones with larger data plans," AT&T CEO Randall Stephenson said in a statement.

In the landline business, revenue fell 0.4 percent to $14.6 billion. But its newer U-verse phone, TV and Internet service saw growth. AT&T had 634,000 additional high-speed Internet subscribers and 201,000 TV subscribers.