AT&T reported what analysts consider a solid second quarter, with revenue of $40.52 billion and a net profit of $3.4 billion, up from $33 billion in revenue and $3.08 billion in net income in the same quarter last year.
The company, which reported its second-quarter earnings July 21, saw its consolidated revenue rise by more than 22 percent from one year ago, largely due to its acquisition of DirecTV in July 2015. That acquisition has brought in increased revenue and net income each quarter since the takeover.
“One year after our acquisition of DirecTV, the success of the integration has exceeded our expectations,” Randall Stephenson, AT&T chairman and CEO, said in a statement. “Cost synergies are ahead of target, we’ve added nearly 1 million DirecTV subscribers since the acquisition, and our new video streaming services are scheduled to roll out later this year. We plan to serve every segment of the video industry and offer customers their favorite content virtually wherever and whenever they want it.”
Diluted earnings per share for the second quarter are 55 cents, down slightly from the 59 cents posted one year ago.
In its consumer mobile business, AT&T announced it has 54.26 million total subscribers, down from 54.72 million in the same quarter one year ago. It logged 27.86 million postpaid subscribers for the latest quarter, a drop from 29.84 million one year ago. On the other hand, the company saw its prepaid subscribers grow in this interval to 12.63 million from 10.44 million.
The company’s customer churn rate for the second quarter was 1.96 percent overall, up from 1.86 percent one year ago, while its postpaid churn rate was 1.09 percent, down from 1.16 percent one year ago.
AT&T said it added 342,000 DirecTV net customers in the United States in the quarter and 38,000 global TV net adds. Since the DirecTV acquisition, AT&T said it has posted nearly 1 million U.S. additional DirecTV customers.
“Second-quarter results continued our strong track record of delivering revenue, adjusted earnings and free cash flow growth,” Stephenson said in his statement. “This steady execution done at scale gives us the financial strength to grow our business while returning substantial value to our shareholders.”
Several IT analysts told eWEEK that the company’s second-quarter results were pretty positive.
“I think AT&T delivered a very solid quarter, especially in light of the earlier acquisition of Direct TV and integrating its assets and services into its infrastructure,” Charles King, principal analyst of Pund-IT, told eWEEK. “If there was any disappointment, it was that the addition of new DirecTV customers has been lagging behind what the company had hoped.”
That shouldn’t take away from the company’s latest quarterly earnings, he said. “Other than that, it was a solid quarter. The company continues to perform well, and it had a terrific year overall.”
Bill Menezes, an analyst with Gartner, said the numbers show that AT&T’s “consumer wireless business continues to struggle in the face of unrelenting competition from Verizon and T-Mobile,” but that it was picked up a bit by its value-conscious Cricket prepaid mobile business. “The vast majority of the company’s overall subscriber adds again were connected devices, underscoring a growing reliance on new devices, such as connected home and Internet of things devices, to generate new connections and service revenue.”
Menezes also noted that since 93 percent of AT&T’s smartphone sales during the quarter were unsubsidized phones, “AT&T’s strategy of moving away from phone subsidies continues at a rapid pace. It won’t be long before all of the major carriers join T-Mobile as ‘no contract’ providers exclusively.”
Rob Enderle, principal analyst at Enderle Group, told eWEEK that AT&T had a “surprisingly strong quarter … given how much pressure T-Mobile has been putting on the segment.”
AT&T posted “good growth in virtually all reported segments and no real negative surprises,” said Enderle. “Customer satisfaction is being reported as up, as well, suggesting they may be addressing what has been an historic problem with the company. Even DirecTV showcased strong growth, which was surprising. It isn’t often a firm of this size reports earnings with this much diverse good news.”
AT&T acquired DirecTV for $48.5 billion in July 2015 after pursuing the merger for more than a year.