AT&T exceeds subscriber estimates, returns to Ma Bell roots

AT&T Inc. topped Wall Street wireless subscriber growth estimates as phone giveaways continue to fuel customer gains, giving the company a favorable start as it parts with its media business and returns to its roots as a telecom giant. The spinoff of WarnerMedia this month means AT&T is back to the old grind of competing with cable companies. Only this time, the battle isn’t over selling bundles—TV, internet and phone at the lowest price—it’s about the quality of the broadband connection, whether it’s wireless or fiber, AT&T CEO John Stankey said. “We’re kind of at that golden age of connectivity that’s starting to emerge,” Stankey said in an interview on Thursday. AT&T made a well-timed exit from the media and streaming business this month ahead of Netflix Inc.’s disappointing results Tuesday that knocked down the value of nearly all of the streaming-service companies. AT&T spun off and merged its WarnerMedia division with Discovery Inc. to create Warner Bros. Discovery. RSVP for Ad Age In-Depth: TV Pivot on May 24 and 25 at AdAge.com/TVPivot HBO and HBO Max, now part of Warner Bros. Discovery, have a total of 76.8 million subscribers worldwide, up 3 million last quarter. In the U.S., HBO and HBO Max have 48.6 million customers. Analysts expected domestic subscribers to be 48.8 million. The average U.S. HBO monthly bill was $11.24. AT&T shares rose more than 4% on Thursday morning after the company reported adding 691,000 regular monthly phone subscribers in the first three months of the year, exceeding the 437,000 that analysts predicted. And earnings, excluding some items, of 77 cents a share on $38.1 billion in sales topped analyst estimates for earnings of 75 cents and revenue of $37.7 billion. Free cash flow fell to $700 million from $4.2 billion a year earlier, a number that included $1.8 billion payment from DirecTV. The company is using cash to spend heavily on its 5G network buildout and is still expecting to generate $16 billion in free cash flow this year. The company still sees generating $20 billion in cash flow next year. Net debt grew to $169 billion in the first quarter from $156.2 billion in the fourth quarter. The company received $40 billion in the Discovery merger to use toward debt reduction. Subscribe to Ad Age now for award-winning news and insight. —Bloomberg News

AT&T exceeds subscriber estimates, returns to Ma Bell roots

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