AT&T subscriber growth misses estimates, shares fall

Tue Jan 28, 2014 5:08pm EST
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NEW YORK (Reuters) - AT&T Inc, the No. 2 U.S. mobile provider, had slower wireless subscriber growth in the latest quarter than Wall Street had estimated, sending its shares down 1.6 percent in late trade.

AT&T also added fewer subscribers in the latest quarter than two big rivals, Verizon Wireless and T-Mobile US. Investors have been worried that AT&T could become embroiled in a mobile price war. No. 4 U.S. mobile service T-Mobile US has spent months directly marketing to AT&T customers while AT&T recently offered to pay T-Mobile customers to switch.

While AT&T trailed T-Mobile in subscriber growth, Jefferies analyst Michael McCormack said the company's customer defection rate, known in the industry as churn, and its wireless profit margin were better than expected.

"I think the market was expecting a much worse result in terms of wireless profitability and market share losses," said McCormack who had expected churn of 1.19 percent compared with AT&T's reported rate of 1.11 percent.

AT&T reported subscriber net additions of 566,000 for the quarter, well short of the average Wall Street expectation for 636,000 according to eight analysts contacted by Reuters.

It's growth trailed market leader Verizon Wireless which had 1.6 million subscriber additions, and T-Mobile U.S. which had 869,000.

However, AT&T reported stronger than expected wireless profitability with a service margin of 37.4 percent, compared with 29.1 percent in the year-ago quarter and analyst expectations closer to 34 percent.

It reported fourth-quarter earnings of $6.9 billion, or $1.31 per share, compared with a loss of $3.86 billion, or 68 cents per share in the year-ago quarter when it had a massive actuarial charge.

The latest quarter included a pension related gain.   Continued...

An AT&T wireless store front is pictured in in San Diego, California October 23, 2013. REUTERS/Mike Blake