Naysayers that predicted dire outcomes at AT&T were happily proved in the wrong, as the US behemoth traded a reduction of $800 million in voice revenues for an increase of $1.3 billion in mobile revenues this week in its second quarter, with revenues rising 4.7% to $30.9 billion on the quarter, and net income up just shy of 30% to $3.8 billion.
It eased the market’s nerves by saying that its U-verse TV subscribers rose by 170,000 in the quarter to 549,000 in service, on target to hit its predicted 1 million by the end of 2008. There were fears that failure to hit those numbers would trigger stock panic on many of the suppliers that are at all dependent upon AT&T (see separate item). AT&T said that U-verse network deployment is on schedule, and install times are falling and attach rates for broadband service rising.
“Our results demonstrate the great strength of AT&T’s assets and our ability to execute with focus and discipline,” said Randall Stephenson, AT&T chairman and chief executive officer. “Earnings growth continues to be solid, our wireless momentum is strong, our major growth and cost-reduction initiatives are on track, and we continue to return substantial value to shareowners.
AT&T’s cash from operating activities for the second quarter was $8.5 billion, with capex held to $5.3 billion, resulting in a free cash flow of $3.2 billion.
The effect of the iPhone was clearly in evidence in its wireless results with more than 1.3 million net gains in wireless subscribers to 72.9 million and postpaid subscriber churn down to 1.1%, the lowest in the company’s history.