When all the numbers shook out, U-verse TV was a bigger first-quarter deal for AT&T (NYSE: T) than broadband, even though the carrier reported more new broadband subscribers.
Click here for charts outlining AT&T's Q1 2013 earnings report.
According to first quarter figures, AT&T added 731,000 U-verse Internet customers during the period, but most likely they were among the 606,000 DSL customers who left the service--probably to switch over to U-verse. On the other hand, it's easy to say that the 232,000 U-verse TV customers the carrier garnered are all new to the service. AT&T joined Verizon (NYSE: VZ) FiOS, which gained 169,000 new TV subscribers in the period, as advancing forward, not backward, in the pay TV space.
As a whole, "U-verse continues to shine," said John Stephens, senior executive vice president and CFO in a prepared statement during a conference call with analysts.
The carrier now has 4.8 million U-verse video subscribers and "added more subscribers than we have in any quarter over the last two years," Stephens noted.
U-verse was also a moneymaker. The division's revenues grew 31.5 percent year-over-year and 5 percent over the first quarter of 2012. Year-over-year residential customer revenues of $5.5 billion were 2 percent higher over the year previous, helping offset lower revenues from voice and legacy products. The carrier said that U-verse revenues now represent 48 percent of wireline consumer revenues as opposed to a year ago when they represented 38 percent and two years they were 27 percent.
Those numbers should grow as AT&T begins the rollout of what it calls Project Velocity IP (Project VIP) in which it will invest $14 billion dollars over the next three years to expand and enhance its wireless and wireline IP broadband networks beyond the existing U-verse markets.
"I'd expect that as we expand the footprint and get additional coverage that we get out of velocity, you'll continue to see some really solid numbers and some pressure from the success of sales," Stephens said.
Project VIP, Stephens said, depends heavily on the integration of LTE wireless with wireline U-verse to fill coverage gaps where wired service is not possible. The U-verse TV penetration rate for existing markets is 19.4 percent.
"It's still early, but we already have made tremendous progress with our LTE deployment," he pointed out. "We are running ahead of schedule with nearly 200 million LTE POPs covered to date and we expect to complete nearly 90 percent of our 300 million POP LTE buildout by the end of this year."
AT&T, like other pay TV service providers, increased its dependence on bundled services—high-speed Internet, voice and, unlike many cable operators, wireless. The carrier said that 90 percent of new U-verse TV customers sign up for high-speed Internet as well and that ARPU for U-verse triple play customers was above $170 as about 70 percent of subscribers took three or four services.
Since U-verse has yet to expand out of its existing markets, Stephens was quick to credit the subscriber and revenue gains on "really quality execution by our people and their teams" who "focused on reducing churn, they focused on shortening installation times, they focused on converting customers from legacy DSL services to high-speed U-verse services."
- see the release
- and AT&T's investor presentation
Earnings roundup: Wireline telecom earnings in the first quarter of 2013
In detail: AT&T's Q1 2013 earnings results
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