For AT&T, U-verse saves landline segment's bacon in an otherwise dismal first quarter earnings report

U-verse TV and broadband services are driving a transformation of AT&T's (NYSE:T) consumer business, with revenues from IP now comprising more than 37 percent of the company's wireline business, up from 27.8 percent in the previous quarter. AT&T showed a slight increase in its wireline consumer revenues from last quarter, a bump the company attributed solely to the success of U-verse.

For AT&T fans, there wasn't a whole lot more to cheer about when the big telco rolled out its first quarter results today. It reported sales of $30.6 billion; analysts expected $30.7 billion. It added 512,000 net contract subscribers; just 57 percent of the 900,000 it added in the same quarter a year ago. And it spiraled on. Net income was down 21 percent to $2.48 billion, from $3.12 billion a year ago. EPS? Down, from 53 cents to just 42 cents. Wireless, once an engine of growth for the company, has stalled as the U.S. market saturates, much as the market has matured in Europe.

What good news there was came served up on the U-verse platter.

AT&T said it added 231,000 U-verse subs, taking the telco's total IPTV audience to some 2.3 million households in the U.S., that's an add of more than 1 million customers in the past 12 months, a strong showing for the five-year-old service. It also reported that it had added 255,000 U-verse Internet subscribers, the company's strongest quarterly net adds in a year. But, even with those numbers, wireline revenue was off 12 percent, and income was down 17 percent from a year ago, a continuation of the nation's trend away from landlines.

AT&T CFO Rick Lindner, meanwhile, said AT&T's "first sequential growth in wireline consumer revenues in quite some time," an 0.8 percent improvement from the 4Q09, was due, primarily, to U-verse.

More than three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T. AT&T's U-verse deployment now reaches approximately 24 million living units. Companywide penetration of eligible living units is 13 percent, and across areas marketed to for 24 months or more, overall penetration exceeds 20 percent. AT&T's total video subscribers, which combine the company's U-verse and bundled satellite customers, reached 4.4 million at the end of the quarter, representing 16.9 percent of households served.

The company said increased U-verse penetration drove 32.5 percent year-over-year growth in consumer IP revenues (broadband, U-verse TV and U-verse Voice) and a 5.8 percent increase in revenues per household served. U-verse continues to drive a transformation in AT&T's consumer business, reflected by the fact that consumer IP revenues now represent 37.4 percent of AT&T's consumer wireline revenues, up from 27.8 percent in the year-earlier quarter.

For more:
- see the AT&T release
- see the Wall Street Journal article

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