Telecom Conglomerate AT&T Q1 Earnings Expected To Get DirecTV Boost

By | April 25, 2016

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Telecom conglomerate AT&T ’s ( T ) first-quarter EPS is expected to rise 10%, with revenue up 24%, boosted by its acquisition of satellite broadcaster DirecTV last July. AT&T is slated to release earnings after the market close on Tuesday. Analysts expect that like Verizon Communications ( VZ ), which on Thursday reported Q1 revenue below views, AT&T’s results will be affected by fewer upgrades to new mobile phones. That trend improves wireless profit margins but lowers equipment revenue. Excluding AOL, acquired last June, Verizon said its Q1 revenue fell 1.5%, as wireless revenue fell 1.4% to $22 billion. “With installment payment plans becoming the industry norm, nearly 70% of AT&T smartphone subscribers are on unsubsidized plans,” said Jim Breen, an analyst at William Blair, in a research report Monday. “Customers are increasingly waiting longer to upgrade their phones. “This has a negative impact on revenue because AT&T records the entire value of handsets as revenue at the point of sale. We believe that AT&T’s wireless service revenue will be pressured throughout 2016 as more customers are migrated to new (installment payment) plans.” Analysts are looking for an update on AT&T’s success in selling bundles of wireless and video services to current DirecTV subscribers as well as to new customers. Another earnings call topic could be operating synergies with DirecTV. AT&T has been renegotiating programming contracts, lowering per-subscriber costs. DirecTV added 60,000 U.S. subscribers in Q1 2015. That quarter, AT&T added 331,000 postpaid wireless subscribers that are billed monthly, including tablet users, but lost 256,000 postpaid phone lines. AT&T has lost  postpaid phone subscribers for five straight quarters amid aggressive promotions by T-Mobile US ( TMUS ) and Sprint ( S ). In Q1, analysts estimate revenue of $40.48 billion, up 24% from the year-earlier period. Analysts polled by Thomson Reuters estimate earnings per share of 69 cents, up 10%. Image provided by Shutterstock . Scalper1 News

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