AT&T trips up in its business of wireless and pay-TV services amid high-stake efforts to turn itself into a media and entertainment juggernaut, Bloomberg reported Wednesday.
The two important business measures missed Wall Street estimates in the fourth quarter, leading to shortfall in the overall sales. On Wednesday, AT&T stock dropped as much as 5.5 percent, the biggest intraday fall in three months.
The company a net 13,000 monthly wireless subscribers in the United States during the fourth quarter, far below from the predictions of nearly 252,000. The disappointment was further driven by a loss of 410,000 customers of non-phone devices such as tablets and smartwatches.
According to the Bloomberg News, AT&T has fallen victim in part to the same situation that’s bedeviling tech giants like Apple and other phone makers as consumers are hanging longer onto their smartphones. In the recent quarter, AT&T’s phone sales plunged around $500 million due to sluggish upgrades, CFO John Stephens said.
The Dallas-based company lost about 658,000 U.S. pay-TV subscribers, while analysts had anticipated a loss of 191,000 subscribers. The figures appear even worse in comparison with AT&T’s biggest rival in mobile services.
Verizon reported downbeat sales in the fourth quarter on Tuesday, but the company along with T-Mobile each gained about 1.2 million new wireless subscribers in the same quarter.
On the other hand, AT&T’s monthly churn or defection rate surged to 1.2 percent from 1.1 percent a year earlier.
The company’s shares close to $29.02, falling 5.4 percent in the early-hours trading. It lost 27 percent stocks last year, lagging behind Verizon’s 6 percent gain.
In a statement, AT&T’s CEO Randall Stephenson said that the company’s top priority is to reduce its debt and 2018’s record free cash flow will help that effort. At the end of the year, it had a net debt of $171.3 billion, following its acquisition of Time Warner which has taken a heavy load.
With that purchase in $85 million deal in 2018, the company is gambling that entertainment programming delivered to mobile phones and home TV sets can spark its passive revenue growth, as reported in Bloomberg.
AT&T’s pay-TV division, led by DirectTV, further continues to lose customers to fast-growing online business including Netflix and Prime Video. AT&T is currently working on developing online businesses of its own, using content from Time Warner, but it will possibly take time to catch on.