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AT&T reports an up and down quarter that reveals slowing subscriber growth

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AT&T released its earnings for the second quarter of 2015, and there’s plenty for AT&T to be both happy and somewhat concerned about.

First, the good news: AT&T reported arevenue of $33.02 billion, a 1.4 percent bump from last year across the same period. Reuters polled analysts, who estimated AT&T to report $33.04 billion in revenue, so AT&T essentially matched expectations. In addition, revenue in the company’s wireless business rose by 2.1 percent to $18.3 billion.

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Unfortunately, everything else should give AT&T and shareholders pause, starting with the $3.04 billion in profits AT&T reported for the second quarter. By itself, it’s an impressive number, but AT&T actually reported $3.55 billion during the same period last year.

Secondly, AT&T saw a huge decrease in postpaid customer additions, or customers who opt for two-year contracts or monthly payment installments, with the company reporting 410,000 postpaid additions. This compares to the 1.03 million subscribers AT&T added a year ago, a significant dropoff since the postpaid sector is where many telecom companies, including AT&T, make a good portion of their money.

Overall, AT&T added 2.1 million subscribers, with 331,000 of them opting to go prepaid.

Also on the negative side of the ledger, AT&T reported a churn rate, the rate at which postpaid subscribers leave the network, of 1.01 percent. Again, an impressively low number on its own, but when you compare it to the 0.86 percent churn rate the company reported last year, the trend starts to look like it’s not AT&T’s friend.

AT&T remains confident in its results during the second quarter. “These results reaffirm our transformation strategy,” said AT&T chairman and CEO Randall Stephenson. The company has reason to remain confident, given how AT&T’s acquisition of DirecTV is looking more like a slam dunk with each passing day. AT&T also successfully acquired Nextel Mexico and Iusacell in a bid to create the first-ever North American Mobile Service area, which seeks to offer coverage to over 400 million subscribers in the U.S. and Mexico.

Williams Pelegrin
Williams Pelegrin
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