- Shares of streaming rival Netflix sank 11% on Monday after it reported a sharp slowdown in new customer additions globally;
- AT&T Latin America provides pay-TV services across 10 countries and territories in the region and wireless services to consumers and businesses in Mexico.
AT&T beat Wall Street revenue targets as the reopening of the U.S. economy following pandemic-linked restrictions boosted smartphone sales and the media business.
The company said on Thursday it added 595,000 net wireless phone subscribers in the first quarter, more than double what analysts had expected.
Shares of AT&T surged 4.25% to $31.40 in premarket trading.
AT&T’s controversial move to make its entire 2021 theatrical movies slate available to its streaming customers at the same time helped the company attract 2.7 milllion new subscribers for HBO and HBO Max.
The services now have a total of 44.2 million U.S. subscribers, AT&T said.
Its movie release of “Godzilla vs. Kong” has generated over $80 million at the U.S. box office and over $300 million globally as the No. 1 film over the past three weekends.
AT&T has been investing heavily in its new 5G wireless network and bundling its streaming service HBO Max for free with certain phone plans to retain customers and keep them from switching to competitors.
Wireless phone churn, or the rate of customer defections, declined 0.1% in the first quarter to 0.76%. The improvements were, in part, due to the bundling of HBO Max to higher-priced phone plans.
Revenue for AT&T was up nearly 3% at $43.9 billion, beating analysts’ average estimate of $42.69 billion, according to IBES data from Refinitiv.
Excluding items, AT&T earned 86 cents per share, above analyst estimates of 78 cents.
WarnerMedia, which includes HBO, began to recover from the ravages of the pandemic during which sports events and movie productions were paused. Revenue for WarnerMedia rose 9.8% to $8.5 billion.
AT&T added 235,000 new fiber internet customers, as Americans continued to work from home during the pandemic, driving up demand for home Wi-Fi.
The company’s net debt rose to $169 billion at the end of the first quarter, due to its purchase of more wireless spectrum, or airwaves that carry data.
Separately, rival Verizon Communications Inc has said it lost more wireless subscribers than expected during the first quarter as it battled intense competition from T-Mobile US Inc and AT&T to attract customers.
HBO Max in Latin America
AT&T Latin America provides pay-TV services across 10 countries and territories in the region and wireless services to consumers and businesses in Mexico.
In June, the company will launch HBO Max in Latin America and the Caribbean, its first market outside the US, as LABS anticipated in May 2020. The launch will hit the following countries and territories: Anguilla, Antigua, Argentina, Aruba, B.V.I., Bahamas, Barbados, Belize, Bolivia, Brazil, Cayman Islands, Chile, Colombia, Costa Rica, Curacao, Dominica, Dominican Republic, Ecuador, El Salvador, Grenada, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Montserrat, Nicaragua, Panama, Paraguay, Peru, St. Kitts and Nevis, St. Lucia, St. Vincent, Suriname, Trinidad & Tobago, Turks and Caicos, Uruguay and Venezuela.
Consolidated revenues for the first quarter totaled $43.9 billion versus $42.8 billion in the year-ago quarter, up 2.7%. Higher Mobility revenues, primarily from equipment sales, and higher WarnerMedia revenues more than offset declines in domestic video, business wireline and Latin America, which includes foreign exchange pressure.
Additionally, consolidated revenues were impacted by the fourth-quarter 2020 sale of AT&T’s previously held-for-sale wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands.
Subscription revenues were $3.8 billion, up 12.6% reflecting growth of Direct-to-Consumer domestic HBO Max and HBO subscribers, and, to a lesser extent, the May 2020 acquisition of the remaining interest in HBO Latin America Group.
In Latin America operational highlights, revenues were $1.4 billion, down 13.6% year over year largely due to foreign exchange impacts and the economic impact of COVID-19.
Operating contribution was $173 million compared to $184 million in the year-ago quarter, with operating income margin of 12.3%, compared to 11.8% in the prior year.
Vrio revenues were $743 million, down 16.2% year over year due to foreign exchange impacts. Operating loss was $35 million compared to $43 million in the year-ago quarter, with continued positive EBITDA for the quarter.
According to the company, 383,000 net losses were driven primarily by economic pressures and restructuring of sales channels in Brazil and COVID-19 restrictions in parts of the region.
In Mexico, revenues were $631 million, down 10.2% year over year due to lower service and equipment revenues partly reflecting foreign exchange pressures.
Service revenues were $439 million, down 6.0% year over year driven by foreign exchange pressures and reflecting a stable subscriber base, partly offset by growth in other service revenues.
Equipment revenues were $192 million, down 18.6% year over year. Operating loss in Mexico was $134 million versus $145 million in the year-ago quarter. Total net adds were 38,000 including 29,000 postpaid net adds and 11,000 reseller net adds, partially offset by 2,000 prepaid net losses.