AT&T reported Q2 revenues of $32.6 billion, up 1.6% YoY, and operating expenses of $27.0 billion, compared with $26.0 billion a year earlier. Earnings came in at $0.68 (diluted) compared to $0.71 diluted EPS in the year-ago quarter. Excluding significant items, EPS was $0.62 versus $0.67 a year ago.
"The quarter was marked by several transformative moves to grow our wireless, broadband and video services,” said Randall Stephenson, AT&T chairman and CEO. “We announced our intent to acquire DIRECTV, which will improve our video position and our ability to bundle broadband, mobility and video services nationally. Our move to simple pricing and no-device-subsidy plans is repositioning the wireless business model, resulting in our best postpaid net adds in nearly five years and our lowest-ever postpaid churn. And our Project VIP investments continue to drive impressive growth in U-verse and strategic business services.”
Some Wireless Operational Highlights
- Total wireless revenues, which include equipment sales, were up 3.7 percent year over year to $17.9 billion.
- AT&T added 1,026,000 postpaid subscribers in the second quarter, the strongest postpaid net gain in nearly five years. Total wireless subscribers increased by 634,000 in the quarter, led by postpaid net adds and 175,000 connected device net adds. These gains were offset somewhat by a net loss of 405,000 prepaid subscribers, due to declines in session-based tablets and the expected second-quarter reduction in Cricket subscribers as the company begins its integration of Leap Wireless.
- AT&T added 1.6 million postpaid smartphones in the second quarter.
- At the end of the quarter, 80 percent, or 54.6 million, of AT&T's postpaid phone subscribers had smartphones, up from 73 percent, or 49.5 million, a year earlier.
- Smartphones accounted for 92 percent of postpaid phone sales in the quarter.
- Total second-quarter wireline revenues were $14.6 billion, down 0.9 percent versus the year-earlier quarter and up 0.2 percent versus the first quarter of 2014.
- Total U-verse revenues grew 24.8 percent year over year.
- Revenues from residential customers totaled $5.7 billion, an increase of 3.0 percent versus the second quarter a year ago. Continued strong growth in consumer IP data services in the second quarter more than offset lower revenues from legacy voice and data products.
- U-verse, which includes high speed Internet, TV and voice over IP, now represents 62 percent of wireline consumer revenues, up from 51 percent in the year-earlier quarter. Consumer U-verse revenues grew 24.5 percent year over year.
- U-verse TV added 190,000 subscribers in the second quarter to reach 5.9 million in service.
- U-verse high speed Internet had a second-quarter net gain of 488,000 subscribers, to reach a total of 11.5 million.
- Total revenues from business customers were $8.7 billion, down 2.9 percent versus the year-earlier quarter but stable sequentially.
- Business service revenues declined 2.3 percent year over year but were essentially flat versus the first quarter of 2014.
- Overall, declines in legacy products were partially offset by continued double-digit growth in strategic business services. Revenues from these services, the next-generation capabilities that lead AT&T's most advanced business solutions — including VPNs, Ethernet, cloud, hosting, IP conferencing, VoIP, MIS over Ethernet, U-verse and security services — grew 13.5 percent versus the year-earlier quarter.