AT&T prepares for revamped business after media unit sale

0

The AT&T logo is seen in a store window in the Manhattan borough of New York, New York, U.S., January 19, 2022. REUTERS/Brendan McDermid/File Photo GLOBAL BUSINESS WEEK AHEAD

Join now for FREE unlimited access to Reuters.com

Register

Jan 26 (Reuters) – AT&T Inc’s (TN) WarnerMedia unit reported solid fourth-quarter revenue growth on Wednesday, helped by new customers for its HBO Max streaming service, but AT&T shares fell by 3% as the market absorbed whether its core wireless business could propel future growth.

After facing investor skepticism over its costly bid to become a media powerhouse, AT&T reached an agreement to merge WarnerMedia with Discovery Inc , which it now expects to close in the second quarter.

The company will detail its plans to attract new types of wireless customers and how it will refine its brand after WarnerMedia during a virtual analyst day in March, AT&T Chief Executive John Stankey said during a conference call with analysts on Wednesday.

Join now for FREE unlimited access to Reuters.com

Register

AT&T will aim to have “a much sharper and more intense focus” on its core wireless and internet business, Stankey said.

Jonathan Chaplin, an analyst at New Street Research, wrote in a note Wednesday that the rate of customer defections at AT&T had increased “significantly,” and it remained to be seen whether the company could sustain the growth of its wireless customer base.

Investors were also disappointed with AT&T’s growth forecast for the communications sector, Chaplin said in an email.

The company saw 884,000 net new monthly bill-paying phone subscribers in the quarter, consistent with its preliminary result of 880,000 released earlier this month.

Rival carrier Verizon (VZ.N) reported a better-than-expected subscriber addition of 558,000 in its latest quarter on Tuesday. Read more

Revenue at WarnerMedia, which hosts premium TV channel HBO and streaming service HBO Max, rose 15.4% to $9.9 billion in the fourth quarter.

WarnerMedia CEO Jason Kilar said it was the highest revenue for the company in its 99-year history, thanks to streaming gains, steady growth in its studio business and his playgroup.

“It’s an indication that what we’re doing is working and resonating with audiences around the world,” he said in an interview with Reuters.

HBO and HBO Max together added 4.4 million subscribers in the quarter, enticing viewers with releases such as “Dune,” “The Matrix” and the latest season of the TV show “Succession.”

Total consolidated revenue was $41.0 billion in the quarter ended Dec. 31, beating analyst estimates of $40.44 billion, according to Refinitiv Data.

Excluding items, AT&T gained 78 cents a share, above analysts’ average estimate of 75 cents.

AT&T prioritized its fiber internet business as an area of ​​growth and said it added 271,000 net new customers in the quarter.

Including WarnerMedia and advertising firm Xandr, AT&T now expects 2022 revenue growth in the single-digit percentage range.

The company expects adjusted annual earnings of between $3.10 and $3.15 per share in 2022, below analysts’ average estimate of $3.21.

AT&T, which faces fierce competition from rivals Verizon and T-Mobile US (TMUS.O) as it rolls out their 5G technology nationwide, forecasts 2022 capital spending of around $20 billion. of dollars.

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Richard Rohan Francis and Chavi Mehta in Bengaluru and Sheila Dang in Dallas; Additional reporting by Dawn Chmielewski in Los Angeles; Editing by Saumyadeb Chakrabarty and Bernadette Baum

Our standards: The Thomson Reuters Trust Principles.

Share.

Comments are closed.