DALLAS (dpa-AFX) - AT&T Inc. (T) Wednesday said its profit for the second quarter declined from a year ago, hurt largely by higher operating costs that offset revenue growth, reflecting subscriber additions. Both earnings and revenues for the quarter fell short of Wall Street expectations. Moving ahead, AT&T maintained its financial outlook for the full year 2014.
AT&T said it added 1.03 million postpaid subscribers in the second quarter, up from 551 thousand last year and 625 thousand in previous quarter. This was the strongest gain in five years. Postpaid churn rate for the quarter dropped to 0.86 percent from 1.02 percent last year and 1.07 percent last quarter. Both AT&T and Verizon, the two major service providers in US, have been experiencing stiff competition from T-Mobile US Inc. (TMUS) and Sprint Corp. (S).
'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,' Chief Executive Randall Stephenson said.
The Dallas, Texas-based telecom giant's second-quarter profit dropped to $3.55 billion or $0.68 per share from $3.82 billion or $0.71 per share last year.
Excluding special items, adjusted earnings dropped to $0.62 per share from $0.67 per share last year. On average, 26 analysts polled by Thomson Reuters expected earnings of $0.63 per share for the quarter. Analysts' estimates typically exclude special items.
AT&T's revenues for the second quarter grew 1.6 percent to $32.58 billion from $32.08 billion a year ago. Twenty-four analysts had a consensus revenue estimate of $33.22 billion for the quarter.
Total wireless revenues, which include equipment sales, were up 3.7 percent to $17.9 billion, while wireline revenues edged down 0.9 percent to $14.6 billion.
Second-quarter operating costs rose to $27.0 billion from $26.0 billion last year, while operating margin dropped to 17.2 percent from 19.1 percent last year.
Looking forward to full year 2014, the company maintained its financial outlook of revenue growth in the 5 percent range and adjusted earnings growth at the low end of the mid-single digit range.
T closed Wednesday's trading at $35.88, down $0.06 or 0.17%, on the NYSE. The stock further dropped $0.65 or 1.81% in after-hours trade.
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