Northwest Arkansas Democrat-Gazette
AT&T counts 338,000 phone-bill skippers
AT&T said 338,000 regular mobile-phone subscribers stopped paying for their service in the second quarter because of the coronavirus crisis, which is the first time a U.S. mobile-phone company has disclosed how many people are skipping bills under financial duress from the pandemic.
The company said an additional 159,000 broadband customers and 91,000 TV subscribers also have stopped payments because of the pandemic in the quarter. AT&T and other carriers have vowed not to shut off service to people affected by the viral crisis.
“We’re actively contacting, working with and trying to retain these customers and certainly, we haven’t given up on them and they haven’t given up
on us,” chief executive John Stankey said on an earnings call Thursday.
AT&T said that it lost 886,000 TV customers and 154,000 regular monthly wireless subscribers, including phone, watch and tablet users. That was better than analysts’ predictions for a loss of 939,000 TV subscribers and 210,000 wireless defections.
HBO Max, the premium streaming service AT&T debuted in May, now has 36 million subscribers. That matches the company’s forecast to have 36 million subscribers in the first year, though AT&T didn’t say how many of the subscribers had been existing HBO viewers who converted at the same $15 monthly price. The video service is key to the company’s entertainment strategy, along with the Warner Bros. film studio. AT&T expects to have 50 million HBO Max subscribers by 2025.
The nonpaying customers and subscriber declines applied further pressure to the company’s cash position as it tries to maintain a generous dividend.
Because of the uncertainty surrounding the pandemic, AT&T could provide only limited guidance, saying that the dividend-to-free-cashflow ratio would be at the low end of the 60s percentage range it had previously targeted. And capital spending for the year will be about $20 billion, compared with $19.6 billion in 2019.
The company pays about $14 billion to $15 billion in dividends annually. Last year, AT&T’s dividend-to-freecash-flow ratio was 51.3%. The lower the percentage, the more cash the company has at its disposal for other uses. The communications and media giant posted adjusted earnings of 83 cents a share on $40.95 billion in quarterly revenue, topping estimates for earnings of 79 cents on $40.94 billion in sales. The effects of the coronavirus pandemic cut about 9 cents from the company’s adjusted earnings per share and reduced revenue by $2.8 billion, the company said.
WarnerMedia revenue fell 23% to $6.8 billion because of a pullback by TV advertisers, particularly as there were no live sports, and movie theaters closed.
Hollywood shut down production because of the pandemic, delaying movie releases and series for both traditional TV and streaming services. Stankey said the company hopes to resume film and TV production next month.
In the wireless business, AT&T’s biggest, revenue was relatively steady, slipping 1% to $17.15 billion.
Tens of millions of people in the U.S. can’t get broadband or can’t afford it, and that has only grown more difficult for them during the pandemic as work, school and social interaction have shifted online.
The company added 135,000 customers to prepaid phone service, which tends to be cheaper.
Overall, the Dallas company’s quarterly profit fell 65% to $1.28 billion, or 17 cents per share.
AT&T shares fell 0.8% to $29.91 Thursday in New York trading. The stock is down 24% this year, compared with a 9.2% fall for Verizon Communications Inc. and a 34% rise for T-Mobile US Inc. Information for this article was contributed by Scott Moritz of Bloomberg News and by Tali Arbel of The Associated Press.