AT&T Again Raises Revenue View For Year -- Update

By Dow Jones Business News, 
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AT&T Again Raises Revenue View For Year -- Update


By Lauren Pollock and Erin McCarthy

AT&T Inc. again raised its revenue guidance for the year, pointing to strong wireless trends in its second quarter.

The telecommunications giant said it expects to report that it added more than 800,000 customers who signed long- term service contracts in the period, up sharply from 551,000 a year earlier.

That continues the company's recent growth streak. For the first quarter, it added 625,000 customers, which it deemed the most additions in the first quarter in five years.

AT&T estimated the rate at which wireless contract customers left its network, called churn, will be under 0.95%, down from 1.02% a year earlier. In the first quarter, churn increased to 1.07%.

The company now expects revenue growth in the 5% range for the year, versus April's increased estimate of 4% growth.

Meanwhile, AT&T backed its full-year guidance for per-share adjusted earnings growth at the low-end of the mid- single digit range.

AT&T also said its network investment plan is ahead of schedule, as its 4G LTE network now covers nearly 290 million people. It expects to take fiber to more than 400,000 new business customer locations by the end of the second quarter.

The company is becoming more aggressive about upgrading its broadband network with the looming merger of Comcast Corp. and Time Warner Cable Inc. It also is increasingly pushing into video.

However, the company said that AT&T Next and Mobile Share Value plans are "driving a shift in the company's wireless revenue components," resulting in higher equipment revenue and lower service revenue.

While regular wireless contract plans are a key metric for the telecommunication giants, both AT&T and Verizon have unveiled plans that bill subscribers for the full price of their phones--broken into monthly payments--but allowing customers to upgrade to new devices at a faster pace. The new plans are a move away from the hefty subsidies AT&T and Verizon offer for smartphones purchased with traditional contracts.

AT&T said its wireless service margins will likely be pressured, compared with the prior year, because of the increased sales activity and strong customer movement to the no-device-subsidy Mobile Share Value plans, the company added. Wireless service EBITDA margins will likely be more than 40% in each of the three remaining quarters of 2014, AT&T said.

Write to Lauren Pollock at lauren.pollock@wsj.com and Erin McCarthy at erin.mccarthy@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires


  (END) Dow Jones Newswires
  06-03-140813ET
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