AT&T Added 800,000 Wireless Subs in Q2

AT&T added nearly 800,000 postpaid phone subscribers in Q2, it reported Thursday, joining Verizon in adding them amid continuing competition from T-Mobile (see 2107210054). AT&T also beat profit estimates and grew HBO Max. CEO John Stankey told analysts AT&T's spinoff of WarnerMedia, combining it with Discovery (see 2105160003), is in early stages. “No news is good news,” he said: “It's a lot of work with the regulatory agencies and document production and providing information that's responsive to their requests so that they can begin the reviews.” Executives said the wireless adds were the most for any Q2 in the past 10 years. AT&T added 1.16 million wireless customers, compared with some analyst estimates of 300,000 and 2.8 million total domestic HBO Max and HBO subscribers. Postpaid churn was 0.87% vs. 1.05% in the year-ago quarter. “Gross adds are up, churn is at record low levels and our average promotional spend per net add is significantly lower than a year ago,” said Chief Financial Officer Pascal Desroches. COVID-19 drove down results a year ago, Desroches said. “While the pandemic is still having some impact on our results, we're seeing our businesses emerge stronger than before.” AT&T’s $5 billion, 10-year deal with Dish Network (see 2107190003) will be good for both companies, Stankey said: “When somebody is going to be successful, it’s always nice for us to be successful along with them.” Profit was $1.9 billion, up from $1.6 billion a year ago. Revenue was $44 billion, up from $41 billion. The AT&T and Verizon results raise some questions, New Street’s Jonathan Chaplin told investors. “Low churn at AT&T and Verizon ought to result in slower growth for the share gainers (T-Mobile; Cable); however, the strong growth in Wholesale revenue at Verizon suggests strong adds at Cable, and we suspect T-Mobile will do just fine also,” he said: “We still need to untangle the mystery of too much growth in US wireless.” Results were “inarguably very strong,” said MoffettNathanson’s Craig Moffett. “Solid growth comes with the asterisk of extreme promotionality that is still suppressing” earnings and growth is “lagging well behind Verizon’s, despite much faster unit growth,” he said.