Key Trends To Watch As AT&T Reports Fourth Quarter Results
AT&T (NYSE:T) is expected to publish its Q4 2017 results on January 31. Below, we take a look at some of the key trends to watch when the company reports earnings.
We have a $42 price estimate for AT&T, which is 15% ahead of the current market price.
See our complete analysis for AT&T | Verizon|Sprint | T-Mobile
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Postpaid Business May Continue To Lose Subscribers
We expect AT&T to continue to witness postpaid phone subscriber attrition, amid losses of feature phone subscribers. However, the losses should moderate year-over-year, on account of wider availability of its unlimited data plans and promos such as free HBO subscriptions for postpaid unlimited plan subscribers. During Q3, the company lost 97k phone losses versus 268k in the year-ago period. However, its postpaid ARPU could come under some pressure, as the adoption of unlimited plans effectively puts a ceiling on revenues from higher spending customers, while limiting overage fees. Postpaid phone churn should remain low, driven by AT&T’s increased bundling of wireless and video services, which helps to retain subscribers. AT&T’s prepaid business should also continue its strong run, driven by both its Cricket and AT&T prepaid brands.
Pay TV Business Should See A Sequential Improvement
AT&T’s pay TV business has been losing subscribers amid broader industry headwinds and cord-cutting. The third quarter was particularly bad on account of some hurricane-related disruptions as well as the company’s move to tighten its credit policy for pay TV subscribers. During Q3, the satellite operations posted net subscriber losses of 251k versus 323k net additions in the year-ago period. However, AT&T said that it expects net additions for the linear TV business to turn positive over the holiday quarter as it makes up for the temporary disruptions. We will also be looking for updates on AT&T’s streaming TV bet, DirecTV Now. In early December, the company noted that the service had about 1 million subscribers. Although ARPU and churn for this service are likely to be less favorable compared to linear TV products, it should partially hedge AT&T’s broader pay TV operations.
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