AT&T Warns Investors of Heavy Q3 DirecTV Subscriber Losses

AT&T filing: Natural disasters hitting earnings; DirecTV Now at 300K adds

AT&T counts the cost of natural disasters in the third quarter

The operator anticipates impacts from the several hurricanes during the period, as well as earthquakes in Mexico, to decrease third quarter revenue by $90 million. "Damage to our network and other property, costs to restore services, and revenue declines from waived charges will decrease our reported third-quarter 2017 consolidated revenues almost $90 million and our reported pre-tax earnings about $210 million, or $0.02 per diluted share".

The decline of traditional video subscribers has a negative impact on AT&T's Entertainment Group revenues and margins; the group said the third quarter adjusted consolidated operating income margin would therefore "be essentially flat" versus the year-ago third quarter.

Despite the short-term blemishes, the company said its full-year forecast of $22 billion in capital expenditures and mid-single-digit growth in adjusted earnings remains valid.

As MoffettNathanson analyst Craig Moffett observed, the net loss means DirecTV is losing about 390,000 traditional subscribers - customers that had been paying at a higher rate than the low-priced DirecTV Now service.

AT&T attributed the lower total video adds to more intense competition in the traditional pay-TV markets and OTT services, severe storms that hit the country, and tighter credit standards.

The company continued to expand its postpaid smartphone base even with almost 900,000 fewer handset equipment upgrades, against the year before. This trend will however not affect gross adds and AT&T continues to see low postpaid phone churn levels.

AT&T shares were down 1.5% at US$37.60 in screen-based trading.

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