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
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