July 22 (Reuters) – AT&T Inc (TN) on Thursday raised its financial guidance for the year as the telecommunications company came out of the pandemic with more wireless and Internet customers, and topped analyst estimates for the phone subscribers and income in the second quarter.
The results come as AT&T unwinds its costly media investments to focus on its original business of providing telephone and Internet services.
Before entering into a deal to combine its media content with Discovery (DISCA.O), AT&T said that WarnerMedia continued to attract more customers to the HBO Max streaming service and had recorded higher revenues as sports in live and televised events resumed after the pandemic.
The company added 789,000 new net telephone subscribers who pay a monthly bill in the quarter ended June 30, beating Wall Street estimates of 278,000 new subscribers, according to data from research firm FactSet.
WarnerMedia added 2.8 million US subscribers to its HBO premium channel and HBO Max streaming platform during the quarter, thanks to new films like Lin-Manuel Miranda’s “In the Heights” and “Mortal Kombat “, based on the popular video game.
The growth in new digital video subscribers is a sign that the media streaming market is still expanding in the United States, Jason Kilar, CEO of WarnerMedia, said in an interview, even as streaming pioneer Netflix (NFLX .O) reported losing 430,000 subscribers in the United States. and Canada in the second quarter. Read more
“The market grows with consumer spending… but you have to deliver to customers day in and day out,” he said.
Kilar added that the growth of HBO Max subscribers in Latin America will exceed the absolute number of subscriber additions in the US market during the second half of this year and that he “would not be surprised” if this trend persists until 2022.
The Warner Bros. studio of the company is producing more than ten films that will be available exclusively on HBO Max on “day one” in 2022, Kilar said.
The company said in a conference call with analysts that it would delay the launch of HBO Max in select European markets until early 2022 in order to focus on its early successes in Latin America.
AT&T has raised its forecast of global HBO Max subscribers to between 70 and 73 million by the end of the year. He previously expected 67 million to 70 million subscribers.
Still, AT & T’s decision to pull out of the entertainment business reflects the enormous costs and challenges of competing in a crowded streaming video industry.
Globally, HBO and HBO Max now have 67.5 million subscribers, compared to 209 million subscribers for Netflix.
‘HIGH EXIT SPEED’
The Dallas-based company said its deal to sell a minority stake in DirecTV, its struggling satellite TV brand that continued to lose customers during the quarter, to buyout firm TPG Capital is expected to be completed. in the next weeks.
AT&T CEO John Stankey said the company’s commitment to WarnerMedia and DirecTV has remained the same in preparing companies for success.
“We want to achieve a high exit speed for these two companies, at which point the combination with the right partner only widens their respective opportunities for success,” he said on the conference call.
If the deal to sell a piece of DirecTV closes in a few weeks, total revenue will be reduced by $ 9 billion for the remainder of the year, the company said.
On Wednesday, the company said it would sell Vrio Corp, its DirecTV business unit in Latin America, to Argentina-based investment group Grupo Werthein after taking on a $ 4.6 billion depreciation charge. Read more
AT&T added 246,000 new net fiber Internet subscribers during the quarter, up from 225,000 in the quarter of last year, as the company made it a business priority to serve more homes with high Internet. throughput via fiber optic cables.
AT & T’s total revenue grew 7.6% to $ 44 billion, beating analysts’ average estimate of $ 42.67 billion, according to IBES data from Refinitiv.
Excluding the impacts of the DirecTV and TPG agreement, AT&T now expects revenue growth of around 2% to 3% in 2021 and an increase in adjusted earnings per share in the low to mid range. .
The company had previously guided revenue growth of around 1% and adjusted earnings per share to be stable from the previous year.
Net income applicable to common shares reached $ 1.5 billion, or 21 cents per share, in the second quarter, from $ 1.2 billion, or 17 cents per share, a year earlier.
Excluding items, AT&T gained 89 cents per share, above estimates of 79 cents.
AT&T shares were flat in morning trading.
Reporting by Eva Mathews in Bengaluru and Sheila Dang in Dallas; additional reporting by Helen Coster and Kenneth Li in New York; Editing by Sriraj Kalluvila, Steve Orlofsky, William Maclean and Nick Zieminski
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