AT&T turned in lower quarterly profit as it wages an increasingly expensive battle for wireless subscribers with T-Mobile US and Sprint.
The company posted earnings of $3 billion, or adjusted earnings per share of $0.63, compared with $3.5 billion in the same quarter last year. Analysts polled by Thomson Reuters were expecting 64 cents per share on revenue of $33.2 billion. Revenue rose 0.9 percent, to $33.0 billion from $32.1 billion a year ago.
AT&T also cut its revenue forecast for the year to 3 percent to 4 percent, down from 5 percent in its previous call.
AT&T added 785,000 long-term wireless contracts in the third quarter; in particular, 466,000 smartphones and 434,000 tablets. The network saw subscriber gains in its no-subsidy AT&T Next and Mobile Share Value plans, in addition to the number of customers that brought their own devices to AT&T.
Like other mobile networks, AT&T is looking forward to the fourth quarter, during which it will see the full impact of the iPhone 6 and 6 Plus launch as well as the holiday season.
Analysts at MoffettNathanson estimate at least 75 percent of the carrier’s smartphone sales are iPhones, while at least 50 percent of Verizon Communication’s smartphones sales are iPhones. Notably, AT&T still benefits from its connection with the iPhone. It was the first network to offer the iPhone in 2008, and carried the phone exclusively for four years.
“We saw competitive intensity pick up in an iPhone launch quarter, with all major carriers now offering the iPhone. We expect that to continue and move into the holiday sales period in the fourth quarter,” said AT&T’s CFO John Stephens.
AT&T has delved into new technology categories, including 500,000 connected cars. The network added 601,000 subscribers to its U-verse high speed Internet, with approximately 12.1 million total subscribers. AT&T’s U-verse high speed Internet represents 73 percent of the company’s broadband subscribers, up from 59 percent in the year-earlier quarter.
AT&T’s U-verse TV added 216,000 subscribers, with approximately 6.1 million total subscribers. The network has also established ultra-high speed fiber connections in cities like Dallas/Fort Worth and will implement the technology in than 14 other cities, including Houston, Miami and Atlanta.
AT&T says 97 percent of its video customers also purchase Internet plans and nearly two-thirds of U-verse TV subscribers purchase three to four services.