AT&T Q1 earnings fall but revenue rises on wireless business

AT&T said Wednesday first-quarter net income fell 13.5% as expenses grew but saw growth in its wireless phone business.

It posted $3.2 billion of net income vs. $3.7 billion a year ago. After adjusting for some items, earnings per diluted share totaled 63 cents, matching analysts' consensus estimates.

Shares of AT&T rose 1.5% to $33.35 in after-hours trading.

The telecom giant's consolidated revenues totaled $32.6 billion, up 0.3% from a year ago. When excluding the results of a Connecticut wireline operation it sold, revenues rose by 1.2%, it said.

AT&T, which has agreed to pay $48.5 billion to buy DirecTV, said Wednesday it still expects the deal to close in the second quarter of this year and expects savings from the transaction to reach "at least $2.5 billion on an annual run rate by year three after closing."

When AT&T announced the deal in May, 2014, it said it anticipated $1.6 billion in savings.

Its wireless revenues, the company's fastest-growing business, rose 1.8% to $18.2 billion. Wireless equipment revenues rose 36% to $3.4 billion, as the company drove more customers to equipment installment plans. In the first quarter, AT&T continued to heavily promote its no-device-subsidy AT&T Next and Mobile Share Valueplans and lessen its emphasis on subsidized plans.

Its total wireless subscribers grew by 1.2 million, led by gains in postpaid and connected devices. It added 441,000 postpaid subscribers and 98,000 new prepaid subscribers.

AT&T's phone-only postpaid average revenue per user fell 9.6%. But only about 1.02% of post-paid customers abandoned its services.

Its first-quarter wireline revenues, which include the results of its U-verse branded Internet and TV services, totaled $14.1 billion, down 3.1% due to the decline in the business customer segment.

But its adjusted U-verse revenues grew 20.3% year-over-year. Revenues from residential customers totaled $5.7 billion. When adjusting for the sold Connecticut operations, revenue grew 2.1%, it said.

Its broadband subscriber base grew by 440,000 to a total of 12.6 million. The TV service added 50,000 subscribers in the first quarter.

U-verse, which includes Internet, TV and voice over IP, now makes up 69% of wireline consumer revenues. That compares with 59% a year ago.