June 03, 2014 — DALLAS–(BUSINESS WIRE)–AT&T Inc. (NYSE:T) reported continued progress in the second full year of its Project VIP network investment plan, strong second-quarter wireless trends and an increase in its full-year 2014 revenue guidance, while reaffirming its full-year guidance for consolidated margins, EPS growth, capital spending and free cash flow.
AT&T’s Project VIP network transformation plan, announced in 2012, is ahead of schedule:
- AT&T’s 4G LTE network now covers nearly 290 million people; and
- The company’s Project VIP broadband build is expected to take fiber to more than 400,000 new business customer locations by the end of the second quarter.
In Mobility, AT&T expects to report second-quarter results that include:
- Postpaid subscriber net adds exceeding 800,000;
- Postpaid churn of 0.95 percent or lower;
- Approximately 3.2 million AT&T Next smartphone sales, which have risen throughout the quarter and now are expected to be approximately 50 percent of total sales; and
- Approximately one-half of the company’s postpaid smartphone customer base on no-device-subsidy Mobile Share Value pricing plans, growing to approximately two-thirds by year-end.
AT&T Next and Mobile Share Value plans are driving a shift in the company’s wireless revenue components — resulting in higher equipment revenues and lower service revenues and ARPU, with no service revenue growth expected in the second quarter. The company expects second-quarter wireless service EBITDA margins to be pressured year over year due to the increased sales activity and strong customer movement to the no-device-subsidy Mobile Share Value plans. Wireless service EBITDA margins are expected to be over 40 percent in each of the three remaining quarters of 2014.
Wireline expectations for the second quarter include:
- U-verse video additions bundled with broadband will continue to perform well. U-verse broadband to be solid even with second-quarter seasonality and fewer migrations from DSL. Growing consumer preference for buying broadband and pay TV services bundled together reinforces the strategic rationale of AT&T’s proposed acquisition of DIRECTV.
- Continued growth in business high speed broadband adds;
- Strategic business services revenue growth in the mid-teens, with continued economic pressures; and
- Wireline margins continue under pressure, reflecting content cost increases, fiber expansion and high-speed broadband subscriber growth.
Based on all of these trends, the company raised its full-year 2014 guidance for revenue growth to be in the 5 percent range and reaffirmed its full-year 2014 guidance for stable consolidated margins, adjusted earnings per share growth at the low-end of the mid-single digit range, capital expenditures in the $21 billion range and free cash flow in the $11 billion range.
AT&T is scheduled to release its full second-quarter 2014 financial results after market close on July 23, 2014.