AT&T adds more wireless subscribers than expected as bundling pays off
By Harshita Mary Varghese
April 22 (Reuters) - AT&T added more wireless subscribers than expected in the first quarter, benefiting from customers opting for the telecom provider's packages bundling wireless and high-speed fiber services.
In a highly competitive market, network providers have extended device subsidies, added plan discounts and increased investments in network infrastructure to attract and retain customers.
About 42% of AT&T households that use home internet services also opted for wireless plans, a convergence dynamic that analysts had flagged as a key differentiator.
AT&T, like rival T-Mobile, extended device subsidies into the first quarter for Apple's latest iPhone models as carriers competed aggressively to lure customers with lucrative offers.
The company said it added 294,000 net monthly bill-paying wireless phone subscribers in the first quarter, compared with additions of 272,000 expected by analysts polled by FactSet.
AT&T raised prices on its lowest and highest wireless tiers while trimming prices in the middle, a move analysts said is designed to steer customers toward mid-range plans rather than spark a price war.
Shares of the company fell about 3% after the company forecast second-quarter free cash flow of $4 billion to $4.5 billion, compared with analysts' estimate of $4.6 billion, according to Visible Alpha.
"You could have a little bit better free cash flow performance there if they wanted to, but clearly they feel like data is going to be the revenue of the future. And that's why they're investing so heavily in it," said Brian Mulberry, chief market strategist at Zacks Investment Management.
Telecom providers like AT&T and Verizon are pouring billions into technology and fiber network upgrades to remain competitive amid a sharp rise in data consumption.
Total revenue for the quarter grew about 3% to $31.5 billion, compared with estimates of $31.25 billion, according to data compiled by LSEG.
Starting first quarter, AT&T is reorganizing its business segments to highlight its core growth areas.
The new advanced connectivity segment, covering domestic 5G and fiber services, reported about 5% growth in revenue.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Anil D'Silva)