AT&T beats Q2 estimates for subscribers and revenue

AT&T Inc on Thursday raised its full-year financial forecast as the wireless carrier emerged from the pandemic with more wireless and internet customers, and beat analyst estimates for phone subscribers and revenue in the second quarter.

Shares were up 1.61% in pre-market trade.

The results come as AT&T is unwinding its heavy media investments to focus on its original business of providing phone and internet services.

Ahead of closing its deal to combine its media content in a deal with Discovery, AT&T said WarnerMedia continued to attract more customers to streaming service HBO Max and notched higher revenue as live sports and televised events resumed from the pandemic.

The company added 789,000 net new phone subscribers who pay a monthly bill during the quarter ended June 30, blowing past Wall Street estimates of 278,000 new subscribers, according to data from research firm FactSet.

The wireless carrier had lost 151,000 subscribers in the year-ago quarter at the height of the pandemic.

WarnerMedia added 2.8 million U.S. subscribers for its premium channel HBO and streaming platform HBO Max during the quarter, thanks to new movies like Lin-Manuel Miranda’s “In the Heights” and “Mortal Kombat,” which is based on the popular video game.

The growth of new digital video subscribers is one sign the market for streaming media has not tapped out in the United States and likely shows HBO Max is taking share from streaming pioneer Netflix, which reported losing 430,000 subscribers in the United States and Canada in the second quarter.

AT&T raised its forecast for global HBO Max subscribers to between 70 million and 73 million by the end of the year. It previously expected 67 million to 70 million subscribers.

Still, AT&T’s move to exit the entertainment business reflects the enormous costs and challenges to compete in a crowded streaming video industry.

Globally, HBO and HBO Max now have 67.5 million subscribers, compared with 209 million subscribers for Netflix.

AT&T added 246,000 net new fiber internet subscribers during the quarter, up from 225,000 added in the year-ago quarter, as the company has made it a top business priority to serve more households with high-speed internet through fiber optic cables.

Total revenue at AT&T rose 7.6% to $44 billion, beating analysts’ average estimate of $42.67 billion, according to IBES data from Refinitiv.

AT&T now expects 2021 revenue growth in the 2% to 3% range and adjusted earnings per share to rise in the low- to mid-single digits.