AT&T provided a financial update ahead of its Q3 2017 results, noting issues including the impact of natural disasters and heightened competition for its media business.
The company said: “several devastating hurricanes, as well as earthquakes in Mexico, significantly impacted certain regions of our service area during the third quarter”. Damage to network and other property, the cost of restoring services, and revenue declines from waived charges will reduce consolidated revenue by nearly $90 million and pre-tax earnings by around $210 million.
“We expect further reductions in the fourth quarter as we continue to assess damage to our network and fully restore service,” it continued.
AT&T also said the total number of US video subscribers will be “down about 90,000” due to increased competition in traditional pay TV markets and over-the-top services, as well as hurricanes and stricter credit standards.
This will negatively impact its Entertainment Group revenue and margins.
It did cite 300,000 DirecTV Now additions.
Another factor is a shift in AT&T’s reporting method. From 1 July 2017, the company is reporting prepaid IoT connections as a separate group within its subscriber categories. This, it said, primarily relates to customers which “actively subscribe for vehicle connectivity”.
The result is 97,000 additional prepaid net additions in the quarter, with a corresponding decline in connected net adds. The prepaid subscriber bases will be adjusted by an increase of 543,000 connections, with a corresponding decline in the connected device base, to reflect subscriber activity prior to the change.