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AT&T video push still fuzzy

The telecom giant's sales topped $40 billion in the first quarter but details on its upcoming online video service remain scant.

Sara Tew/CNET

AT&T provided little evidence that it's tuned in to Web video, even as it attributed a strong quarter to its acquisition of DirecTV.

The Dallas telecommunications giant released first-quarter earnings on Tuesday but stayed mostly mum on its planned online video service.

Last month, AT&T said it will launch three Web video services under its DirecTV brand. AT&T became the largest pay-TV provider in the US with its $49 billion acquisition of DirecTV in July 2015. The new services are expected to roll out later this year, but the company hasn't released many specifics, including minor details like what channels will be available or how much they'll cost.

The trio of packages is part of AT&T's attempt to marry its TV and wireless services, which would make a wide range of video available to anyone with an Internet connection from the company. That's fine for an older customer base, which might want to buy a bundle of DirecTV and wireless services. But those pesky millennials aren't terribly interested in paying a traditional cable TV bill.

"We're seeing good momentum with our initial integrated wireless, video and broadband offers," Randall Stephenson, AT&T CEO and chairman, said in a release. "We'll expand the integrated choices for customers in the fourth quarter when we launch our new video-streaming services."

AT&T's video strategy is still a little fuzzy. The company added 328,000 satellite subscribers in the first quarter, but total video subscribers were down 54,000 because of a decline in U-Verse TV subscribers. The company said its DirecTV Now online service is on track to launch in the fourth quarter. The service is expected to offer a channel lineup that is similar to a traditional DirecTV subscription, said CFO John Stephens during an earnings call Tuesday.

"There's a collection of cord-nevers, young people who have never had their own subscription, and they might be able to get [DirecTV Now]," said Stephens. "We're very excited about that opportunity and it gives us a way to compete in different places."

In addition to video, AT&T is still focusing on its wireless customers. The carrier said it added 1.8 million US wireless subscribers in the three-month period, ended in March, mostly driven by its prepaid brands and connected devices. AT&T also added 500,000 customers in Mexico.

The company beat Wall Street analysts' expectations. It reported first-quarter earnings, excluding some costs and expenses, of 72 cents per share on $40.5 billion in revenue, up from about $32.6 billion a year earlier. Analysts expected the company to post a profit of 69 cents a share on $40.5 billion in revenue, according to Thomson Reuters.

Shares fell slightly, about 1 percent, to $37.50 in after-hours trading.

Update, 3:26 p.m. PT: Added comments from AT&T first-quarter earnings call.