AT&T Posts Modest Subscriber Gains After Splitting Off WarnerMedia

AT&T's decision to step away from Hollywood and focus on its core telecom business is paying off. 

The Dallas-based company reported first-quarter results that saw slight gains subscriber counts across its phone and internet services amid a decline in profit and revenue, the aftermath of finally splitting off WarnerMedia and other video services. 

AT&T added 691,000 net new postpaid phone subscribers, a metric used by the industry as a success bellwether. That's up from 595,000 postpaid additions in the first quarter of 2021. To date, the company reported a base of 67.5 million phone subscribers in total, up slightly from 67.3 million last year. 

During the earnings call, AT&T CEO John Stankey noted that this is the result of slow and steady growth, not of marketing or generous discounts like "buy one, get one free" offered by other carriers. He pointed out that AT&T's highest-growing category of accounts is for the priciest AT&T Unlimited Elite tier of 5G phone service, which is a payoff of the carrier's decision to let consumers upgrade specific lines to more expensive tiers rather than require the entire account to be on the same tier. 

The results reflect a shift for AT&T, which has spent the last year moving away from big bets like streaming service HBO Max – now part of Warner-Discovery in a deal that closed earlier this month -- and back to areas like upgrading and expanding its wireless service. 

AT&T and Verizon have been busy rolling out the so-called C-band spectrum to their 5G networks, which brings higher speeds across far greater distances. While Verizon has speedily rolled out its upgrades over the last few months, AT&T still expects to start activating its C-band 5G service in the second half of 2022. 

The company has lagged behind Verizon due to its more conservative approach of waiting to update its towers with equipment for C-band and other midband frequency ranges at the same time. While this is likely cheaper for AT&T, its subscribers will have to keep waiting for faster and more reliable 5G speeds offered by the midband frequencies. 

AT&T Fiber, its wired home internet service, added 289,000 subscribers in the first quarter, up from adding 239,000 accounts in the same period last year. The modest growth has led to 6.3 million subscribers currently signed up. The company asserted that it gained subscribers for its Fiber internet without aggressive discounts, stating that its lowest tier was priced $10 per month higher than promotional rates offered by competitors, which often expire after 12 months.

"Give us no contract, steady pricing, and do not change the rate, [customers told us,] and we did that across the board and did not lose any momentum in our gross intake or net growth," AT&T Communications CEO Jeff McElfresh told CNET. "It just proves that consumers sitting in their homes understand the value of what fiber and technology can bring and they're willing to pay for it."

AT&T still isn't widely expanding its 4G- and 5G-based internet service, unlike Verizon and T-Mobile, but will continue offering it to businesses in very selective circumstances. For instance, if its wireless infrastructure only delivers download speeds of less than 100 Mbps in dense urban areas, the carrier won't offer the service. But AT&T said it would consider it in other geographic areas as a niche solution for businesses.

AT&T reported first-quarter revenue of $38.1 billion, down 13% from the same period a year ago, when the carrier still operated its video services. The company said that excluding the video business, revenue would've risen slightly. 

The carrier reported earnings 65 cents a share, down from $1.02 a year ago. Adjusted earnings, which exclude one-time costs, came in at 77 cents a share, which exceeded analyst expectations of 59 cents, per Yahoo Finance. 

AT&T shares rose more than 3% to $20.05 in recent trading.