As wireless growth ebbs and flows, AT&T set for fight of its life

Casting a shadow over the company's fourth-quarter results, which saw an increase in wireless subscribers, is the looming court fight with the feds over its Time Warner acquisition.

AT&T has a critical fight ahead. 
Richard Levine / Corbis via Getty Images

AT&T has never shied away from a fight. 

The Dallas telecom giant has been in the thick of a long battle with the other national carriers over your business, with each player offering freebies like discounts on that new iPhone or even a year of free service. AT&T, for its part, has offered to bundle HBO into its plans as extra incentive to sign up. 

It hasn't gone so well for the nation's second-largest wireless carrier by subscribers, although the fourth quarter looked brighter. The company reported it had added a total of 4.1 million customers in the period, although only 2.7 million were from the US. It added 329,000 US post-paid phone subscribers, or the highly coveted customers who pay at the end of the month. Compare that with T-Mobile, which added 891,000 post-paid phone customers and 1.9 million total customers, or Verizon, which added 431,000 post-paid phone customers and 1.2 million total connections in the same period. 

But the wireless wars are a minor tussle compared with its looming court battle with the US Department of Justice over the right to acquire Time Warner. The trial is set to begin on March 19

How AT&T fares against the US government has a radical impact on the future of the company. It wants to shed its image as a stodgy telecom provider, and has already sent a small army to Hollywood to help remake itself into an entertainment powerhouse. The company already owns DirecTV, and wants a bigger piece of the show business with Time Warner, home to cable networks like CNN, HBO and TBS, as well as the Warner Bros. movie studio. 

For AT&T, it's not enough to deliver you phone and TV service -- it wants to have a hand in making the shows you watch on your television and smartphone. 

"Our top priority for 2018 is no surprise -- it's to close the Time Warner deal," AT&T CEO Randall Stephenson said on an investor call on Wednesday. "We remain very confident we'll complete this merger."

Similar to the third quarter, AT&T saw its customer turnover rate fall to 0.89 percent, suggesting customers stuck with the carrier in the period. That's unsurprising; the lack of aggressive iPhone deals in the period meant there were fewer incentives to switch services. 

Still, until that vision of a complete entertainment company takes shape, AT&T will still rely on the traditional wireless and home services business. 

The company also added 19,000 broadband customers, absorbing losses in its older DSL business. It also added 161,000 total video customers, helped by the 368,000 DirecTV Now streaming subscribers it added. Without DirecTV Now, it lost 207,000 traditional video customers.  

DirecTV Now is its over-the-top streaming service that it views as the potential for how a lot of video will be delivered, and is partly why the company wants to invest in making its own content. 

AT&T's international growth continues to be a bigger part of the company, having added 1.3 million wireless net new customers, for a total base of 15 million.

AT&T posted a fourth-quarter profit of $19 billion, or $3.08 cents a share, thanks largely to tax reform benefits. Excluding one-time items, it earned 78 cents a share. 

Revenue fell 0.4 percent to $41.7 billion. 

Analysts, on average, forecast earnings of 65 cents a share and revenue of $41.19 billion, according to Yahoo Finance

AT&T shares rose 4 percent to $38.95 in after-hours trading. 

Tech Enabled: CNET chronicles tech's role in providing new kinds of accessibility.

Batteries Not Included: The CNET team reminds us why tech is cool.