AT&T U-verse sees slower TV sub adds

CFO signals no plan for sat TV company acquisition

NEW YORK -- In the latest sign that video subscriber growth of telecom giants may have peaked, AT&T on Thursday reported a 209,000 second-quarter net gain in U-verse TV subscribers, down from 248,000 in the year-ago period.

That brought the total U-verse video user base to about 2.5 million at the end of the second quarter, which tends to be weaker for cable, satellite TV and telecom video services due to migrating college students and snowbirds.

CFO Richard Lindner in a conference call Thursday heard the always-popular question about whether AT&T is looking to buy a satellite TV company. While scale helps reduce content costs, the overall financial and strategic benefits of any deal must be considered, he said before signalling no current plans for a satellite play. "We (have) felt very good about the path we are on," Lindner said, highlighting that U-verse's strength compared to satellite is its ability to fully bundle a range of services, including broadband and telephony. "We'll continue to push down that path. We are following the right path."

Lindner also emphasized how happy AT&T is with U-verse's financial contributions. He lauded it for its first-ever quarter of revenue exceeding $1 billion and highlighted that it continues to grow average revenue per user.

But the slower subscriber additions than in the year-ago period and in the previous quarter continued a recent trend. Analysts see it as a sign that the biggest growth burst is over, although some have suggested that the recession may simply slow growth down temporarily.

AT&T had added 231,000 U-verse TV users in the first quarter, down from 284,000 in the first quarter of 2009 and also below the fourth quarter of 2009. Verizon is set to announce latest subscriber growth figures for its FiOS TV service on Friday.

AT&T's total video subscribers, which combine the company's U-verse and bundled satellite TV customers, reached 4.6 million at the end of the second quarter, up from 4.4 million at the end of March. But satellite TV connections declined by 74,000 in the quarter, which "indicates a bit of weakness for DirecTV and Dish Network," said Miller Tabak analyst David Joyce. The two sat TV giants will report their results in the coming weeks.
Joyce argued that AT&T's figures could bode well for cable operators' results.

AT&T on Thursday also reported 3.2 million iPhone activitions in the second quarter - a company record driven by the June 24 launch of Apple's iPhone 4.
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