Record subscribers for AT&T's U-Verse

But company says it will slow U-Verse buildout

Telecom giant AT&T reported record subscriber growth for its U-Verse video service in the fourth quarter, but said it will slow the buildout of the U-Verse infrastructure to preserve cash.

The record quarter for the video service came a day after Verizon posted record quarterly user gains for its FiOS TV service.

In reporting its latest quarterly earnings Wednesday, AT&T said it added 264,000 net new customers to its TV service, which competes with cable and satellite TV providers. That was up from the 232,000 gain in the third quarter and brought its total video user base to nearly 1.05 million as of the end of 2008.

Management said that U-Verse deployment reaches 17 million living units, and the company still wants to hit its previous target of reaching 30 million units. However, it will do so in 2011 rather than 2010 to conserve cash in a tough credit market and economy.

"Between the homes that we've already passed and what we will hit in the next year or so, we're hitting the markets that are the highest priority to us," CFO Rick Lindner said.

AT&T also said Wednesday that it added 1.9 million iPhone subscribers in the fourth quarter, down from 2.4 million in the third quarter when the latest iPhone model was released. iPhone subsidies reduced earnings by $450 million, or 5 cents per share.

Collins Stewart analyst Thomas Eagan said AT&T's TV user gains also make him comfortable that satellite TV marketing partner Dish Network will reverse recent user declines in the fourth quarter -- even though most analysts expect further losses.

AT&T's gain of 8,000 satellite TV subscribers in the quarter reversed a third-quarter loss of 53,000 and should translate to more than 50,000 net new users for Dish, Eagan predicted.

AT&T's new exclusive satellite TV marketing pact with DirecTV starts in February.
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