AT&T grows U-verse

TV video service posts record quarterly gain build-out target pushed back

Telecom giant AT&T on Wednesday reported record subscriber growth for its U-Verse video service during the fourth quarter but said it will slow its infrastructure build-out to preserve cash.

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

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

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

"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," AT&T CFO Rick Lindner said.

AT&T also said Wednesday that it added 1.9 million iPhone subscribers during the fourth quarter, down from 2.4 million in the third quarter, when the latest model was released. IPhone subsidies reduced AT&T's earnings by $450 million, or 5 cents a share.

Collins Stewart analyst Thomas Eagan said AT&T's TV user gains make him comfortable that satellite marketing partner Dish Network will reverse its fourth-quarter user decline, though most analysts expect further losses.

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

AT&T's exclusive satellite marketing pact with DirecTV begins next month. (partialdiff)