U-verse sees less subscribers in Q1

Analyst says AT&T TV service's 'growth rate is ebbing.'

NEW YORK -- AT&T TV service U-verse signed up fewer subscribers in the first quarter than in the year-ago period in the latest sign of slowing telco video growth.

But CFO Richard Lindner on a conference call predicted "continued solid U-verse growth throughout the year" and highlighted that U-verse TV and broadband services now account for more than $3 billion in annualized revenue. "We're not going to slow down with U-verse," he later added.

AT&T on Tuesday said it added 231,000 new U-verse TV users in the first quarter to reach 2.3 million subscribers overall. In the fourth quarter, AT&T had recorded 248,000 net additions. And in the year-ago period, it had added 284,000, up from 148,000 in the first quarter of 2008.

Lindner highlighted that most U-verse users sign up for a product bundle, boosting the financial benefits for the firm. For example, AT&T said the U-verse high-speed Internet attach rate continues to run "well above" 90%, and about 75% of users also signed up for telephony service in the first quarter.

But Sanford C. Bernstein analyst Craig Moffett lamented that "U-Verse's growth rate is ebbing."

AT&T's total video subscribers, which combine U-verse and bundled satellite TV customers, reached 4.4 million at the end of March, but it lost 47,000 satellite users. Moffett said that could be a sign of weakness for sat TV firms.

Driven by the U-verse broadband service, AT&T posted a 255,000 net gain in high-speed users though, its strongest quarterly net adds in a year.
AT&T also added 1.9 million wireless subscribers - a company record - helped by 2.7 million iPhone activations.