AT&T slows U-verse buildout, remains committed to video

AT&T’s average revenue per user in the consumer space is up 3.4%, he added. U-verse is highly ranked in consumer surveys such as the J.D. Power and Associates report and is achieving penetration rates in the mid-teens after 18 months of deployment.

Lindner admitted that U-verse has been dilutive on AT&T’s earnings because of network buildout and customer acquisition costs – including the cost of installations and set-top box purchases – and because the service is only now reaching scale, having hit its first million customers in December.

“This next year, we’ve kinda reached the point on U-verse where it will be less dilutive on an EBITDA basis in 2009,” he said. “We will see that start to improve. That’s where we’ll have opportunities to retain and support the margins in the wireline business and see some scale on the video side so we can better cover programming costs and fixed costs and see less customer acquisition costs as a percentage. There is a fair amount of dilution from U-verse on EPS [earnings per share] and margins, but that is starting to turn and will turn over the next several years.”