AT&T: Economy squeezing broadband

Lindner discounted cable competition as the cause of AT&T’s consumer wireline woes and said where AT&T’s U-verse IPTV service has been deployed the longest -- in the Midwest and Southwest regions – AT&T is able to retain more wireline phone customers and add more broadband customers.

“U-verse is demonstrating it has pull-through on voice – we are seeing clear improvements on access line retention,” Lindner said. “We are selling more broadband and wireless bundles, and in June, we launched a bundle that includes AT&T high-speed Internet and laptop connect services.”

AT&T NetReach uses new software that automatically detects the strongest AT&T signal, whether it’s 3G wireless, WiFi at a hotspot or high-speed Internet access at home, Lindner said.

“It goes to the importance of having a strong video product in our mix,” Lindner said. “As we continue to roll U-verse out in other markets, we expect the same results.”

Sales of the 3G iPhone and AT&T’s lowest churn rates ever (1.1%) led to a 15.8% increase in wireless revenue growth and a 91% growth in operating income to $3.1 billion, even though AT&T added fewer customers in the second quarter of 2008 than it did in the second quarter of 2009.

On the commercial front, AT&T’s wholesale business continues to bounce back, with revenues of $3.5 billion, down just 0.2%, compared with an 8.3% decline a year ago. Enterprise IP data revenues were up 18.4%, but overall enterprise revenues were down 1.4% to $4.7 billion. Regional business revenues, mostly SMBs from the former SBC and BellSouth territories, were up 1.6% to 3.2 billion.

Based on contracts that kick in during the second quarter, such as a recent deal with Shell Oil and various federal government deals, AT&T will show positive year end-results in the enterprise sector, Lindner said.

Lindner said AT&T is seeing very little impact from cable’s assault on its small to mid-sized business segment -- on the order of 2% to 2.5%, he said, adding that AT&T had prepared for cable’s entry by creating new product bundles with attractive prices and term contracts.

AT&T continues to drive costs out of its wireline business, where expenses were down 2.1% to totaled $14.5 billion.