AT&T unexpectedly loses postpaid subscribers in first quarter (T, TWX)

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2 US wireless carrier, reported a drop in quarterly revenue and unexpectedly lost postpaid subscribers as lower prices for its unlimited plans failed to attract customers in a saturated wireless market.

AT&T (T -0.2%) is up 1.2% now in choppy early postmarket action after reporting Q1 earnings that met profit expectations but recorded a billion-dollar miss on revenues.

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Trader's Buzzer: AT&T Inc. (NYSE:T)

AT&T added 2.7 million customers, on a "gross" basis, of which 2.1 million in the USA, driven by the "pre-paid" variety. Phone additions are considered important because they are the most lucrative mobility accounts, and customers with postpaid phone accounts tend to stay longer. AT&T ended Q1 with 14.11 million IP broadband customers and 1.58 million DSL subs. In the competitive consumer wireless market, AT&T has been focused on retaining its most profitable customers and shying away from promotional offers to grab market share.

T-Mobile US Inc TMUS.O and Sprint Corp S.N also offered new unlimited promotions, and AT&T cut the price on its own plan.

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Revenue attributed to AT&T's wireless division declined 4.4% year-over-year to $17.2 billion, thanks to lower equipment and services revenue.

Dallas, Texas-based telecom giant's first-quarter profit dropped to $3.56 billion or $0.56 per share from $3.89 billion or $0.61 per share past year. The company said that it had $0.74 in earnings per share (EPS) and $39.4 billion in revenue, versus consensus estimates from Thomson Reuters that called for $0.74 in EPS and $40.57 billion in revenue. Twenty analysts surveyed by Zacks expected $40.66 billion. AT&T also said it had 1.8 million connected devices on the 2G network it shut down in January; those 2G customers were removed from the company's subscriber count at the beginning of the year.

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Updated full-year 2017 guidance including mid-sing-digit adjusted EPS growth and free cash flow of $18 billion.

AT&T is in the midst of acquiring Time Warner for $85 billion, and the telecommunications company said Tuesday that it expects approval from the U.S. Department of Justice this year.

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