Telco TV

Telcos Take TV Share

1/31/2011 12:01 AM Eastern

Cord-cutting clearly is not a
huge concern for the two biggest U.S. telcos
— which continue to
lure away thousands of
cable-TV customers.

AT&T and Verizon
Communications netted
a combined 428,000
video subscribers in
the last three months
of 2010. “We’re adding
more pay TV subscribers
than any other U.S.
provider,” AT&T president and CEO Randall
Stephenson boasted on the telco’s earnings
call.

AT&T now has 2.99 million U-verse TV
video subs, putting it neck and neck with
Cablevision Systems (with 3.04 million at
last count), while Verizon strengthened its
position as the seventh-largest pay TV provider
with 3.47 million total FiOS TV subs.

The telcos also posted gains on the broadband
side. AT&T added 210,000 net digital
subscriber line customers. While Verizon
lost 145,000 DSL subs, the net gain of 197,000
FiOS Internet customers more than compensated
for that decline.

The companies are relying on broadband
and video to shore up their wireline units,
which are being dragged down by deteriorating
phone line connections.

“U-verse economics are attractive and
growing,” AT&T chief financial officer Rick
Lindner said, noting the video, Internet
and voice services now represent a $5 billion
annualized revenue. “We expect continued
U-verse growth and scale to drive
further improvements in our overall wireline
financials.”

FiOS services are now the majority of Verizon’s
consumer wireline
segment, accounting
for approximately 53%
of segment revenue in
the fourth quarter, compared
with 50% in the
previous three months.

AT&T’s total wireline
revenue for the fourth
quarter 2010 was $15.1
billion, down 3.2%, with
voice revenue dropping 12.8%. For Verizon,
wireline generated revenue of $10.3 billion,
down 2.8% year-to-year. Wireline margins,
though, improved in the quarter for both
AT&T (13.0% vs. 12.3% a year ago) and Verizon
(2.5% versus 2.4%).

Bright spots for AT&T wireline were Uverse
and broadband gains, “but all other
key operating metrics were weaker than
peer Verizon,” including landline losses
and enterprise, Sanford Bernstein senior
analyst Craig Moffett wrote in a report last
week.

Once again, wireless services proved to
be far stronger performers.
AT&T touted its best-ever quarterly wireless
subscriber gain, with 2.8 million net
adds in the period to reach 95.5 million
subscribers.

Verizon Wireless added 803,000 total retail
customers to end the quarter with 94.1
million total customers — ahead of the carrier
offering the iPhone 4, which becomes
available to customers Feb. 10.

September