2018.04.2601:10:00UTC+00AT&T Reports Profit below Estimates on Pay-TV Business Slump

AT&T Inc. reported lower-than-estimate quarterly profit as the second biggest wireless carrier in the U.S. lost subscribers from its pay-TV business, causing its shares to tumble more than 3 percent in extended trading.

Net income attributable to the company increased to $4.76 or 75 cents per share, in the quarter, from $3.47 billion or 56 cents per share, a year prior. On an adjusted basis, AT&T earned 85 cents per share in the first quarter, missing analyst estimates of 87 cents per share. Overall operating revenue declined 3.4 percent to $38.04 billion.

The firm attributed the revenue decline to a new accounting standard. It maintained its full-year profit estimate. Excluding the changes in accounting standard, revenue would have clocked in at $38.9 billion. Analysts projected revenue of $39.31 billion.

The owner of satellite television service DirecTV lost 187, 000 traditional U.S. video customers, fewer than thr 257, 000 customers analysts had projected them to lose, according to research firm FactSet. The company added 312, 000 customers to its DirecTV Now streaming service.

The company has been depending on promotions and discounts to stabilize its wireless and pay-TV subscribers which have affected its margins, according to analysts.

AT&T is in a legal battle with the U.S. Department of Justice in court to complete its $85.4 billion takeover of Time Warner Inc. which it has called necessary for it to compete for advertising money.

Shares of the company declined more than 3 percent to $34.05 in extended trading.