AT&T Q3 Profit Down, But Tops View

(RTTNews) - AT&T Inc. (T) Thursday reported a slight drop in profit for the third quarter, hurt largely by higher operating costs that offset a growth in revenue. However, earnings for the quarter trumped Wall Street estimates, while revenues fell short of expectations.

AT&T indicated adding 289 thousand postpaid subscribers in the quarter, down from 410 thousand in the previous quarter and 785 thousand last year. Postpaid churn rate for the quarter rose 1.16 percent from 0.99 percent last year and 1.16 percent last quarter.

Both AT&T and Verizon, the two major service providers in US, have been experiencing stiff competition from T-Mobile US Inc. (TMUS) and Sprint Corp. (S) amidst consolidation in the telecom industry.

In July, AT&T closed its $48.5 billion acquisition of DirecTV thus becoming the largest U.S. pay-TV provider.

Dallas, Texas-based telecom giant's third-quarter profit dropped to $2.99 billion or $0.50 per share from $3.13 billion or $0.60 per share a year ago.

Excluding special items, adjusted earnings rose to $0.74 per share from $0.65 per share last year. On average, 15 analysts polled by Thomson Reuters expected earnings of $0.69 per share for the quarter. Analysts' estimates typically exclude special items.

AT&T's revenues for the quarter rose to $39.09 billion from $32.96 billion a year ago. Fourteen analysts had a consensus revenue estimate of $40.42 billion for the quarter.

Operating costs increased to $33.17 billion from $27.35 billion last year.

Looking for the full year, AT&T now expects adjusted earnings of $2.68 to $2.74 per share. Analysts currently estimate earnings of $2.61 per share for the year.