Entries in AT&T:T (23)


1Q11 Connections: DBS Connections

CenturyLink Closes on AT&T as Largest Reseller; DirecTV Extends Lead Over DISH 

As a whole, the public ILECs reported an increase of 34k DBS subs during the first quarter of 2011 and 233k for the year—“reported” however, being the key term.  Verizon (NYSE:VZ) no longer breaks out its DBS subs, but at last estimate it had around 1.45m DBS customers.  That was in 2Q10, however, prior to Frontier's (NYSE:FTR) acquisition of 214k former Verizon DBS customers.  

The merged CenturyLink/Qwest (NYSE:CTL) grew DBS subs at a strong pace in 1Q11, and post merger could soon overtake AT&T (NYSE:T) as the top-ILEC provider of DBS services.  Elsewhere, Frontier reported strong DBS customer growth of nearly 140k subs in 1Q11. 

AT&T has shed DBS customers steadily since 2Q10, and lost 11.3% of its customer base in the year ended March 31, 2011. Logically, AT&T also provides the best proxy for Verizon as both providers have pushed similar video services—U-Verse and FiOS—over the past year. One could safely assume that Verizon has experienced similar DBS losses, as it transitions its customers from DBS services to FiOS.

Among the DBS giants, DirecTV (Nasdaq:DTV) extended its connections lead over DISH Networks in 1Q11, adding 184k subscribers.  DISH Networks (Nasdaq:DISH), however, showed signs of life, adding 58k subs after three straight quarters of losses.  Despite its 1Q11 growth, DISH lost 1% of it customer base over the past year, during which DirecTV has grown its connections by nearly 750k. 


1Q11 Connections: Wireless Connections

Wireless Connections Rise as Verizon Tops AT&T

Smartphone offerings fueled connection growth for a number of wireless providers in 2010.  Overall wireless connections grew 10% YoY from 1Q10 to 1Q11, with the number of adds increasing each quarter.

Verizon (NYSE:VZ) overtook AT&T (NYSE:T) as the leading wireless provider in 1Q11, elevated by the February release of the Verizon iPhone.  Verizon added 11.2m customers YoY; nearly 10m of which were added in the first quarter.  Not far behind, AT&T added its 10.5m customers more steadily from 1Q10 to 1Q11, reflecting the same 12.1% annual growth rate as Verizon.

MetroPCS (NYSE:PCS) grew its connection base 9% in 1Q11 and nearly 22% YoY—the result of low-priced Android smartphone offerings and the introduction of its 4G service plans. MetroPCS added 0.73m customers in 1Q11—a quarterly record for the provider— and decreased its churn rate 60 basis points. 

T-Mobile aside, which lost nearly 100k customers in 1Q11 and 78k for the year, the companies that shed connections during 2010 and in 1Q11 were the smaller wireless providers—Alaska Communications (Nasdaq:ALSK), Cincinnati Bell (NYSE:CBB), and NTELOS (Nasdaq:NTLS). CenturyLink (NYSE:CTL) exited its wireless reseller program altogether in mid-2010, though it will soon start reselling Verizon Wireless services to its customers.   



1Q11 Connections: U-verse versus FiOS

Penetration Increasing Steadily

Growth in both FiOS and U-verse continued apace in 1Q11; combined, Verizon (NYSE:VZ) and AT&T (NYSE:T) added 425k net new customers, in line with the number of net adds for most of  the past eight quarters.  On a percentage basis, U-verse is still adding customers more rapidly than FiOS, due to its smaller base; combined, the two carriers have increased the U-verse/FiOS customer base by nearly 27% to almost 7.5m.

Verizon noted in its 1Q11 financial report that FiOS customers continue to drive growth in average revenue per customer and overall revenue growth, and said that the average monthly bill for a FiOS customer was more than $146 per month compared with about $90 for its average wireline consumer.  Verizon also reported that FiOS penetration of potential customers was more than 33% and that FiOS is available to more than 13m potential customers.  The company also said that growth in FiOS Internet connections offset a decline in DSL-based high speed Internet connections.

AT&T highlighted the fact that of its total 3.2m U-verse TV subscribers at the end of 1Q11, the “attach rate” for Internet and U-verse voice services were more than 90% and nearly 60%, respectively, and said that U-verse triple play customers generate $168 per sub per month in revenue.  U-verse service now reaches 28m “living units” and its penetration in markets in service for more than 30 months is 23.8%. 


1Q11 Connections: ILEC Connections Mix

Major Trends Continue as Voice Connections Fall

The connections mix numbers from 1Q11 confirm that big picture trends have not changed for ILECs. Industry wide, voice connections as a percentage of total connections are still falling as providers look to expand video, broadband and wireless segments in order to offset voice losses.

On average, voice connections represented 52% of total connections for ILECs in 1Q11, down from 54% a year ago.  NTELOS (Nasdaq:NTLS) was the lone ILEC to grow its wireline customer base as a percentage of total customers YoY, thanks to its 4Q10 acquisition of FiberNet.  Hawaiian Telecom’s connection mix was most heavily weighted to voice, at 80% of total connections.

In contrast to voice, broadband and video experienced nearly across the board increases as a percentage of total connections.  At the high end, broadband connections made up nearly 30% of SureWest’s (Nasdaq:SURW) total connections in 1Q11, while New Ulm Telecom (OTC:NULM.OB) derived the highest percentage of total connections from video customers, at 20%.  Shenandoah Telecom (Nasdaq:SHEN), after acquiring JetBroadband in 3Q10, posted moderate percentage increases in both broadband and video connections.

Only about half the ILECs surveyed had any wireless subs in their connection mixes.  At the high and low ends of our survey, wireless connections represented nearly 86% of Telephone and Data System’s (NYSE:TDS) connections, and just 1.4% of Hawaiian Telecom’s connections.  Elsewhere, the two largest wireless providers, Verizon (NYSE:VZ) and AT&T (NYSE:T), increased wireless connections as a percentage of total connections by about 5% per year between 1Q09 and 1Q11—offset by similar declines in wireline.


1Q11 Connections: Ten Largest Providers

Verizon Tops Wireless, AT&T Largest Overall Provider

Verizon (NYSE:VZ) reclaimed the top spot in wireless subscriptions in 1Q11, while AT&T (NYSE:T) remained the quarterly leader in both the wireline and total connections categories.  Despite efforts to extend the reach of U-Verse and FiOS, AT&T and Verizon took the fifth and sixth spots in the video category—trailing leader Comcast by nearly 17m subs. 

Overall, the main story of the quarter was VZ’s jump to number one in wireless, albeit pending AT&T’s acquisition of T-Mobile.  The February introduction of the Verizon iPhone no doubt fueled Verizon’s leap to the top spot.  Verizon activated 2.2m iPhones and 0.5m other 4G devices during 1Q11. 

By contrast, the wireline category remained relatively stable in 1Q11 as telcos slowly shed connections.  The top three providers, AT&T, Verizon and CenturyLink/Qwest (NYSE:CTL) combined to lose over 2m wireline connections in the first quarter, as voice losses outweighed gains in video and broadband.

Comcast’s (Nasdaq:CMCSA) near 23m subs rendered it the top video service provider once again, followed by satellite providers DirecTV (Nasdaq:DTV) and DISH Network (Nasdaq:DISH).  Time Warner Cable (NYSE:TWC), which ranked fourth, actually lost video customers in 1Q11.  A video trend to watch is whether telcos can continue to gain ground on the cablecos and DBS providers—as Verizon and AT&T posted moderate video gains in the first quarter.