Entries in U-verse (5)

Sunday
Dec112011

U-Verse Outgains FiOS in 3Q11

3Q11 Connections: U-Verse vs. FiOS

The duo of AT&T (NYSE:T) and Verizon (NYSE:VZ) added a combined 314k U-Verse and FiOS subscribers in the third quarter, as fiber services continue to provide much needed support for the wireline divisions at both companies.  AT&T led the gains, adding 176k U-Verse subs, good for 5.2% QoQ growth, while Verizon’s grew its FiOS customer base 3.1% QoQ, adding 138k subscribers in 3Q11.  

While Verizon has dominated the headlines over the past week with its $3.6b spectrum purchase from a consortium of cablecos, ceo Lowell McAdam has also made recent statements regarding the future of the telco’s FiOS expansion. Speaking at the UBS Media and Communications Conference this past Wednesday, McAdam confirmed that Verizon will halt its expansion of FiOS services in 2012 after the completion of its current rollouts. Verizon currently passes around 13m homes with FiOS, and plans to reach 16m homes by the end of 2012.

Verizon shelved the idea of additional FiOS rollouts, but its wireline segment has relied on FiOS for top line stability and ARPU growth in recent quarters. FiOS customers generated 60% of Verizon’s wireline revenue in 3Q11, and ARPU for FiOS users was $146—55% greater than Verizon’s overall wireline ARPU of $94.20. Similarly, U-Verse has been the main bright spot for AT&T’s wireline business. The ARPU for U-Verse customers was $170 in 3Q11, and U-Verse subs accounted for over 50% of AT&T’s wireline revenue. U-Verse’s ARPU compares favorably to FiOS’ per customer take, thanks to the fact 75% of U-Verse customers opted for triple or quad play bundles in 3Q11.

While U-Verse measures up better on ARPU, FiOS continues to achieve better penetration. In 3Q11, FiOS’ penetration of homes passed was around 30%, while U-Verse’s penetration was around 25% in service areas in which it has marketed service for at least three years. With AT&T’s fiber builds nearly complete, and Verizon ready to halt FiOS rollouts after 2012, the telcos’ ability to improve penetration in their current markets will determine if their fiber customer bases will continue to grow.

Verizon’s McAdam commented on Wednesday that he’d like to see FiOS penetration around 50% in the future, but delivering an additional 20% of homes passed could prove more difficult after its recent spectrum deal. As part of its purchase, Verizon agreed to cross-market the video services of its competitors, namely Comcast (Nasdaq:CMCSA) and Time Warner (NYSE:TWC), allowing the cablecos to bundle Verizon’s wireless service with their video options, even in FiOS markets.

Monday
Nov142011

ILEC 3Q11 Results Summary: AT&T

AT&T Riding the Mobile Broadband Wave

AT&T’s third quarter results were impressive. The company led the major wireless carriers in terms of subscriber growth—without a new iPhone launch and with no LTE coverage to speak of in the period. And now that it’s launching LTE and selling the iPhone 4S, management is extremely confident that its fourth quarter results will be even stronger. On the wireline side of the business, U-verse continues to perform well and the company now generates more than half of its revenue from broadband, video and VoIP products; voice and “other” accounted for the remainder of wireline revenue.

In the company’s conference call, Ralph de la Vega, ceo of AT&T Mobility, gushed about the progress and potential of its LTE network: “I am thrilled about what we're seeing with the LTE launch. I have been a part of many network and device transformations. And this technology quite frankly is the best I have ever seen in my career. The network technology is fantastic. The devices are fast. They're thin. They have great battery life. It's the first time that I think a network transition is going to be a home run right off the bat.”

He noted that smartphones make up 52% of the base now and opined that virtually all subscribers will be using smartphones within two or three years. He continued, “And then you add on top of that these new devices like tablets and MiFis and e-Readers and telematics. And the growth opportunity is off the charts on this. And then you add to that the cloud, the fact that all of these devices in the future are going to want connectivity to the cloud, which means they need to have great bandwidth, great data capability…And the great thing about doing all of that is that we're doing it with a technology, LTE, that provides a reduced cost per megabyte, that is we can produce the megabyte a lot cheaper on LTE, and it's also more spectrally efficient. So lower cost, lower spectrum requirements and great revenue potential. I'm very bullish on what we're seeing in data, and I think we've only seen the tip of the iceberg because customers love the devices that are coming out and they love using high-speed data.”

When one analyst questioned de la Vega on the possibility that smartphone ARPU may begin eroding as lower end customers migrate over, he disagreed, and added that the company expects to add higher tier plans down the road: “In terms of the capability to grow ARPU, I think that we're going to see customers use more data, not less. I don't see an environment going into the future where customers are going to use less data. These products are too good. There's an incredible amount of streaming content that's available. So we're going to continue to see customer data usage increase. We have not seen a decline, and I don't see it any way to decline. That's why I feel so bullish about our position of having 50% of our base already on tiered plans, and we plan to make available more tiered options for customers in the future so they can enjoy the data services that they want. So what I see is exactly the opposite of the scenario you suggested, where everybody is actually using more data. I see it across every product category we sell and that more handsets that we get into a customer's hands that are smartphones, the more data that they use, not the less.”

He added that they are seeing overage from both tiered plans, but that the overage is small today: “I can't give you an exact number, but we do have overage from both plans...like I said before, we plan to make available more options to customers that may need higher usage categories in the future, so they can feel comfortable in stepping up but not feeling that they're having to pay an exorbitant amount. We want to encourage customers to use more and incur a little more cost if that's what they want to do…The other thing that I feel so bullish about is what is happening in the tablet arena. I mean, it's very obvious to me that this tablet revolution is going to continue. I don't see anything in the horizon that stops it, and I think customers are going to want both, some smartphones and a tablet. And they're going to see their content on the tablet in ways that's going to make them use more and more data. So I think the future of tablet computing is going to be very good for our industry.”  De la Vega also said that the free iPhone 3GS, which AT&T is offering with a 2-year contract, has sold out, “We've seen a tremendous, tremendous demand for that device even though it's a generation old. And actually, we're getting more new subscribers coming on the 3GS on the average than other devices.”

AT&T also did well in the prepaid segment in the quarter, adding more than 100k net new prepaid subscribers. De la Vega noted that the new $50 GoPhone plan has been very well received and “we’re just getting started…We put in that plan some handsets that are very attractive. They're low cost, but they've been a huge hit in the marketplace, so we're seeing that business resurge for us...We have a very strong fourth quarter lineup, so I think we're going to continue to do well with GoPhone sales in the fourth quarter.”

On the wireline side of the business, cfo John Stephens was asked about margin trends given that the U-verse margins are generally lower than in the legacy business. The company has been cutting costs in an effort to strengthen wireline margins, but management said that the numerous storms as well as a technology upgrade affected the results in the quarter—adjusted for those factors the EBITDA margin for the wireline business was 32%.

AT&T has been aggressively working to move its legacy DSL customers onto U-verse. Stephens noted, “The most encouraging piece of the DSL story [is that] while our net adds for the quarter were about in the 5,000 range, we had 500,000 high-speed U-verse/IP DSLAM net adds. So we were able to convert a huge piece of our legacy DSL base into U-verse/IP DSLAM, and we saw gains in small business with that IP DSLAM product for the first time. We'll continue to focus on transforming those DSL lines into high speed. We get great speeds, great service to our customers, good ARPUs.” Stephens also noted that the company will promote its wireless broadband service, which it will deploy to 97% of the country, in those areas where it doesn’t have U-verse. “We believe that's going to be able to provide a wireless solution at a high speed, good quality, good cost, on a profitable basis for us. That's the long-term solution to the non-U-verse areas.”

Monday
Oct172011

2Q11 Connections: FiOS versus U-Verse

U-Verse Growth Outpaces FiOS in 2Q11

AT&T (NYSE:T) and Verizon (NYSE:VZ) continued to increase their fiber-based subscriber base in 2Q11, combining to add a net 391k U-Verse and FiOS subs. The net customer gains for both were down slightly from 1Q11, but remained steady compared to quarterly adds over the past two years. The increased penetration of their FTTX services continues improve overall top line growth and ARPU at AT&T and Verizon.

AT&T added 202k U-verse subs in 2Q11, slightly more than what FiOS gained. In its 2Q11 conference call AT&T referenced that U-Verse revenue is growing 57% YoY. It has achieved 25% penetration of U-Verse in service areas in which it has marketed service for three years, and will complete its fiber expansion by the end of 2011. The ARPU from U-Verse subs rose to $170 in 2Q11, up 8% YoY, driven by the fact that 75% of U-Verse video customers opt for either three or four services. U-Verse broadband gains (439k subs) more than doubled television adds (202k subs) in the quarter. 

Verizon’s FiOS customer base grew 4.4% in 2Q11 to 4.5m subs. FiOS customers provided a monthly ARPU of over $146, about 15% less than U-verse’s ARPU, but still well above Verizon’s average consumer ARPU of $92.44. In terms of consumer revenue, FiOS accounted for 57% of Verizon’s consumer revenue in 2Q11, up from 48% in 2Q10.

FiOS’ video penetration of homes passed in 2Q11 was greater than U-Verse’s at 30%, partially attributable to the fact FiOS has had a presence in many of its markets for a longer period of time. With AT&T completing its fiber expansion later in 2011, the key to future FTTX growth for both companies will focus on improving penetration. Currently Verizon has the edge, but with more time in its markets AT&T looks to narrow that gap.

Tuesday
Jul122011

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%. 

Wednesday
Apr062011

4Q10 U-Verse vs. FiOS

AT&T and Verizon Report Steady Growth in U-Verse and FiOS

AT&T (NYSE:T) and Verizon (NYSE:VZ) have been reporting strong growth in video connections during recent quarters, largely as a result of the companies’ U-Verse and FiOS offerings.  AT&T’s U-Verse added between 200k-300k subs in every quarter of 2010 (248k in 4Q10 alone) and is growing at 44.7% annually.  Verizon’s FiOS has been growing somewhat more slowly than rival U-Verse (adding 197k during 4Q10), partially as a result of Verizon’s sale of lines to Frontier (NYSE:FTR) back on July 1, 2010.  Still, FiOS maintains a nearly 1.1m customer lead over U-Verse, ending 4Q10 with approximately 4.1m subs and reporting 18.9% year over year growth.