AT&T meets expectations with $40.5B Q1 revenue, $3.8B in net income, is losing U-Verse customers faster than adding DirecTV subs; adds 1.8M wireless subscribers
Ina Fried / Re/code :
Context & Ripple Effects
AT&T's Q1 lands better than its last report: after a revenue miss in Q4 where wireless revenue fell 4.9% year over year, this quarter meets expectations at $40.5B with $3.8B net income. The mix underneath tells the real story — 1.8M wireless additions are carrying the quarter while the video side runs backward.
The U-Verse-versus-DirecTV math is the detail to watch: satellite gains aren't covering legacy TV losses, and the follow-on coverage confirms it wasn't a one-off — by Q2 AT&T was reporting a net loss of 49K US video customers despite the same wireless strength.
First-order effects
- AT&T's growth engine is now almost entirely wireless: 1.8M subscriber additions must offset a video business shrinking in absolute terms, since DirecTV gains trail U-Verse losses.
- The headline 'meets expectations' masks a deteriorating segment — investors get stability on the top line but continued erosion in pay-TV, the business the DirecTV acquisition was meant to scale.
Second-order effects
- With legacy TV cannibalizing itself rather than converting to satellite, AT&T faces mounting pressure to find a successor video product before U-Verse losses compound — the DirecTV Now push visible in later coverage nets 312K subs by early 2018 but against a still-shrinking base.
- Rivals in both markets read the same numbers: cable operators see an opening to poach U-Verse defections, while wireless competitors face a carrier leaning harder on mobility for all its growth.
Third-order effects
- If the pattern holds — wireless additions funding video decline — AT&T's structure tilts from a balanced telecom-media company toward a wireless operator with a managed-decline TV asset, forcing either a streaming pivot or further dependence on connected devices to keep subscriber counts rising.
- The recurring beat-or-miss cadence across these quarters makes subscriber mix, not revenue totals, the metric that moves the stock — a structural shift in how telecom earnings are judged.
The trend: US telecom earnings are being carried by wireless subscriber growth while traditional pay-TV shrinks in absolute terms, pushing carriers toward streaming replacements for their own legacy video businesses.