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AT&T Inc. (NYSE:T) Does Better Than Expected

As a result of a saturated market, AT&T Inc. (NYSE:T) is experiencing a decline in the rate of new subscribers. However, the good news is that it is improving in keeping its existing customers from leaving.

On Wednesday, The firm reported a net profit of $3.2 billion or 63 cents a share. This is slightly ahead of the analyst estimates for 62 cents a share. Sales grossed $32.57 billion a little behind the $32.82 billion estimated by Wall Street analysts.

AT&T gets most of its revenue from its U.S wireless business. The firm faces rising competition from Google Inc (NASDAQ:GOOGL) and T-Mobile US Inc (NYSE:TMUS) among others.

New customers

The U.S’s second largest network operator acquired 441,000 new contract subscribers in the first quarter. This was above what was anticipated. The reason was more tablet users who helped balance losses from lower-end feature phones.

The speed at which AT&T is acquiring new mobile subscribers is gradually declining. AT&T’s bane is still T-Mobile. According to Wells Fargo analysts, T-mobile acquired 1.03 million new contract subscribers in the first quarter.

Verizon Communications Inc. (NYSE:VZ) is doing relatively better in acquiring new customers. It had a profit of $4.22 billion or $1.02 a share which was beyond analysts estimates. It acquired 565,000 retail postpaid connections, in the first quarter an improvement of 4.8% from last year.

Longstanding carriers such as AT&T and Verizon face a strong challenge in terms of prices and subsidies from Google. On Wednesday, the search engine major introduced its new wireless service termed Project Fi.

Charge as per usage

As opposed to the standard subscription fee of carriers, Google will charge only for the data used each month. This is analogous to the usage-based model utilized by the Republic Wireless, an MVNO (mobile virtual network operator) that competes with bigger carriers.

Similar to other MVNO’s Google rents bandwidth from T-Mobile as well as Sprint Corp (NYSE:S). The service will at first only work with the firm’s Nexus 6 phones. The service will switch between the two networks whichever gives the best signal.

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email ([email protected]) or his Google+ page (https://plus.google.com/103338576216002376250).

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