AT&T Estimates 300K DirecTV Now Adds for Q3

AT&T Estimates 300K DirecTV Now Adds for Q3

Shares in AT&T Inc (NYSE:T) were lower in pre-market trading after the telecoms giant issued a profit warning on Wednesday evening.

The quake and the series of hurricanes that hit various parts of the USA shaved about $90 million off revenue in the period and dinged pre-tax earnings by about $210 million, or 2 cents a share.

The operator anticipates impacts from the several hurricanes during the period, as well as earthquakes in Mexico, to decrease third quarter revenue by $90 million.

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AT&T has filed an financial update for its third quarter with the SEC, saying it expects a decline in video subscribers and subsequent effect on Entertainment Group revenues and margins.

The company confirmed prior full-year targets of mid-single digit adjusted earnings growth, adjusted consolidated operating margin expansion, roughly $22 billion in capital expenditures, and free cash flow in the low $18 billion range. AT& said the video net losses were driven by heightened competition in the traditional pay-TV markets and OTT services, and hurt by the recent hurricanes and stricter credit standards.

Meanwhile, it notes it expects to report DirecTV Now added a net 300,000 subs, while overall total US video subscribers will be down about 90,000 (which "negatively impacts our Entertainment Group revenues and margins, resulting in an adjusted consolidated operating income margin that will be essentially flat versus the year-ago third quarter"). The lower upgrade numbers will adversely affect wireless equipment revenue, but will not affect "gross adds".

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