AT&T’s merger with Time Warner, along with growth in its wireless business, helped the telecommunications giant top Wall Street’s revenue forecast for the three months through September.
Sales at the Dallas-based company rose 15 percent in the quarter to $45.7 billion, AT&T said on Wednesday, compared with the $45.4 billion average of analysts’ projections. Profit increased to $4.7 billion, or 65 cents per share.
AT&T touted its $85 billion acquisition of Time Warner as a key revenue driver. The Department of Justice is in the midst of appealing a judge’s decision to allow that merger to advance, though Chief Executive Officer Randall Stephenson previously said the company is spending “zero effort” on the appeal.
Subscription revenue growth at Turner networks and HBO were up in the quarter and the company released several successful films, including “Crazy Rich Asians,” which has become one of the most successful romantic comedies in a decade.
With the new WarnerMedia entity, AT&T executives have touted the company’s ability to grow as an advertising powerhouse. The company acquired digital ad firm AppNexus earlier this year to help it better utilize the immense amount of consumer data it can gather as both a content provider and distributor in targeting such ads.
Companywide, advertising revenue climbed to $1.5 billion, largely due to the acquisition of Time Warner’s Turner. Excluding merger costs and other expenses, third-quarter earnings of 90 cents per share trailed the 94 cents that Wall Street predicted.
The company added 4.3 million new wireless customers in the North America in the period, a 43 percent year-over-year increase. Subscriptions for both DirecTV and broadband grew just slightly in the quarter to 25.2 million and 14.4 million, respectively.
AT&T is planning to roll-out fifth-generation wireless service in 12 cities in “the next few weeks,” John Donovan, the top executive at the firm’s communications group, told investors.
Telecom firms are engaged in a heated battle to introduce the 5G offering, which is expected to provide cellular connections with speeds that are currently available by only hardwired or WiFi connections. T-Mobile, which is trying to merge with Sprint, also plans to roll-out the service in 30 cities in 2018, then nationwide in 2020.
AT&T’s stock slid 3.82 percent to $31.76 pre-market trading in New York.
A day earlier, competitor Verizon reported a 2.8 percent increase in revenue to $32 billion for the quarter. Profit at the New York City-based carrier rose 35 percent to $5.1 billion. Revenue at the company’s media and advertising segment, known as Oath, dropped 6.9 percent to $1.8 billion.
“The company expects Oath revenues to be relatively flat in the near term and does not expect to meet the previous target of $10 billion in Oath revenues by 2020,” Verizon said in a statement.
