AT&T can’t stop reminding people that it’s in the entertainment business now.
But the reality is the company’s still in the phone business.
The nation’s second-largest wireless provider by subscribers added 3 million net customers in the third quarter, with 2.3 million in the US, the company said during its earnings report Tuesday. But AT&T gained only 130,000 phone subscribers, and lost 97,000 post-paid phone customers, or people who pay at the end of the month and typically boast higher credit scores and more-expensive bills. It also added 227,000 prepaid phone customers through its Cricket and AT&T Prepaid services, and saw 700,000 new customers from Mexico.
On the other end, AT&T said itto its DirecTV Now streaming service, a rare bright spot in a period in which the company lost nearly 90,000 US video subscribers. It ended the period with 25.1 million total video subscribers.
The dichotomy underscores the awkward transition AT&T faces as it looks to transform itself from a stodgy telecom player to a Hollywood powerhouse. Though it doesn’t want to lose you as a phone customer, the company is increasingly seeing more value in delivering you video service, as well as programs like “Game of Thrones.” That’s why itand is , the studio behind the hit HBO show.
The extra incentive is that AT&T has been struggling to deal with the competitive heat on the wireless end. In the same quarter,, while . T-Mobile and Sprint are widely expected to announce a merger in the coming weeks, which could potentially create a stronger rival.
One bright spot: Customers are sticking around longer. AT&T reported that its postpaid customer turnover rate fell to 0.84 percent from 1.04 percent a year ago, even if it ticked up slightly from the second-quarter turnover rate (known in the industry as “churn”) of 0.79 percent.
On the entertainment side, AT&T crowed about nabbing nearly 800,000 DirecTV Now subscribers in less than a year. But the company also lost 385,000 traditional video subscribers in the period, thanks to competition from both streaming services and other traditional pay-TV providers. It also blamed the company tightening its credit policy and kicking off customers who weren’t paying.
Of those total losses, 251,000 were satellite TV subscribers from DirecTV. The company saw a net gain of 125,000 broadband customers.
AT&T posted a third-quarter profit of $3.12 billion, or 49 cents a share. Excluding one-time items, the company earned 74 cents a share.
Revenue fell 2 percent to $39.67 billion.
Analysts, on average, expected AT&T to earn 75 cents a share on revenue of $40.12 billion, according to Yahoo Finance.
AT&T shares fell 1.7 percent to $34.28 in after-hours trading.
Corrected at 2 p.m. PT: To note that AT&T lost post-paid customers in the period.