AT&T reported an improved wireless performance for the final quarter of 2017. The company added 286k postpaid phone net adds and 199k prepaid net adds. This improvement on the postpaid side helped boost smartphone sales by over 8% YoY. Late rally in the back-half of the quarter filled with BOGO offers and upgrade specials helped drive the wireless improvements.
On the prepaid side, the seasonally weak Q4 quarter was hit with higher churn (5.2%). However, smartphone sales within prepaid remained quite stable at 2m.
With the increase in net adds, EBITDA margins fell to 43.8% (from 50.4% in Q3). Higher marketing costs, higher upgrades, and higher equipment costs were the main culprits. Some of this will come back to the company via monthly equipment installment plans over the coming quarters. U-Verse and satellite TV remain weak and losing 100-250k subs per quarter. DirecTV Now offsets these losses. The company points to wireless stickiness DirecTV Now brings – total subs today nearly 1.2m.
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