AT&T beats revenue estimates as reopening helps phone sales

AT&T Inc beat Wall Street revenue targets as the reopening of the US economy following pandemic-linked restrictions boosted smartphone sales and the media business.

The company said on Thursday it added 595,000 net wireless phone subscribers in the first quarter, more than double what analysts had expected.

Shares of AT&T surged 4.25% to $31.40 in premarket trading.

AT&T's controversial move to make its entire 2021 theatrical movies slate available to its streaming customers at the same time helped the company attract 2.7 milllion new subscribers for HBO and HBO Max.

The services now have a total of 44.2 million US subscribers, AT&T said.

Its movie release of "Godzilla vs. Kong" has generated over $80 million at the US box office and over $300 million globally as the No. 1 film over the past three weekends.

Shares of streaming rival Netflix sank 11% on Monday after it reported a sharp slowdown in new customer additions globally. In the US and Canada, Netflix added 450,000 new paid subscribers.

AT&T has been investing heavily in its new 5G wireless network and bundling its streaming service HBO Max for free with certain phone plans to retain customers and keep them from switching to competitors.

Wireless phone churn, or the rate of customer defections, declined 0.1% in the first quarter to 0.76%. The improvements were, in part, due to the bundling of HBO Max to higher-priced phone plans.

Revenue for AT&T was up nearly 3% at $43.9 billion, beating analysts' average estimate of $42.69 billion, according to IBES data from Refinitiv.

Excluding items, AT&T earned 86 cents per share, above analyst estimates of 78 cents.

WarnerMedia, which includes HBO, began to recover from the ravages of the pandemic during which sports events and movie productions were paused. Revenue for WarnerMedia rose 9.8% to $8.5 billion.

AT&T added 235,000 new fiber internet customers, as Americans continued to work from home during the pandemic, driving up demand for home Wi-Fi.

The company's net debt rose to $169 billion at the end of the first quarter, due to its purchase of more wireless spectrum, or airwaves that carry data.

Separately, rival Verizon Communications Inc has said it lost more wireless subscribers than expected during the first quarter as it battled intense competition from T-Mobile US Inc and AT&T to attract customers.