Despite the strained economy, AT&T posted a net increase of 284,000 subscribers for its U-verse TV service, to stand at 1.329 million video subscribers at the end of March.
Still, while AT&T's growth areas including TV, broadband and wireless offset the "continuing economic pressures on consumers and businesses," according to the company, the telco continued to see erosion in the core landline business with wireline revenue dropping about $400 million year-over-year.
Overall, AT&T's first-quarter revenue was $30.6 billion, down 0.6% compared with $30.7 billion in the year-ago period. Net income attributable to AT&T was $3.1 billion, with diluted earnings per share of 53 cents, down 9.7% versus first-quarter 2008.
While overall revenue growth "is now zero or less," AT&T's results "show that the company is well-positioned to handle the recession from a cost management perspective, and equally well-positioned to emerge stronger when the recession (eventually) ends," Sanford Bernstein senior analyst Craig Moffett wrote in a note to investors Wednesday.
The No. 1 telecommunications provider in the U.S. said U-verse TV continued to reach "mid-teens" penetration in areas marketed to for at least 18 months, and nearly 50% TV subscribers take the largest video package.
Including satellite customers, AT&T's total video subscribers stood at 3.5 million at the end of the first quarter, representing 12.6% of households served. AT&T resells DirecTV service across its entire footprint where U-verse TV is unavailable, having dropped Dish Network as a partner in January.
AT&T's satellite connections for the first quarter declined 27,000, down 1.2% year-over-year to 2.205 million at the end of March.
On the broadband front, AT&T's DSL connections increased by 359,000 in the first quarter, compared with 236,000 in the preceding quarter.
But total first-quarter wireline consumer revenue was $5.4 billion, compared with $5.8 billion in the year-earlier quarter, as declining voice revenue more than offset growth in video and broadband.
AT&T lost more than 4.2 million consumer phone lines in the last 12 months, down 12.3% from a year ago, to stand at 29.969 million.
AT&T noted that it had the smallest sequential decline in wireline consumer connections -- retail voice, high-speed Internet and video -- in three quarters. The company had 46.8 million total consumer connections at the end of the first quarter of 2009, compared with 49.3 million at the end of the first quarter of 2008 and 47.0 million at the end of the fourth quarter of 2008.
The company also posted 1.2 million net adds in wireless subscribers to reach 78.2 million.
AT&T chairman and CEO Randall Stephenson highlighted AT&T's deal with Apple to offer iPhone devices. The telco said it activated more than 1.6 million iPhone 3Gs in the first quarter and noted that average monthly revenue per subscriber for iPhone users is approximately 1.6 times higher than the company's overall postpaid subscriber base.
"[D]uring this down cycle we continue to invest in key growth areas like mobile broadband, more bandwidth to the home through our all-IP AT&T U-verse platform, and advanced global business solutions delivered over AT&T's premier Internet backbone network," Stephenson said in a statement. "We have good momentum in all of these areas."
Capital spending plunged 24%, to $3.2 billion for the quarter, compared with $4.2 billion in the year-ago quarter. AT&T had previously announced an expected decline in capex for 2009 of up to 15% for the year.
