While it suffered a slight decline in pay-television customers and a surprising drop in broadband customers, AT&T (NYSE:T) held its own in the wireless industry.
The company has only reported results for its first three quarters so far, but in Q3, for example, it lost 91,000 U-Verse pay-TV customers, but it gained 26,000 DirecTV subscribers, according to research from Leichtman Research Group (LRG). That made AT&T the industry's largest loser with U-verse, but not that far off from its rivals.
The company also underperformed as an Internet service provider, losing 129,000 subscribers in Q3, after a similar 136,000-customer loss in Q2, and a 69,000 gain in Q1, according to LRG. Those numbers are disappointing at a time when rivals are almost universally adding broadband subscribers, but the losses are still relatively small.
Where the company has excelled, however, is its wireless business -- specifically, the consumer segment in the most recent quarter. In wireless, broadly, AT&T has fought off intense competition managing to grow its subscriber base while using added efficiency to eke out larger profits.
Consumer wireless leads the way
Despite increased competition from low-cost rivals T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S), AT&T has continued to grow its numbers of wireless connections in its United States. It grew from 120.55 million total customers in Q4 2014 to to 121.77 million in Q1 2015, and 123.9 million in Q2, according to data from Statista. That number spiked in Q3, according to an investor's report from AT&T, jumping to 126.4 million.
That's impressive, given that T-Mobile and Sprint both used aggressive pricing to attempt to win customers and AT&T has clearly stayed strong in the face of that increased competition. One particular area of strength became noticeable in Q3 when, because of a change in how it reports results, the company broke out its Consumer Mobility division's numbers.
Though the group's revenue fell 4.6% to $8.8 billion in Q3 year over year, operating expenses dropped by even more, 9.6%, which saw the division increase its operating income 8.5% to $2.7 billion for the quarter. Margins were higher because the company focused on controlling its costs and adding efficiencies.
For the quarter, Consumer Mobility showed its strongest gains in prepaid customers, adding 466,000. The division also lowered its overall churn from 2.03% in Q3 2014 to 1.9% in Q3 2015, which it specifically attributed to "improvements in prepaid churn." Those numbers are especially encouraging when you consider that consumer customers, rather than business users, are the ones being targeted by T-Mobile and Sprint's ads and promotions.
These numbers are impressive
AT&T's wireless numbers were impressive partly because the company was largely able to maintain its prices even as T-Mobile CEO John Legere regularly called them out. This performance shows that the company has succeeded in creating a consumer belief that it offers a better wireless network that's worth paying for.
That may be a hard argument to make in the coming years, given that T-Mobile and Sprint have gained ground when it comes to network quality, according to the most recent RootMetrics report. But while darker days may be coming for the company's wireless business, in 2015, wireless has been a strength and a source of growth when the rest of its segments are holding ground or losing users.