AT&T Blames Hurricanes, Mexico Earthquake For Q3 Revenue, Video Subscriber Losses


Shares in AT&T Inc (NYSE:T) were lower in pre-market trading after the telecoms giant issued a profit warning on Wednesday evening.

AT&T Inc. said Wednesday that recent hurricanes to hit the US and Caribbean and earthquakes in Mexico would reduce third-quarter earnings per share by 2 cents and revenue by almost $90 million.

The natural disaster and the series of hurricanes that hit various parts of the US shaved about $90 million off revenue in the period and dinged pre-tax earnings by about $210 million, or 2 cents a share.

As more customers cut their cable and turn to streaming services, Dallas-based AT&T says it expects to lose about 390,000 traditional pay-TV subscribers this quarter, according to financial documents filed with the Securities and Exchange Commission.

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The figure is higher than Wells Fargo analysts' estimate of 200,000 net adds for the OTT service; however AT&T's estimate of 90,000 total video net losses is higher than the 50,000 net losses forecast by the firm.

The decline of traditional video subscribers has a negative impact on AT&T's Entertainment Group revenues and margins; the group said the third quarter adjusted consolidated operating income margin would therefore "be essentially flat" versus the year-ago third quarter.

It expects to report 900,000 fewer handset equipment upgrades than in the year-ago Q3, hitting wireless equipment revenue. This trend will however not affect gross adds and AT&T continues to see low postpaid phone churn levels.