Revenue dropped 2% to $39 billion, due to declines in the domestic video, and legacy wireline services. This was offset by addition from Time Warner net of eliminations and growth in wireless, strategic business services and advertising. On a comparative basis, revenue rose 0.2% due to the close of the Time Warner acquisition.
At the end of the second quarter, AT&T had about 58 million business wireless subscribers. Total video subscribers grew by 80,000, and the Entertainment Group ended the quarter with 25.4 million total video subscribers. DirecTV Now added 342,000 subscribers to reach more than 1.8 million customers.
Looking ahead into fiscal 2018, the company lifted adjusted EPS guidance to the high-end of the $3.50 range. Free cash flow was raised to the high end of the $21-billion range, which includes all deal and integration costs. Capital investment is now predicted to be about $25 billion.
Time Warner’s full second-quarter results were included in AT&T’s results as the acquisition was closed on June 14. WarnerMedia revenues increased 7% helped by HBO and Turner year-over-year subscription revenue growth. Turner ad revenue moved up 3% and the company said a record number of series were in production at Warner Bros.
Business wireless revenue rose 2.1% on higher equipment revenues. However, business wireline revenue fell 8.9% as declines in legacy products were partially offset continued growth in strategic business services.
Revenue from Entertainment group tumbled 8% due to the impact of ASC 606 revenue recognition and declines in linear TV subscribers and legacy services. Broadband revenues rose slightly due to an accounting change for bundled discounts and higher IP broadband subscribers partially offset by legacy DSL declines.
Revenue from Consumer Mobility declined 1.5% as the company lost 144,000 total subscribers in the quarter. International revenue decreased 3.7% largely due to foreign exchange pressures. Wireless revenue moved down 1% due to a decrease in service revenues from customers migrating to no-overage plans, declines in reseller, and the impact of ASC 606 revenue recognition.
During the second quarter, the company’s total wireless subscribers increased by 3.1 million to reach 146.9 million in service. The company had added 73,000 postpaid subscribers of which 46,000 were postpaid phones. AT&T added 453,000 prepaid subscribers, which included 356,000 prepaid phone subscribers. Postpaid churn was 1.02%, up from 1.01% last year. Postpaid phone churn rose to 0.82% from 0.79% a year ago.
Related: Verizon Q2 profit rises on subscriber growth, tops view
Verizon (VZ), AT&T’s main competitor, posted better-than-expected results for the second quarter. This was the last quarterly results for CEO Lowell McAdam who will be stepping down next month. For fiscal 2018, Verizon guided revenue growth in the low-to-mid-single-digit percentage rates, and adjusted earnings growth in the low single-digit percentage rates range.
Shares of AT&T ended Tuesday’s regular trading session up 2.19% at $31.68 on the NYSE. The stock had been trading between $30.80 and $39.80 for the past 52 weeks.