AT&T Misses on Revenue from Cheaper Tablet Data Fees

AT&T (T) reported net income for the first quarter of $3.7 billion, or $0.67 per share on revenue of $31.36 billion.

Adjusted earnings, excluding the sale of an advertising business, were at $0.64 per share, above the $0.60 earned in the prior-year period, and exactly what analysts had predicted.

Revenue, however, was nearly half a billion less than analyst expectations of $31.74 billion, and less than the prior year period when the company brought it $31.82 billion.

The company added 296,000 devices to contract-based plans, but all in the form of tablets carrying lower monthly fees. Overall, the AT&T posted its first ever loss on contract-based plans, and, excluding tablets, lost contract-based devices to the tune of 69,000.

This created a situation in which average revenue per contract user rose only 0.9 percent for Q1.

Company CFO John Stephens recognized the role of tablets in the decrease in spending for the period, noting that the company’s cheap data plans for the devices are not set in stone. “We put that in place to see how it would work, to stimulate demand,” but later in the conference call said that it was not necessarily a “permanent offering.”

The company’s shares closed regular trading at $39 on a slight gain of 0.7 percent, but slipped 1.54 in afterhours to $38.40.