(Reuters) - The No. 2 U.S. wireless carrier AT&T Inc (T.N) reported adjusted profit in line with estimates on Thursday, as it signed up new wireless subscribers but saw a drop in pay-TV customers.
The Dallas-based company’s shares, which have gained as much as 24 percent so far this year, were down 1.2 percent in extended trading after closing at $42.52.
Excluding items, the company earned 72 cents per share in the second quarter ended June 30 - in line with the average analyst estimate, according to Thomson Reuters I/B/E/S.
AT&T said it added 1.4 million new wireless subscribers, including 257,000 postpaid customers, or those who pay monthly bills.
However, its total video subscribers were down 49,000 in the quarter. It added 342,000 DIRECTV subscribers, but lost 391,000 U-verse TV customers.
AT&T is looking to tap new revenue sources in an oversaturated U.S. wireless market. It acquired satellite-TV provider DIRECTV last July to create the country’s largest pay-TV company.
AT&T is making a big mobile video push by later this year launching online video streaming services from DIRECTV. With these moves, the company will be up against rival streaming services such as Netflix Inc. (NFLX.O) and Dish Network Corp’s (DISH.O) Sling TV.
Its upcoming DIRECTV Now streaming service will be a “game changer,” Chief Financial Officer John Stephens said on an earnings call.
“We expect the millions of people who don’t now subscribe to a video service and prefer a streaming option will be impressed,” Stephens said.
The company is yet to divulge details on pricing and content offerings of its DIRECTV streaming service.
“Over the last six months they have lost video subscribers. They are still guiding to positive video subscriber growth for full year...but it would be a mistake to call DIRECTV a growth engine,” MoffettNathanson analyst Craig Moffett said.
Last week, AT&T deposited a down payment to bid in the U.S Federal Communications Commission’s ongoing spectrum auction that involves a sale of airwaves from television broadcasters for wireless use.
The company is one of the bidders in the sale of Yahoo Inc’s Internet business. Its rival Verizon Communications Inc is seen by some industry watchers as a frontrunner in the Yahoo sale.
AT&T reported total operating revenue rose to $40.52 billion from $33.02 billion, falling slightly short of the average analyst estimate of $40.62 billion.
The net income attributable to AT&T rose to $3.41 billion, from $3.08 billion, a year earlier. On a per share basis, it fell to 55 cents from 59 cents.
Reporting by Rishika Sadam in Bengaluru; Editing by Saumyadeb Chakrabarty and Diane Craft