AT&T said in a filing late Wednesday that it expects losses of about 90,000 DirecTV subscribers in its soon-to-be-reporter fiscal third quarter and about $90 million in consolidated revenues owing to damages from recent hurricanes and earthquake in Mexico.
The SEC filing also reiterated the company’s full-year 2017 guidance of “mid-single-digit adjusted earnings growth, adjusted consolidated operating margin expansion, capital expenditures in the $22 billion range, and free cash flow at the low end of the $18 billion range,” it said.
The forecast comes after AT&T’s board declared a quarterly dividend last month of 49 cents a share, consistent with previous levels. The telecom giant is awaiting final approvals of its $85 billion takeover of Time Warner. It reports Q3 earnings October 24.
AT&T cited “heightened competition in traditional pay TV markets and over-the-top services, hurricanes and our stricter credit standards” as the reasons behind the expected sub losses. “The decline of traditional video subscribers negatively impacts our Entertainment Group revenues and margins, resulting in an adjusted consolidated operating income margin that will be essentially flat versus the year-ago third quarter,” it states.
It said it did add 300,000 subs to its DirecTV Now service.
As for the revenue hit, it said: “Several devastating hurricanes, as well as earthquakes in Mexico, significantly impacted certain regions of our service area during the third quarter. Damage to our network and other property, costs to restore services, and revenue declines from waived charges will decrease our reported third-quarter 2017 consolidated revenues nearly $90 million and our reported pre-tax earnings about $210 million, or $0.02 per diluted share. We expect further reductions in the fourth quarter as we continue to assess damage to our network and fully restore service.”