AT&T Inc.’s share price down, expects to add more than 800 000 new subscribers, lifts sales forecast and reduces costs

AT&T Inc. explained that its acquisition of DirecTV will provide it with the opportunity to cut its TV content expenses, which is considered one of its largest video costs, by about 20%. The company also posted an increased 2014 revenue projection.

The company made a regulatory filing yesterday, revealing that about 60% of its revenue generated by its video subscribers is now spent on paying for content for its U-verse TV service. After the DirecTV takeover is finalized, the combined company is to focus on reducing its expenses.

AT&T Inc. also revealed that more than 800 000 customers are expected to be added on a monthly basis over the second quarter of the current financial year, likely to be the largest number of subscribers added since the result it posted in the fourth quarter of 2009.

According to the information provided by the company in its statement, about 50% of customers, who are purchasing new phones, opted for the Next financing plan of AT&T, up from 40% over the first three months of the financial year.

One of the analysts, who work for Citigroup – Mr. Michael Rollins commented for the Wall Street Journal, saying: “AT&T is trading away service revenue in the near-term to improve retention and customer goodwill.”

About 2.4 million postpaid subscribers are expected to be added over the 12 months that will end in June. AT&T Inc. also forecast that the revenue generated by its wireless services is not likely to grow over the second quarter of the financial year compared to the results it posted last year.

One of the spokesmen of AT&T Inc. – Mr. Brad Burns explained that the company is adding new subscribers at the fastest rates in the last few years.

AT&T Inc. was 0.68% down to close at 35.20 dollars per share yesterday, marking a one-year change of +0.37%. According to the information published on CNN Money, the 25 analysts offering 12-month price forecasts for AT&T Inc. have a median target of 35.00, with a high estimate of 42.00 and a low estimate of 25.00. The median estimate represents a -0.57% decrease from the last price of 35.20.