AT&T counts the cost of natural disasters in the third quarter

AT&T counts the cost of natural disasters in the third quarter

"It should be clear that DirecTV, like all of its cable peers, is suffering from the ravages of cord-cutting", said Craig Moffett, analyst at MoffettNathanson, in an email. "The issue is in the acceleration in cord-cutting, and the prevalence of OTT, not each other", Moffett noted, adding that it's reasonable to expect a weak Q3 across the pay TV industry. "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 almost $90 million and our reported pre-tax earnings about $210 million, or $0.02 per diluted share".

The announcement weighed on other stocks in the sector, with shares of Dish Network Corp., Charter Communications Inc., Comcast Corp and Altice USA Inc. trading lower.

In the three months to the end of September the group saw its DIRECTV NOW service add around 300,000 (net) customers, but total United States video subscribers were down about 90,000.

Even though the pre-released linear video subscriber losses were higher than expected and storm impact was a short-term negative, AT&T is clearly "not the only one being impacted by these trends in Q3", Wells Fargo Senior Analyst Jennifer Fritzsche wrote in an investor note.

DirecTV Now added 300,000 subscribers in the quarter, so AT&T lost about 390,000 satellite TV and cable customers.

The company also announced that, effective July 1, it is reporting prepaid IoT connections (mainly for auto connectivity) as a separate class in its subscriber categories, which will result in 97,000 additional prepaid net adds in Q3.

AT&T is not the only pay-TV provider to point to a more competitive environment. DirecTV Now wasn't available in the July-September quarter in 2016.

The losses come after more options have entered the market that allow consumers to stream television over the internet at a cheaper price than paying for cable.

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