AT&T Inc. posted a 4.5% drop in revenue from a year ago and withdrew its forecast of 2% revenue growth for the year, saying it can’t provide a financial forecast for 2020 due to the coronavirus pandemic.

First-Quarter Highlights

Communications

• Mobility:
• Service revenues up 2.5%
• Operating income up 9.0% with EBITDA of $7.8 billion, up 7.0%
• Postpaid phone churn of 0.86%, a 6 basis point improvement
• 163,000 postpaid phone net adds
  
• Entertainment Group:
• Solid video and broadband ARPU gains
• AT&T TV national launch; video subs impacted by focus on long-term value customer base:
• 18.6 million premium TV subscribers – 897,000 net loss
• 209,000 AT&T Fiber net adds; IP broadband revenue growth of nearly 2%
• WarnerMedia
• HBO Max launch set for May 27
• Cancellation of the 2020 NCAA Division I Men's Basketball Tournament
• Warner Bros. television and film production on hiatus during pandemic
  

“The COVID pandemic had a 5 cents per share impact on our first quarter. Without it, the quarter was about what we expected — strong wireless numbers that covered the HBO Max investment, and produced stable EBITDA and EBITDA margins,” said Randall Stephenson, AT&T Chairman and CEO.

“We have a strong cash position, a strong balance sheet, and our core businesses are solid and continue to generate good free cash flow — even in today’s environment. In light of the pandemic’s economic impact, we’ve already adjusted our capital allocation plans and suspended all share retirements,” Stephenson said. “As a result, we’re able to continue investing in critical growth areas like 5G, broadband and HBO Max, while maintaining our dividend commitment and paying down debt.”

AT&T's consolidated revenues for the first quarter totaled $42.8 billion versus $44.8 billion in the year-ago quarter. Growth in domestic wireless service revenues and strategic and managed business services revenues partially offset declines in revenues from WarnerMedia, domestic video, legacy wireline services, domestic wireless equipment and Vrio.

Operating expenses were $35.3 billion versus $37.6 billion in the year-ago quarter, down 6.1% due to a one-time spectrum gain, lower Entertainment Group costs, lower WarnerMedia costs primarily associated with lower revenues, lower domestic wireless equipment costs and cost efficiencies.

Operating income was $7.5 billion versus $7.2 billion in the year-ago quarter, with operating expense reductions outpacing revenue declines. Operating income margin was 17.5% versus 16.1% in the year-ago quarter. When adjusting for amortization, a one-time spectrum gain, merger- and integration-related expenses and other items, operating income was $9.1 billion versus $9.6 billion in the year-ago quarter, and operating income margin was 21.2% versus 21.4% in the year-ago quarter.

Due to the lack of visibility related to COVID-19 pandemic and recovery, the AT&T withdrawn financial guidance at this time.