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AT&T Claims More Than 200,000 DirecTV Now Subs Signed Up in Q4

Telco also discloses $1 billion charge in quarter related to pension and postemployment benefit plans

AT&T added more than 200,000 video subscribers in the fourth quarter — which was “entirely driven” by its new DirecTV Now internet-delivered pay-TV service, the telco said Friday.

The gain in video subs includes only paying customers, the company said in a filing with the SEC. AT&T is scheduled to report Q4 earnings results on Wednesday, Jan. 25.

“While it’s early days, our recent conversations with investors have focused heavily on whether [virtual pay-TV service providers] will be incremental vs cannibalistic, and we’ve been arguing incremental,” RBC Capital Markets analyst Steven Cahall wrote in a note to clients Friday. “This potentially sets up Q4 results for interesting subscriber commentary.”

Since AT&T launched DirecTV Now on Nov. 30, the service has been plagued with technical glitches and outages, including one that lasted several hours last Friday, angering customers of the fledgling over-the-top offering. The company has refused to grant refunds to subscribers unhappy with DirecTV Now, TechCrunch reported this week.

DirecTV Now — which AT&T execs had promised would shake up the pay-TV industry with breakthrough pricing — starts at $35 monthly for a bundle of 64 channels (plus local stations where available), ranging up to a package with up to 130 channels for $70 per month. Local channels on DirecTV Now are available only in select markets from ABC, NBC, Fox and Telemundo, where the broadcasters have owned-and-operated stations. AT&T currently does not have a deal with CBS for DirecTV Now.

Also in the filing Friday, AT&T disclosed that for Q4 it plans to record a $1 billion charge related to pension and postemployment benefit plans.

In addition, AT&T said that in Q4 it added more than 900,000 branded net domestic wireless subscribers (roughly 500,000 postpaid and 400,000 prepaid). During the quarter, about 700,000 2G subscribers deactivated their accounts. As of Dec. 31, 2016, AT&T had 2.3 million remaining total 2G subscribers and non-voice phone connections. “We have discontinued service on virtually all of our 2G cell sites,” the telco said.

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