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AT&T Slows U-verse Expansion Plans

AT&T tacked on 264,000 U-verse TV subscribers in the fourth quarter of 2008, but video and other growth areas were more than offset by dropping wireline voice connections, and the telco also said it would scale back capital spending on building out the U-verse network.

The telco's fiber-to-the-node U-verse network currently reaches 17 million living units, more than double the reach at the end of 2007. While AT&T expects to "make continued good progress on its U-verse network build in 2009," it now expects to reach its previously announced target of 30 million living units in 2011, a year later than its original plan.

AT&T said it expects to cut total capital expenditures for 2009 by 10% to 15% compared with 2008. The telco's capex for last year was $20.3 billion.

The company ended the year with 1.045 million U-verse TV subscribers, compared with 231,000 at the end of the previous year.

AT&T also grew broadband subscribers, which include both wireline and wireless customers, by 357,000 in the fourth quarter to reach 16.3 million in service. U-verse TV continues to have a "high attach rate for broadband," with more than 90% of video subscribers in the fourth quarter also taking high-speed Internet.

However, for the fourth quarter, total regional consumer revenues were $5.3 billion, down 5.3% year over year, as voice declines more than offset growth in data and video, according to AT&T. Regional consumer revenue connections (which include retail voice, high speed Internet and video) fell to 47.0 million at the end of 2008, down 4.9% versus 49.4 million at the end of 2007.

For the fourth quarter, AT&T's total revenue was $31.1 billion, up 2.4% year-over-year, while net income was $2.4 billion -- down 23.3% compared with the fourth quarter of 2007. Full-year revenue was $124.0 billion, up 4.3% compared with 2007, and net income was $12.9 billion, a 7.7% increase over the year earlier.

"Despite the economic environment, we grew revenues in 2008, and I expect 2009 will be another year of overall revenue growth and solid progress for our company," AT&T chairman and CEO Randall Stephenson said in a statement.

The company said it expects full-year 2009 revenue growth "in the low single-digit range, led by gains in wireless and IP data services."

AT&T touted activations of Apple iPhone 3G subscribers -- powering on 1.9 million of the devices in the fourth quarter, with total iPhone activations over the last half of 2008 topping 4.3 million.

However, the telco said costs associated with subsidizing sales of the popular iPhones reduced pretax fourth-quarter earnings by approximately $450 million. Costs related to hurricanes, by comparison, reduced pretax earnings by approximately $120 million.