AT&T Sold 1M Fewer Phones During Q1 And Is On The Clock To Compete For 5G Spectrum Holder Straight Path

AT&T said on Tuesday evening that it has five days to respond to a new bid to acquire Straight Path Communications.

"We have the right to negotiate … to match or exceed the bid. We will evaluate the situation and make an evaluation within that time frame," said John Stephens, AT&T's senior executive vice president and CFO said during the carrier's Q1 2017 earnings call.

AT&T announced its intent to acquire Straight Path Communications for $1.6 billion as part of the Dallas-based telecom giant's push to build 5G networks. Straight Path, a company that buys and holds millimeter wave spectrum licenses needed for faster wireless connections, received a "superior" bid from another telecom provider on Tuesday.

[Related: Partners Predict 'Bidding War' For Straight Path As Unnamed Company Tops AT&T's $1.6B Offer]

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Randall Stephenson, chairman and CEO of AT&T, said that the carrier has the leading spectrum position in the U.S. today.

"All these investments are creating a very unique platform for a very unique customer base," Stephenson said. "Our goal is to put gigabit speeds in our customers' hands, no matter where they are on our network."

Stephenson pledged that the AT&T will continue its 5G development, as well as expand on its fiber footprint. The carrier said that it currently has 4.6 million AT&T Fiber customers, with plans on adding 2 million more during 2017. AT&T Fiber exists in 50 U.S. metro areas today, he said.

AT&T faced a similar struggle with the re-introduction of unlimited data plan that telecom rival Verizon faced during its 2017 Q1 period, which caused both carriers to shed postpaid customers. AT&T reported 61,000 fewer postpaid subscribers during Q1 2017.

Basking Ridge, N.J. Verizon lost 307,000 retail postpaid subscribers on a net basis during its first quarter.

However, AT&T reported 2.7 million wireless net adds during the first quarter, which the carrier attributed to prepaid users and connected devices.

AT&T's Business Solutions revenues dipped during Q1 2017 by 4.3 percent to $16.85 billion, down from $17.61 in the year-ago quarter. Business wireless revenues were also down 2.1 percent year over year to $9.43 billion, feeling the pressure of lower wireless equipment revenues.

The company's strategic services revenues, which include Ethernet, cloud, VoIP and security services, grew about 8 percent from $2.75 billion in Q1 2016 to $2.97 during Q1 2017, as legacy voice and data service revenues continued to decline, as predicted by AT&T.

Partner Solutions revenues saw a modest decline during Q1 2017, which ended on March 31. Wired and wireless sales were $1.52 billion, down from $1.57 billion in the year-ago quarter.

Consolidated revenues slipped down 2.8 percent thanks to "record-low" equipment sales and upgrade rates in the wireless space, Stephens said.

"We had our lowest-ever postpaid upgrade rate, selling 1 million fewer phones than a year ago," he said.

AT&T reported earnings of $0.74 adjusted earnings per share on revenues of $39.37 billion in Q1 2017, down from $40.53 billion a year ago. AT&T's earnings fell short of Wall Street expectations of $40.53 billion for Q1 2017, according to Thomson Reuters.

Net income attributable to AT&T during the quarter was $3.57 billion, down from $3.80 billion during Q1 2016.