TLDR:
- AT&T stock jumped 4% after beating Q3 earnings expectations ($0.60 vs $0.57 per share)
- Added 403,000 postpaid phone subscribers, exceeding analyst estimates
- Fiber business gained 226,000 new subscribers, marking 19th straight quarter above 200K
- Revenue slightly missed expectations ($30.2B vs $30.45B forecast)
- Premium plans and wireless-fiber bundles driving customer retention
AT&T’s stock climbed approximately 4% in Wednesday’s trading following the release of its third-quarter earnings report, which showed strong wireless subscriber growth and better-than-expected profits despite slightly missing revenue targets.
The telecommunications giant reported adjusted earnings of $0.60 per share for the quarter, surpassing Wall Street analysts’ expectations of $0.57 per share. However, total revenue came in at $30.2 billion, falling short of the projected $30.45 billion.
AT&T added 403,000 postpaid phone subscribers during the quarter, exceeding analyst estimates of 393,430. This growth was primarily driven by customers signing up for premium unlimited plans that include additional features such as increased hotspot data.
The company’s mobility services segment showed particular strength, with sales increasing 4% compared to the same period last year. This growth reflects the successful adoption of AT&T’s higher-tier service plans in an increasingly competitive U.S. telecom market.
AT&T’s fiber internet business continued its steady expansion, adding 226,000 new subscribers in the third quarter. While this marked the 19th consecutive quarter with net additions above 200,000, it fell short of analyst expectations of 257,860 new subscribers. The company attributed this slight miss to a work stoppage in its southeast region that affected fiber installations.
The company’s strategy of bundling services has shown promising results, with 40% of fiber customers also choosing to subscribe to AT&T’s wireless plans. This combination allows customers to receive discounts while helping AT&T retain subscribers across multiple service lines.
Total consumer broadband revenue increased by 6.4% year over year, demonstrating strong momentum in this crucial segment. The company maintains its full-year guidance, expecting wireless services revenue to grow by approximately 3% and broadband revenue to increase by more than 7%.
Despite these positive indicators, AT&T faced some challenges during the quarter. The business wireline segment continued to experience declining revenues, contributing to a 0.5% decrease in total sales compared to the previous year. Additionally, the company recorded a $4.4 billion impairment charge related to this division.
Operating expenses rose 14% to $28.1 billion, significantly higher than analyst estimates of $22.31 billion, primarily due to the impairment charge. Adjusted earnings per share declined approximately 6% compared to the same period last year.
Looking ahead to the fourth quarter, AT&T expects increased activity in phone purchases and upgrades due to seasonal patterns. The company also remains confident in achieving its target net-debt-to-adjusted-EBITDA ratio of 2.5 by the first half of next year.
Management reaffirmed its full-year guidance for adjusted EBITDA growth of 3%, suggesting confidence in the company’s operational strategy despite market challenges.
The company’s shares responded positively to the earnings report, with investors appearing to focus on the strong wireless subscriber growth and better-than-expected profits rather than the revenue miss.
Lower phone upgrade volumes impacted total revenue during the quarter, a trend also experienced by competitor Verizon. However, AT&T expects this to improve in the fourth quarter during the traditional holiday shopping season.
The company’s premium plan strategy continues to help AT&T maintain competitiveness in the saturated U.S. telecom market, where rivals are increasingly bundling their services with streaming platforms to attract customers.
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