At&t Inc ((T)) has held its Q3 earnings call. Read on for the main highlights of the call.
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AT&T’s latest earnings call revealed a mixed sentiment, highlighting strong growth in broadband and mobility services, alongside strategic acquisitions poised to drive future expansion. However, the company faces challenges from increased competition, declining business wireline revenue, and rising operating expenses, which could impact its overall performance.
Strong Broadband Growth
AT&T reported its highest total broadband net additions in over eight years, with more than 550,000 new subscribers to AT&T Fiber and Internet Air. The company now boasts over 10 million premium AT&T Fiber subscribers, underscoring its leadership in the broadband market.
Mobility Service Revenue Growth
The mobility segment saw a 2.3% year-over-year increase in service revenue, contributing to a 2.2% growth in EBITDA. This growth reflects AT&T’s ability to capitalize on the demand for mobile services, despite a competitive landscape.
Consumer Wireline Revenue Increase
Consumer wireline revenue experienced a 4.1% year-over-year growth, largely driven by a 16.8% increase in fiber revenue. This highlights the successful expansion of AT&T’s fiber network and its appeal to consumers.
Strategic Acquisitions
AT&T’s planned acquisitions of spectrum licenses from EchoStar and fiber assets from Lumen are strategic moves aimed at enhancing its portfolio. These acquisitions are expected to bolster AT&T’s growth prospects and competitive position in the market.
Free Cash Flow Improvement
The third quarter saw an improvement in free cash flow, reaching $4.9 billion, up from $4.6 billion the previous year. This increase provides AT&T with more financial flexibility to invest in growth initiatives.
Increased Competition in Wireless
The wireless segment faced heightened competition, as evidenced by a 14 basis point increase in postpaid phone churn to 0.92%. This indicates a more active marketplace and potential challenges in retaining customers.
Business Wireline Revenue Decline
Business wireline revenues declined by 7.8% year over year, with EBITDA falling by about 13%. This segment continues to face headwinds, impacting AT&T’s overall revenue mix.
Higher Equipment and Acquisition Costs
AT&T’s mobility operating expenses rose due to higher equipment costs and acquisition-related expenses. This increase in costs poses a challenge to maintaining profitability.
ARPU Pressure
Average Revenue Per User (ARPU) was under pressure due to AT&T’s success in attracting customers from underpenetrated segments with lower ARPUs and efforts to drive convergence.
Forward-Looking Guidance
Looking ahead, AT&T remains optimistic about its growth trajectory. The company aims to pass 60 million locations with fiber by 2030 and reported a convergence rate of over 41% for AT&T Fiber households also subscribing to its wireless services. Financially, AT&T expects service revenue growth in the low single-digit range, adjusted EBITDA growth of 3% or better, and free cash flow in the low to mid $16 billion range.
In summary, AT&T’s earnings call painted a picture of robust growth in key areas like broadband and mobility, supported by strategic acquisitions. However, the company must navigate challenges such as increased competition and rising costs. The forward-looking guidance suggests a positive outlook, with ambitious targets for fiber expansion and revenue growth.