AT&T stock rises as earnings best seen on strong wireless and fiber broadband subscriber growth

AT&T (T) on Thursday reported September quarter earnings and revenue that beat estimates and said it added more postpaid wireless phone subscribers than expected. AT&T stock jumped on the news.


Reported before market open, AT&T’s revenue excluded WarnerMedia, which spun off in early April, and DirecTV. The telecommunications giant said third-quarter adjusted profit from continuing operations was 68 cents, up 3% from a year earlier. Revenue from continuing operations fell 4.1% to $30 billion.

Analysts had forecast AT&T earnings of 61 cents a share on revenue of $29.8 billion, according to FactSet. A year earlier, AT&T earned 66 cents a share on revenue of $39.9 billion, but that included sales from discontinued operations.

Share T: faster growth in EBITDA

“The EPS overrun was driven by higher Adjusted EBITDA ($10.7 billion), with T reporting an EBITDA (earnings before interest, tax, depreciation and amortization) overrun across all of its key segments “said Goldman Sachs analyst Brett Feldman in a statement. “AT&T now expects full-year adjusted EPS from continuing operations to be $2.50 or higher versus the previous guidance of $2.42 to $2.46.

Additionally, AT&T reported free cash flow of $3.8 billion, below consensus estimates of $4.4 billion. Capital expenditures exceeded estimates in the third quarter, but are expected to fall in the December quarter.

AT&T reiterated its free cash flow forecast for 2022 of around $14 billion. That’s down from the original forecast of $20 billion, MoffettNathanson analyst Craig Moffett noted in a report.

“AT&T must show a clear path to deleveraging its balance sheet,” Moffett said in a statement. “Deleveraging requires faster debt repayment or faster EBITDA growth. Yes, EBITDA growth has improved – and that was just one of many improvements in the earnings release as of today (Q3) – but debt reduction remains slower than one would like.”

Moffett added, “All of this goes a long way to explaining why AT&T would be looking for financial partners to help fund the build of its consumer wireline fiber. AT&T has made building fiber a fundamental part of its strategy. But the capital outlay required is enormous, and the payback times are terribly long.”

AT&T stock jumped 7.7% to close at 16.74 on trading today.

AT&T Stock: Wireless Subscriber Adds Pace

Additionally, the company said it added 708,000 postpaid wireless phone customers compared to estimates of a gain of 552,000. A year earlier, it had added 928,000 postpaid wireless phone subscribers. “Postpaid” subscribers usually have unlimited monthly data plans.

Wireless service revenue rose 5.4% to $15.3 billion, beating estimates of $15.2 billion.

Additionally, AT&T added 338,000 fiber optic broadband subscribers, topping AT&T stock analysts’ 330,000 views.

AT&T stock had fallen 15% so far this year ahead of the earnings report. Heading into AT&T’s earnings report, the telecommunications stock had a relative strength rating of 29 out of the best possible 99, according to IBD Stock Checkup.

WarnerMedia split off and merged with Discovery in early April. The new media company is called Discovery of Warner Bros. (WBD).

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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