AT&T Reports Strong Q3 Results

AT&T has reported better-than-anticipated third-quarter adjusted profit and backed its full-year forecast, boosted by strong wireless subscriber additions.

Subscriber Growth

The company added 403,000 monthly bill-paying wireless phone subscribers during the period, surpassing Bloomberg consensus estimates of 394,645. This indicates that AT&T's higher-priced unlimited plans, which are typically cheaper than those offered by rivals, are attracting cost-conscious consumers. Postpaid phone churn, a measure of the number of people disconnecting from the service, was 0.78%, slightly lower than 0.79% in the same period last year.

> "We delivered another strong and consistent quarter, furthering our leadership in converged 5G and fiber connectivity," said AT&T (NYSE:T) Chief Executive John Stankey.

Shares in AT&T saw a rise in premarket US trading on Wednesday.

Fiber Business

Net subscribers to its fiber business increased by 226,000, marking its 19th consecutive quarter of net additions exceeding 200,000. However, this fell short of projections of 265,390. Stankey noted that fiber installations were temporarily impacted by the powerful Hurricane Helene in September and a work stoppage in the Southeast.

In August, more than 17,000 workers in the region, including technicians and customer service representatives, began a strike protesting perceived unfair labor conditions. AT&T and the union representing the workers reached a new pay agreement earlier this month.

Financials

Free cash flow, crucial in determining dividend levels, fell by 1.9% year-on-year to $5.1 billion, although it was higher than estimates of $4.69 billion.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased to $11.6 billion, compared to $11.2 billion in the same period in 2023, exceeding analysts' expectations of $11.38 billion.

Revenue fell by 0.7% to $30.2 billion, missing expectations due to weaker demand for AT&T's business wireline voice and data services. Intellectual property sales of around $100 million in the prior year also negatively impacted business returns.

AT&T reiterated its full-year guidance for adjusted core earnings and wireless service revenue growth but noted that income at the business wireline division would decline in the high-teens range, an adjustment from earlier expectations of a decline in the mid-teens.