AT&T Q3 2024 Earnings Review

In the third quarter of 2024, AT&T (T) reported solid financial performance, achieving significant growth in high-value wireless and broadband subscribers. The report highlighted the addition of 403,000 postpaid phone subscribers and a 6% EBITDA growth in the Mobility segment. Despite challenges such as a work stoppage and Hurricane Helene, AT&T maintained positive broadband subscriber growth, adding 226,000 AT&T Fiber net subscribers. Total revenues for the quarter were $29 billion, a slight decrease from the previous year, largely due to reduced vendor financing payments, while capital expenditures rose to $5.3 billion due to wireless network modernization efforts.

Key Takeaways

• 403,000 postpaid phone net adds and over 6% EBITDA growth in Mobility.
• 226,000 AT&T Fiber net adds, with 17% fiber revenue growth.
• Plans to expand fiber coverage to 30 million locations by end of 2025.
• Announced sale of 70% stake in DIRECTV.
• Year-to-date free cash flow reached $12.8 billion, with an expectation of $17-18 billion for the full year.
• Q3 revenues were $29 billion, with capital expenditures of $5.3 billion.

Company Outlook

• Aiming for full-year capital investments between $21 billion and $22 billion.
• Targeting free cash flow midpoint of $17 billion to $18 billion.
• Management is confident in meeting full-year financial guidance.

Bearish Highlights

• Business Wireline EBITDA fell 20% due to declines in legacy voice services.
• Total revenues decreased by $150 million year-over-year.

Bullish Highlights

• Mobility service revenue grew by 4%, with 6.7% EBITDA increase to $9.5 billion.
• Consumer Wireline EBITDA grew by 8.6%, with broadband revenues up 6.4%.
• Net debt reduced by $1.1 billion in Q3.

Misses

• Postpaid phone subscribers added were down from 468,000 a year prior.

Q&A Highlights

• AT&T is focused on organic growth, not interested in acquiring HFC assets.
• Pricing adjustments will affect postpaid phone ARPU in Q4.
• Open to exploring secondary market opportunities for spectrum acquisition.
• Investments aim to sustain EBITDA growth and improve profit margins in Consumer broadband.

AT&T leadership, including CEO John Stankey, emphasized a strategic shift towards fiber infrastructure and wholesale opportunities. The company's commitment to a connectivity-based model and the divestiture of DIRECTV align with its focus on 5G and fiber. The upcoming Analyst and Investor Day is scheduled for December 3, 2024, where further updates are expected.

InvestingPro Insights

AT&T's third-quarter performance illustrates its robust market position. The company's market capitalization of $159.82 billion reinforces its stature in the telecommunications sector. Notably, AT&T's P/E ratio of 14.36, dropping to 11.16 when adjusted for the last twelve months, may indicate undervaluation relative to earnings, appealing to value investors. The AT&T dividend yield stands at 5.16%, reflecting 41 consecutive years of maintaining payments, aligning with the reported free cash flow of $12.8 billion year-to-date and projections of $17-18 billion for the full year.

Recent strong stock performance is evident, with a 19.58% total return over the past three months and a significant 52.7% return over the past year, indicating a healthy position near the 52-week high.

Conclusion

AT&T's Q3 2024 financial results underscore effective growth strategies and market adaptability amid challenges. As the company charts a path for the future, the upcoming Investor Day will shed light on strategic initiatives and business expansion plans.

Full Transcript

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