AT&T Q3 Earnings Exceed Forecasts, Shares Climb

AT&T fared better in the third-quarter, with revenue growth and earnings per share (EPS) exceeding expectations.

The US telecom giant’s adjusted EPS for the third quarter stood at $0.64, marking a 5.9% year-over-year (YoY) decline but beating the $0.63 expected.

Revenue for the quarter reached $30.35 billion, also exceeding estimates of $30.04 billion.

AT&T’s shares closed 6.56% higher at $15.26 on Friday following the report. The stock last stood 0.39% lower at $15.20 in pre-market trading.

CEO John Stankey revised the full-year free cash flow and profit growth forecasts upward. The company now foresees a 4% full-year adjusted earnings growth versus the previous estimate of 3% or more. AT&T also projects a free cash flow of $16.5 billion, a $500 million increase from earlier expectations.

In July, the company increased its cost reduction plan by $2 billion after hitting its $6 billion cost-cutting goal sooner than expected. Maintaining lower costs is vital for AT&T to keep a stable cash flow to aid in its $128.7 billion net debt and substantial dividend.

Stankey cited profitable customer ties, investments in premier 5G and fiber connectivity, and efforts to streamline digital experiences as reasons for optimistic forecasts. The estimates align with AT&T’s strong presence in the Diversified Telecommunication Services (DTS) sector.

Subscribers Surge Boost AT&T Cash Flow Target

AT&T raised its annual free cash flow forecast as it saw substantial subscriber growth from promotions and phone upgrades in the third quarter.

For the quarter, the US telecom provider added 468,000 mobile and 296,000 fiber optic subscribers, mainly due to efforts aimed at drawing in Apple iPhone users.

The firm has sought to stand out in the US market in recent months with aggressive offers, including significant discounts on the iPhone 15 series.

Analysts had projected AT&T’s mobile subscriber base to gain 403,000. They stated that despite market saturation, the company maintains low churn rates and sustained customer growth, attesting to its resilience.

In addition, AT&T’s robust consumer wireline and mobile margins offset weak business wireline, resulting in a relatively positive consolidated outcome, notably in earnings before interest, taxes, depreciation, and amortization (EBITDA) growth.