AT&T adds more subs in Q3, posts profit beat and reaffirms forecast; shares rise

AT&T (NYSE:T) followed suit like its peer Verizon (VZ) and posted a small revenue miss and an adjusted profit beat for the third quarter while reaffirming its forecast for the full year.

Shares of the company were in red briefly after the report but turned positive and were nearly +3% in premarket NYSE trading on Wednesday.

In the third quarter, the telecom added 403,000 net new monthly wireless phone subscribers, ahead of Bloomberg estimates of 394,600. Business wireline service revenue and declines in mobility equipment revenue were driven by lower sales volumes, which were mostly offset by higher mobility service and consumer wireline revenues, the company said.

Postpaid phone churn in Q3 was 0.78%, down 1 basis point year-over-year, but was ahead of the consensus estimate of 0.77%. Free cash flow was slightly lower at $5.1B vs. $5.2B for the same period last year but beat analyst expectations.

Seeking Alpha analyst Joseph Parrish, in his early reaction commentary to the company’s results, said, “AT&T continues to restore its status for dividend investors. Regular growth in its fiber and mobility businesses show the compounding power of a pure telecom. Low churn rate signals the strength of their convergence strategy. These are welcome gains following a challenging few years.”

In Q3, the company recorded a $4.4B non-cash goodwill impairment related to its Business Wireline unit. At the end of the quarter, total debt was $129B, and net debt stood at $125.8B.

Net loss attributable to common stock for the three months ended September 30 was $0.2B, or a loss of 3 cents per share, compared with net income of $3.4B, or 48 cents apiece, for the same period last year.

After adjusting for the goodwill impairment, on a per share basis, the Dallas, Texas-based company earned 60 cents, topping the consensus estimate by 3 cents.

Revenue of $30.2B was down marginally from last year and missed the consensus mark by $250M.

For the full year, it continues to expect adjusted EPS in the $2.15-$2.25 range (midpoint $2.20) vs $2.20 consensus, on wireless service revenue growth of 3%, broadband revenue growth of 7%+, and adjusted EBITDA growth in the 3% range.

Capex for 2024 is expected to be around $21-$22B and FCF in the $17-$18B range. It also continues to expect to achieve net debt-to-adjusted EBITDA in the 2.5x range in the first half of 2025.