AT&T: Proving All The Naysayers Wrong

Summary:

  • AT&T reported better-than-expected Q3 earnings last week, with strong growth in broadband revenues.
  • The broadband business is performing well, with strong subscriber growth and increasing average revenue per user.
  • AT&T’s improved free cash flow situation resulted in the telecom raising its guidance for FY 2023 by $500M.
  • Higher expected free cash flow translates to lower investment and dividend risks, making the stock an unbeatable bargain in the telecom industry.

AT&T Stock Jumps On Strong Earnings Report

Brandon Bell

AT&T (NYSE:T) reported much better than expected third quarter earnings last week which benefited from robust growth in the fiber broadband business, but the telecom also saw an uptick in free cash flow and raised its FCF

Broadband KPIs Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Y/Y Growth
Revenue
Fiber $1,271 $1,376 $1,453 $1,523 $1,613 26.91%
Non-Fiber $1,158 $1,116 $1,074 $1,038 $1,054 -8.98%
Total Revenue $2,429 $2,492 $2,527 $2,561 $2,667 9.80%
Net adds
Fiber (in thousands) 338 280 272 251 296 -12.43%
Non-Fiber (in thousands) -367 -323 -295 -286 -281 -23.43%
ARPU
Fiber $62.62 $64.82 $65.92 $66.70 $68.21 8.93%
Non-Fiber $54.80 $55.54 $56.00 $56.71 $60.43 10.27%
Total Broadband ARPU $58.63 $60.31 $61.31 $62.26 $64.91 10.71%


Analyst’s Disclosure: I/we have a beneficial long position in the shares of T, VZ either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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