AT&T Q2 Earnings: Strong Wireless Net Adds, Higher Free Cash Flow, Stable Annual Outlook
AT&T Inc (NYSE:T) reported fiscal second-quarter 2024 operating revenues of $29.8 billion, down 0.4% year over year and missing the analyst consensus estimate of $29.9 billion.
Adjusted EPS of $0.57 is in line with the analyst consensus estimate. The stock price gained after the print.
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In the Mobility segment, AT&T clocked 997 thousand wireless net adds, including 419 thousand postpaid phone net adds, beating analyst estimates of 279 thousand, Bloomberg reports.
Verizon Communications Inc (NYSE:VZ) reported postpaid phone net additions of 148 thousand, surpassing forecasts of 118 thousand for the quarter.
AT&T has attracted budget-conscious customers with its lower-priced unlimited plans, standing out amid fierce competition, CNBC reports.
AT&T’s mobility segment saw a postpaid churn of 0.85% versus 0.95% a year ago. The Consumer Wireline segment had 239 thousand AT&T Fiber net adds, implying fiber broadband net additions lagging behind analyst estimates of 253 thousand. Verizon reported 391 thousand total broadband net additions.
The company reported 139 thousand AT&T Internet Air net adds.
AT&T’s adjusted EBITDA of $11.3 billion was up from $11.1 billion a year ago. It spent $4.4 billion on Capex.
The company generated $9.1 billion in operating cash flow (down from $9.9 billion in the year-ago quarter) and $4.6 billion in free cash flow (up from $4.2 billion last year).
Currently, AT&T’s dividend yield stands at 6.10%. Higher free cash flows allow the company to raise shareholder returns through higher stock buybacks and dividends.
Prepaid churn was 2.57% compared to 2.50% in the year-ago quarter. Postpaid phone-only ARPU was $56.42, up 1.4% compared to the year-ago quarter.
Operating Income: Operating income was $5.8 billion versus $6.4 billion a year ago.
Mobility segment operating income was up 1.6% year over year to $6.72 billion, with a margin of 32.8% compared to 32.6% in the year-ago quarter.
The Business Wireline segment operating margin was 2.1% compared to 7.5% in the year-ago quarter. The Consumer Wireline segment operating margin was 5.5% compared to 5.2% in the year-ago quarter.
FY24 Outlook: AT&T reiterated Wireless service revenue growth in the 3% range, Broadband revenue growth of 7%+, and adjusted EPS of $2.15 – $2.25 versus the $2.22 consensus.
It maintained full-year adjusted EBITDA growth in the 3% range and a full-year free cash flow of $17 billion-$18 billion.
For 2025, the company affirmed the adjusted EPS growth guidance.
Price Action: T shares traded higher by 2.86% at $18.74 in the premarket at the last check on Wednesday.
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