AT&T Boosts Wireless Subscriber Count but Falls Short of Revenue Forecasts

image

AT&T Boosts Wireless Subscriber Count but Falls Short of Revenue Forecasts

AT&T Inc. (NYSE:T) reported an increase in wireless subscriber numbers in the third quarter, surpassing analyst expectations. The company added 403,000 net postpaid wireless phone subscribers during the July-September period, exceeding Visible Alpha's forecast of 393,430 additions.

This growth is attributed to the adoption of AT&T's premium unlimited plans, which offer benefits such as more hotspot data. These premium plans have been essential for maintaining AT&T's competitive edge in the saturated U.S. telecommunications market. While competitors like Verizon (NYSE:VZ) and T-Mobile integrate streaming services like Netflix (NASDAQ:NFLX) and HBO Max into their packages to attract customers, AT&T continues to compete with these plans.

AT&T also saw increased demand for convergence plans that combine high-speed fiber data with wireless phone services. The company noted that 40% of its fiber customers are also subscribed to its wireless plans.

As part of its effort to focus on core operations, AT&T completed the sale of its 70% stake in DirecTV to private equity firm TPG for $7.6 billion last month, marking a shift away from its costly venture into the media sector.

The telecommunications giant reported a churn rate of 0.78% for postpaid phones in the quarter, indicating the percentage of customers who discontinue service each month. This low churn rate was supported by AT&T’s strategy of offering the same promotions to both new and existing customers.

Despite the increase in subscriber numbers, AT&T's third-quarter revenue fell short of expectations, coming in at $30.2 billion as opposed to the anticipated $30.44 billion according to LSEG data. This decline was partly due to reduced mobility equipment revenue, impacted by lower phone upgrade volumes.

The company's fiber business added 226,000 customers, which fell short of the expected 257,860 additions. This was largely due to a work stoppage in the southeastern region in August that disrupted fiber installations.

AT&T's free cash flow for the quarter was $5.1 billion, surpassing Visible Alpha's estimate of $4.7 billion. This financial metric is often used to assess the feasibility of a company's dividend payments to investors.