AT&T (T, Financial), a major US telecom company, released its third-quarter earnings recently. The company's Q3 revenue was $30.2 billion, remaining largely flat year-over-year and falling short of market expectations of $30.4 billion. However, adjusted earnings per share stood at $0.60, surpassing the expected $0.57. AT&T reiterated its annual guidance, anticipating approximately 3% growth in adjusted EBITDA and an adjusted EPS between $2.15 and $2.25.
A notable highlight of AT&T's performance was the growth in mobile users, which exceeded analyst expectations and continued the strong growth momentum from the previous quarter. The company added 403,000 net new wireless phone subscribers monthly, surpassing the projected 394,600. The customer churn rate remained below 1%, although a decrease in consumer phone upgrades has led to a drop in equipment revenue, affecting overall revenue.
With new wireless users becoming scarcer, AT&T and its peers have been promoting broadband internet services. These efforts are increasingly encroaching on traditional cable companies' market share. It is estimated that the three major US telecom companies, including T-Mobile US (TMUS) and Verizon (VZ), added over 900,000 broadband customers in Q3, including wireless home and fiber-optic clients.
AT&T is at the forefront of fiber deployment, providing wired broadband connections to about one-third of the U.S. As of Q3, 226,000 new fiber network users were added, which fell short of the expected 265,000 due to severe weather and worker strikes in the Southeastern U.S. Additionally, the company gained 135,000 fixed wireless users, below the anticipated 147,000, as it focuses on its leading fiber network, lagging behind competitors like Verizon in the fixed wireless segment.
Telecom industry leaders, including AT&T CEO John Stankey, project that Apple's (AAPL) latest iPhone launch will not trigger a substantial upgrade cycle. The iPhone 16, offering moderate hardware upgrades, will gradually incorporate advanced AI technology through software updates. Verizon reported slightly lower-than-expected Q3 sales due to slowing new phone purchases in the U.S. The new iPhone 16 did not become an essential product, impacting Verizon's stock, which fell by 5% recently.
In September, AT&T concluded its costly venture into the pay-TV business, agreeing to sell its remaining stake in DirecTV to investment firm TPG Inc. for $7.6 billion in cash. AT&T plans to concentrate on providing wireless 5G and "fiber to the home" products while strengthening its balance sheet.
Recently, AT&T's stock rose by 2.7% to $22.08, marking an approximate 28% increase this year. By comparison, T-Mobile and Verizon have seen gains of 37% and 10%, respectively. T-Mobile is set to release its earnings report soon.
