AT&T Surpasses Q4 Earnings Expectations
Telecommunications giant AT&T (NYSE:T) reported fourth-quarter and full-year 2024 earnings on Monday, Jan. 27, that topped analyst consensus estimates. Adjusted earnings per share (EPS) of $0.54 exceeded analysts' projections of $0.50 while revenue rose slightly to $32.3 billion, surpassing the consensus estimate of $32.02 billion.
Overall, the quarter demonstrated resilience, primarily bolstered by strong performance in the Mobility segment and ongoing fiber network expansion, despite hurdles in the Business Wireline segment.
| Metric | Q4 2024 | Analysts' Estimate | Q4 2023 | Change (YOY) |
|---|---|---|---|---|
| Adjusted EPS | $0.54 | $0.50 | $0.54 | 0% |
| Revenue | $32.3 billion | $32.02 billion | $32.02 billion | 0.9% |
| Adj. net income | $4.08 billion | N/A | $2.19 billion | 86% |
| Total operating expenses | $26.97 billion | N/A | $26.75 billion | 0.8% |
| Operating income | $5.33 billion | N/A | $5.27 billion | 1% |
| Postpaid phone net additions | 482,000 | N/A | 526,000 | (8.4%) |
| Fiber net additions | 307,000 | N/A | 273,000 | 12.5% |
Source: AT&T. Note: Analyst consensus estimates for the quarter provided by FactSet. YOY = Year over year.
Understanding AT&T's Business
AT&T is a telecommunications powerhouse, providing a comprehensive range of services, including wireless solutions and broadband internet. With a strong emphasis on fiber-optic deployment and 5G, it seeks to expand its infrastructure to meet the surging demands for high-speed connectivity. The company's strategic priorities include bolstering its fiber and 5G networks to help it deliver competitive telecommunications services amid a rapidly evolving digital landscape.
Recently, AT&T has concentrated on crucial growth areas, such as increasing its fiber broadband connections over its legacy copper networks and expanding 5G coverage. Key success factors include managing efficient spectrum acquisition for wireless services and optimizing cost structures to maintain profitability even in competitive markets.
Quarterly Insights and Performance
AT&T saw mixed results across its business segments during the quarter. The Mobility segment reported $23.13 billion in operating revenue, growing 3.3% year over year thanks to increases in service and equipment revenues. However, the segment's operating income fell by 1.4% to $6.12 billion, affected by heightened competition and rising costs.
The Business Wireline segment struggled considerably, with operating revenue dropping by 10% year over year to $4.55 billion, driving a loss of $211 million. This was primarily due to a decline in demand for legacy services, reflecting broader market trends away from traditional wireline solutions.
Meanwhile, the Consumer Wireline segment managed to boost operating revenue by 3.4% to $3.47 billion. This growth was fueled by customer migration to fiber broadband, significantly adding value to AT&T's service offerings. Fiber broadband connections saw a 12.3% year-over-year increase, highlighting the successful execution of AT&T's strategic priorities.
The company did face notable one-time cost impacts from asset impairments and restructuring, which tempered profitability. Nevertheless, the stability of its dividend at $0.2775 per share illustrates a commitment to shareholder returns amid ongoing transformations within its operational framework.
Looking Forward
For the quarters ahead, AT&T management remains focused on maintaining momentum in fiber and 5G deployment. The company also said it expects low-single-digit 2025 service revenue growth, along with adjusted EBITDA growth of at least 3%.
Management anticipates continued infrastructure investment to support extensive service coverage and aims to reduce overall debt, having decreased long-term debt by 7.4% year over year. Prospective developments from the sale of the majority stake in DIRECTV are expected to sharpen AT&T's focus and streamline its operational efficacy.
Investors should watch for advancements in AT&T's fiber and 5G initiatives, as these areas are pivotal to delivering value and sustaining competitive advantage in telecommunications. The ongoing strategic performance improvement and adaptive capability to regulatory developments will likely have considerable implications for AT&T's future positioning.
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