AT&T Stock Gains On Q3 Performance: EPS Beat, Strong Postpaid Net Adds And More

AT&T Inc T reported third-quarter FY23 operating revenues of $30.35 billion, up 1% year-over-year, beating the consensus of $28.69 billion. Adjusted EPS of $0.64 beat the consensus of $0.59.

The results reflected higher Mobility, Mexico, and Consumer Wireline revenues, partly offset by lower Business Wireline revenues.

In the Mobility segment, AT&T clocked 494 thousand total phone net adds (postpaid and prepaid), which included 468 thousand postpaid phone net adds and 26 thousand prepaid phone net adds. 

The Mobility segment saw a Postpaid churn of 0.79%, down from 0.84% last year. The Consumer Wireline segment had 296 thousand AT&T Fiber net adds.

AT&T’s adjusted EBITDA of $11.2 billion was up from $10.7 billion a year ago. The company generated $5.2 billion in free cash flow. It spent $4.6 billion on Capex.

Prepaid churn was 2.78% versus 2.83% in the year-ago quarter. Postpaid phone-only ARPU was $55.99, up 0.6% versus the year-ago quarter, due to pricing actions, higher international roaming, and a mix shift to higher-priced unlimited plans.

Operating Income: Operating income was $5.8 billion, down by 3.8% Y/Y. 

Mobility segment operating income was up 8.6% Y/Y to $6.8 billion with a margin of 32.7% compared to 30.7% in the year-ago quarter. The Business Wireline segment operating margin was 6.7% compared to 11% in the year-ago quarter.

“Our investments in best-in-class 5G and fiber connectivity are fueling our growth engine. We’re gaining profitable customer relationships and becoming more efficient. This is powering our strong business performance and gives us the confidence to raise our full-year free cash flow guidance,” said John Stankey, AT&T CEO.

FY23 Outlook: AT&T now expects full-year adjusted EBITDA growth of better than 4% versus prior guidance of 3%+.

The company now expects full-year free cash flow of about $16.5 billion, versus prior guidance of $16 billion+.

Price Action: T shares traded higher by 4.68% at $14.99 in the premarket on the last check Thursday.