AT&T's Q1 Operating Cash Flow and Free Cash Flow Got A Boost - Does It Make A Case For Higher Dividends?

AT&T Inc. T reported fiscal first-quarter 2024 operating revenues of $30.03 billion, down 0.4% year over year and missing the consensus of $30.54 billion. 

Adjusted EPS of $0.55 beat the consensus of $0.54. The stock price gained after the print.

The results reflected declines in Mobility equipment revenues, driven mainly by lower sales volumes and lower Business Wireline revenues.

Also Read: Verizon’s Q1: Flat Revenue, Bump In Free Cash Flow And Stable 2024 Outlook

In the Mobility segment, AT&T clocked 741 thousand million wireless net adds, including 349 thousand postpaid phone net adds. 

AT&T’s Mobility segment saw a Postpaid churn of 0.89%, versus 0.99% year-ago. The Consumer Wireline segment had 252 thousand AT&T Fiber net adds.

AT&T’s adjusted EBITDA of $11.0 billion was up from $10.6 billion a year ago. It spent $3.8 billion on Capex.

The company generated $7.54 billion in operating cash flow (Up from $6.68 billion in the year-ago quarter), and $3.1 billion in free cash flow (up from $1 billion last year). 

Currently, AT&T’s dividend yield stands at 6.73%. Higher free cash flows allow the company to raise shareholder returns through higher stock buybacks and dividends. 

Prepaid churn was 2.77% compared to 2.73% in the year-ago quarter. Postpaid phone-only ARPU was $55.57, up 0.9% compared to the year-ago quarter.

Operating Income: Operating income was $5.8 billion versus $6.0 billion a year ago. 

Mobility segment operating income was up 3.1% Y/Y to $6.47 billion with a margin of 31.4% compared to 30.5% in the year-ago quarter. 

The Business Wireline segment operating margin was 1.3% compared to 7.1% in the year-ago quarter. The Consumer Wireline segment operating margin was 6.4% compared to 2.9% in the year-ago quarter.

Under CEO John Stankey, AT&T divested media properties and focused on its longtime core business of providing communications services, Bloomberg reports.

AT&T has also recuperated from two incidents since its first quarter earnings, including an outage of its wireless network in February and a security breach, disclosed on March 30, in which data from about 73 million current and former customers was compromised.

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 $2.21 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.

AT&T stock lost 6% in the last 12 months. Investors can gain exposure to the stock via Invesco S&P 500 Equal Weight Communication Services ETF RSPC and The Communication Services Select Sector SPDR Fund XLC.

Price Action: T shares traded higher by 4.06% at $17.18 in the premarket at the last check Wednesday.

Also Read: AT&T, Comcast, Verizon Challenge: Subsidy Slash Threatens Internet for 23M Households

Photo courtesy: Pixabay