AT&T Q2 earnings beat on strong wireless and internet subscriber growth

Source: Quartz Author: Cris Tolomia

AT&T reported second-quarter results on Wednesday that beat analyst estimates on earnings per share and subscriber additions, with revenue rising 2.3% to $31.6 billion compared with the same period a year ago.

On an adjusted basis, the company earned $0.65 per diluted share, clearing the $0.59 consensus forecast, according to the Wall Street Journal. Earnings per share from continuing operations were $0.66, up from $0.62 a year earlier.

Subscriber Growth

The company's postpaid phone base grew by 432,000 net subscribers during the quarter, AT&T said. Analysts had forecast additions of roughly 338,500, according to the Wall Street Journal. Postpaid phone churn was 0.86%.

Internet subscriber growth also came in strong:

• Total internet additions: 646,000 net additions across consumer and business accounts
• Fiber network: 367,000 additions
• Fixed wireless: 279,000 additions — a record for the two categories combined

The quarter also represented the strongest consumer postpaid wireless account growth in more than three years.

Segment Performance

Revenue in AT&T's advanced connectivity segment, which encompasses its domestic fiber and wireless operations, rose 5.1% year over year to generate operating income growth of 20.3%. Revenue from legacy services dropped 26%, reflecting AT&T's ongoing wind-down of its copper infrastructure.

Share Repurchases and Outlook

AT&T Chairman and CEO John Stankey said the company is accelerating its planned share repurchases this year to approximately $10 billion, up from the roughly $8 billion it had outlined earlier.

"We believe our network performance and operating scale can't be matched," Stankey said in a statement.

AT&T stock rose 1.41% on Wednesday.

Building on Q1 Momentum

The second-quarter results build on momentum from the first quarter, when AT&T added 294,000 postpaid phone net subscribers and 584,000 total internet net subscribers, also topping analyst expectations. That quarter's adjusted EPS of $0.57 cleared the $0.55 consensus estimate. First-quarter revenue reached $31.5 billion, a roughly 3% year-over-year increase.

Fiber Expansion

AT&T now reaches more than 38.6 million total consumer and business locations with fiber and remains on track to exceed 40 million fiber locations by year-end 2026, the company said. More than 42% of households with AT&T's home internet service also subscribe to AT&T wireless.

Full-Year Guidance

AT&T left its full-year outlook intact, still targeting:

• Adjusted EPS: $2.25 to $2.35 range
• Free cash flow: At least $18 billion
• Shareholder distributions: $45 billion or more by 2028 through dividends and buybacks