AT&T (T) on Thursday reported September-quarter earnings and revenue that topped estimates and said it added more wireless postpaid phone subscribers than expected. AT&T stock surged on the news.
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Reported before the market open, AT&T earnings excluded WarnerMedia, spun off in early April, and DirecTV. The telecom giant said third-quarter adjusted earnings from continuing operations were 68 cents, up 3% from a year earlier. Revenue from continuing operations fell 4.1% to $30 billion.
Analysts had projected AT&T earnings of 61 cents a share on revenue of $29.8 billion, according to FactSet. A year earlier, AT&T earned 66 cents a share on revenue of $39.9 billion, but that included sales from discontinued operations.
T Stock: Faster EBITDA Growth
“The EPS beat was driven by higher adjusted EBITDA ($10.7 billion) with T reporting a beat to EBITDA (earnings before interest, taxes, depreciation and amortization) across all of its key segments,” said Goldman Sachs analyst Brett Feldman in a report. “AT&T now expects adjusted EPS from continuing operations for the full-year to be $2.50 or higher versus prior guidance of $2.42 to $2.46.
In addition, AT&T reported free cash flow of $3.8 billion, below consensus estimates of $4.4 billion. Capital spending came in higher than estimates in the third quarter but it’s expected to fall in the December quarter.
AT&T reiterated its guidance for 2022 free cash flow in the range of $14 billion. That’s down from original guidance of $20 billion, noted Craig Moffett, analyst at MoffettNathanson, in a report.
“AT&T has to show a clear path to deleveraging their balance sheet,” said Moffett in a report. “Deleveraging requires faster debt retirement or faster EBITDA growth. Yes, EBITDA growth improved – and that was just one of a number of improvements in today’s (Q3) earnings release – but debt reduction remains slower than one would like.”
Moffett added: “All this goes a long way towards explaining why AT&T is reportedly looking for financing partners to help fund their consumer wireline fiber build. AT&T has made…
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