AT&T Inc. (T) posted stronger-than-expected first-quarter earnings Thursday in its maiden investor update following the spin-off of its media assets into Warner Bros. Discovery (WBD), with revenues topping forecast thanks to solid gains for its wireless and broadband divisions.
AT&T said adjusted earnings for the three months ending in March were pegged at 77 cents per share, down 10.5% from the same period last year but just ahead of the Street consensus forecast of 59 cents per share. Group revenues, the company said, fell 13.2% to $38.1 billion, while the group's standalone wireless revenues were pegged at $29.7 billion, a figure that came in just ahead of analysts' estimates of a $29.53 billion tally.
AT&T said it added 12.8 million global subscribers to its HBO and HBO Max streaming services when compared to last year's levels, taking the overall total to 76.8 million. The quarter addition was 3 million, AT&T said.
Around 965,000 post-paid wireless subscribers were added over the quarter, as well as 289,000 new broadband customers, the company said.
“Our momentum in growing customer relationships is reaching historical levels,” said CEO John Stankey. “We had our best first quarter for postpaid phone net adds in more than a decade and our fiber broadband net adds remain consistently strong."
“AT&T has entered a new era, meeting this opportunistic moment from a position of flexibility and strength thanks to our evolving networks, enhanced customer experience, growing 5G and fiber customer base and a much stronger balance sheet,"Stankey added. "And we continue to make good consistent progress on our journey to becoming America’s best broadband provider.”
AT&T shares were marked 3.4% higher in early Thursday trading following the earnings release to indicate an opening bell price of $20.08 each.
Earlier this month, AT&T began trading as a 'pure play' telecoms company after closing its $43 billon media asset spin-off of WarnerMedia with Disocvery Communications (DISCA).
The deal closure also cements AT&T as a "core communications services business with strong customer relationships in wireless and fiber to drive recurring revenue, EBITDA and FCF growth," according to JPMorgan analyst Philip Cusick, who resumed his coverage of the stock with an overweight rating and a $22 price target.
AT&T said last month it sees low single-digit revenue growth in 2023, with adjusted earnings in the region of $2.50 to $2.60 per share, or around $44 billion.
The group also reiterated its plan to pay an "attractive" annual dividend of around $8 billion after the close of the WarnerMedia/Discovery deal, a figure that represents a payout ratio of around 40% against its free cash flow forecast of $20 billion.
That payout, AT&T said, will still allow for around $48 billion in new investments as it expands its 5G wireless and fiber interest services as part of its shift towards a 'pure play' telecoms group. It wants to double its fiber network and expand its 5G network to 200 million homes, and sees capital investments of $24 billion this financial year and $20 billion in 2024.
