Sign in

    AT&T Inc (T)

    AT&T Inc. is a telecommunications company that operates primarily through two reportable segments: Communications and Latin America. The company provides wireless and wireline telecom and broadband services to consumers in the U.S. and businesses globally, with a focus on expanding its 5G and fiber networks to drive growth in wireless and broadband services . AT&T's Communications segment includes Mobility, Business Wireline, and Consumer Wireline, while the Latin America segment offers wireless services and equipment in Mexico .

    1. Communications - Provides telecom and broadband services to U.S. consumers and businesses globally, focusing on wireless and wireline services.
      • Mobility - Offers nationwide wireless services and equipment, significantly contributing to the segment's revenue.
      • Business Wireline - Delivers advanced ethernet-based fiber services, IP Voice, and managed professional services to businesses.
      • Consumer Wireline - Offers broadband services, including fiber connections, to consumers.
    2. Latin America - Provides wireless services and equipment in Mexico, contributing a smaller portion of the company's total segment operating revenues.
    Initial Price$17.19April 1, 2024
    Final Price$18.98July 1, 2024
    Price Change$1.79
    % Change+10.41%

    What went well

    • AT&T's successful convergence strategy is driving growth and customer satisfaction, with combined customers having lower churn and longer lifetime values, and AT&T having a 500 basis point market share advantage in areas with deployed fiber, positioning the company uniquely in the market.
    • AT&T is experiencing strong growth in both mobility and fiber broadband, with significant opportunities to expand fiber passings beyond initial targets due to better-than-expected returns, planning to pass 30 million fiber locations by the end of 2025 and potentially expand by 10-15 million additional locations, enhancing their converged service offerings and competitive advantage.
    • AT&T is effectively managing costs and achieving margin accretion that outpaces service revenue growth, improving profitability through focus on quality growth, cost structure improvements, and operational efficiencies, including more than 7% EBITDA growth in their consumer wireline business during the second quarter.

    What went wrong

    • Ongoing network outages and data breaches may impact customer trust and future financials. Despite management's efforts, AT&T has faced instances where it has "let down customers" due to these issues. John Stankey acknowledged that "we have to actually address your question and work through these issues" and that "we're not dismissing the issue in any way, shape or form." ( )
    • Expected moderation in wireless industry volumes and potential limits on pricing power could pressure AT&T's revenue growth. John Stankey noted that "we're going to see a little bit of moderating volumes in aggregate in the industry" and acknowledged that "I don't think this is an issue of price increases or price increases safe." ( )
    • Spectrum policy concerns and lack of new spectrum availability may limit AT&T's capacity expansion in wireless. John Stankey expressed that "I do not think spectrum policy in this country is on the right path right now" and that the company needs to "use every trick in the book" to deal with growth, indicating potential challenges in meeting future capacity demands. ( )

    Q&A Summary

    1. Fiber Expansion Plans
      Q: Are you accelerating fiber buildout beyond 30 million passings?
      A: We are well on our way to achieving 30 million fiber passings by next year. Given the strong returns we've seen, which have been better than expected when we started in 2014–2015 , we expect to continue investing in fiber growth beyond 30 million passings. The exact number and pace will be shared later, as we ensure alignment with our Board.

    2. Network Augmentation amid Spectrum Constraints
      Q: How are you planning network spend amid spectrum constraints?
      A: We view capacity as a fixed resource that must be managed carefully. We've put a lot of capacity out there over the last few years and are being deliberate in deploying it. Our investment in fiber helps us handle high-density traffic efficiently, reducing reliance on wireless spectrum. We're also advocating for policy changes to improve spectrum availability and exploring options in the secondary market. Additionally, we're focusing on Open RAN (ORAN) to enable more efficient capacity growth through more distributed radiation points and leveraging our dense fiber assets.

    3. Cost Structure Improvements and EBITDA Growth
      Q: How are you progressing on cost-cutting and EBITDA growth?
      A: We're continuing to achieve margin accretion that outpaces service revenue growth by effectively managing our cost structure. We're repositioning our business to be a 5G and fiber provider, mining out costs built up over a century. We're making progress on the regulatory front and have retooled our labor structure. Technology advancements and our fiber deployment are improving operational efficiency, with benefits seen in failure rates, reliability, and on-time performance. We believe we can continue to reduce costs, improve consumer margins, and maintain competitive margins in wireless while growing the business.

    4. Impact of Data Breaches and Outages
      Q: How are data breaches affecting your business and financials?
      A: We are disappointed by these events and care deeply about our reliability and data security. We've been responsive and have taken good action to learn from these issues internally. Despite the challenging threat environment, we've maintained customer confidence and feel confident in our financial guidance going forward.

    5. Wireless Volume Slowdown and Pricing Power
      Q: Do you see wireless volumes slowing and limited pricing power?
      A: We've anticipated moderating volumes in the market and expect to see this trend continue. However, we have a unique position with opportunities for share take, allowing us to create our own growth by winning customers from others. We're focusing on quality growth, bringing in customers that contribute directly to EBITDA growth. We've demonstrated the ability to deliver more value to customers, and we believe there's room to differentiate our products and ultimately improve ARPU.

    6. Affordable Connectivity Program (ACP) Impact
      Q: How is ACP affecting your business this quarter?
      A: We're most of the way through the ACP effect and have managed it effectively. There has been a slight impact on fixed broadband, but it's not the sole reason for the softness this quarter. The vast majority of our customers have transitioned, and we feel confident in our ability to deliver on our commitments. Our prepaid business performed well despite some impacts from ACP.

    7. Impact of New iPhone on Upgrades and Competition
      Q: Are you expecting higher upgrades with the new iPhone, and how will it affect churn and competition?
      A: There is typical seasonality with new device cycles, including a suppression effect before launch and an acceleration after. We expect this cycle to continue and are positioned to adjust accordingly. If customers find meaningful features in new devices, we'll respond to it. We're in a good position with our guidance to handle whatever happens, and we've been through these cycles before.

    8. GigaPower and Open Access Relationships
      Q: Can you update us on GigaPower's progress and potential for more partnerships?
      A: We'll provide detailed insights at our upcoming Communacopia session after completing an 18-month cycle to gather performance data. We're optimistic about opportunities to grow profitably on fiber and convergence in various models. We've built a back office for GigaPower with a wholesale relationship structure that we make available to others. We see further opportunities and are active in forming more partnerships to drive convergence.

    9. Internet Air Expansion
      Q: Will Internet Air's national business launch accelerate net adds, and do you have capacity for it?
      A: We expect to continue growing and see improvements, but this aligns with our existing strategy. We're not broadly offering Internet Air everywhere, but are selective, focusing on areas that aid our transition from legacy technology and where we have ample capacity. For business customers, we're comfortable offering it nationally and can profitably add it to our portfolio. We anticipate improvements in our business segment numbers in the coming quarters.

    NamePositionStart DateShort Bio
    John T. StankeyChief Executive Officer and PresidentJuly 2020John T. Stankey has been the CEO and President of AT&T Inc. since July 2020. He began his career with the company in 1985 and has held various leadership roles, including CEO of WarnerMedia and AT&T Business Solutions .
    F. Thaddeus ArroyoChief Strategy and Development OfficerMay 2022F. Thaddeus Arroyo has been the Chief Strategy and Development Officer at AT&T Inc. since May 2022. He has held various high-level managerial positions within AT&T or its subsidiaries for more than the past five years .
    Pascal DesrochesSenior Executive Vice President and Chief Financial OfficerApril 2021Pascal Desroches has served as the CFO of AT&T Inc. since April 2021. Previously, he was the Executive Vice President - Finance of AT&T and held CFO roles at WarnerMedia and Turner .
    Edward W. GillespieSenior Executive Vice President - External and Legislative AffairsApril 2020Edward W. Gillespie has been the Senior Executive Vice President - External and Legislative Affairs at AT&T Services, Inc. since April 2020. He was previously Managing Director of Sard Verbinnen & Co. and Counselor to President George W. Bush .
    Kellyn S. KennyChief Marketing and Growth OfficerMay 2022Kellyn S. Kenny has been the Chief Marketing and Growth Officer at AT&T Inc. since May 2022. She was previously the Chief Marketing and Growth Officer for AT&T Communications, LLC, and Global Chief Marketing Officer at Hilton Worldwide Holdings .
    Lori M. LeeGlobal Marketing Officer and Senior Executive Vice President - HR and InternationalAugust 2023Lori M. Lee has held her current position at AT&T since August 2023. She previously served as the Global Marketing Officer and Senior Executive Vice President - International starting in December 2022 .
    Jeremy LeggChief Technology OfficerMay 2022Jeremy Legg has been the Chief Technology Officer at AT&T Services, Inc. since May 2022. He previously served as the CTO for AT&T Technology Services, WarnerMedia, and Turner .
    David R. McAtee IISenior Executive Vice President and General CounselOctober 2015David R. McAtee II has been the Senior Executive Vice President and General Counsel at AT&T Inc. since October 2015 .
    Jeffery S. McElfreshChief Operating OfficerMay 2022Jeffery S. McElfresh has been the Chief Operating Officer at AT&T Inc. since May 2022. He has held high-level managerial positions within AT&T or its subsidiaries for more than the past five years .
    1. Can you provide more details on the progress of your multiyear cost-cutting targets, and how confident are you that EBITDA growth will outpace consolidated service revenue performance, especially amid potential operational challenges?
    2. Given concerns about a potential volume slowdown in the wireless industry and limited room for further pricing actions, how do you plan to sustain growth in your mobility segment, and do you share these concerns about volumes and pricing power?
    3. With the anticipated $480 million one-time payment related to your wireless network transformation in the back half of the year, can you elaborate on what this payment entails and whether it was fully contemplated within your original guidance?
    4. You mentioned a 500 basis point market share advantage in areas where you've deployed fiber; could you share more concrete data supporting your argument that convergence is a critical strategy and explain how AT&T is uniquely positioned to capitalize on these economics beyond market share gains?
    5. Considering recent network outages and data breaches, how have these events impacted your go-to-market strategy, and do they pose any risks to your future financial performance?
    Program DetailsProgram 1
    Approval DateMarch 2014
    End Date/DurationNo expiration date
    Total additional amount300 million shares
    Remaining authorization144 million shares
    DetailsRepurchase shares for employee benefit plans or acquisitions. Funded through cash from operations, borrowings, or cash from non-strategic investments.

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Adjusted EBITDA Growth: Expected in the 3% range for the full year .
      2. Adjusted EPS: Expected in the range of $2.15 to $2.25 for the full year .
      3. Free Cash Flow: Expected in the $17 billion to $18 billion range .
      4. Capital Investments: Expected in the $21 billion to $22 billion range .
      5. Mobility Service Revenue Growth: Expected in the 3% range .
      6. Mobility EBITDA Growth: Expected at the higher end of the mid-single-digit range .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Free Cash Flow: Expected in the $17 billion to $18 billion range .
      2. Adjusted EBITDA Growth: Expected in the 3% range .
      3. Adjusted EPS: Expected in the range of $2.15 to $2.25 .
      4. Capital Investments: Expected in the $21 billion to $22 billion range .
      5. Mobility Service Revenue Growth: Expected in the 3% range .
      6. Mobility EBITDA Growth: Expected at the higher end of the mid-single-digit range .
      7. Net Debt to Adjusted EBITDA: Expected in the 2.5x range in the first half of next year .
      8. Business Wireline EBITDA Declines: Expected in the mid-teens range .
      9. DIRECTV Cash Distributions: Expected to decline by about 20% annually .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Leverage Target: 2.5x leverage target for early next year .
      2. DIRECTV Cash Distributions: Expected $3 billion with a decline rate of about 20% .
      3. Free Cash Flow: Expected in the $17 billion to $18 billion range .
      4. Adjusted EBITDA Growth: Expected in the 3% range .
      5. Adjusted EPS: Expected in the range of $2.15 to $2.25 .
      6. Wireless Service Revenue Growth: Expected in the 3% range .
      7. Mobility EBITDA Growth: Expected at the higher end of the mid-single-digit range .
      8. Consumer Wireline EBITDA Growth: Expected in the mid- to high single-digit range .
      9. Business Wireline EBITDA Decline: Expected in the mid-teens range .
      10. Capital Investments: Expected in the $21 billion to $22 billion range .
      11. Fiber Expansion: On track to pass 30 million-plus locations by the end of 2025 .

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. Mobility Subscribers: Expected to grow .
      2. Wireless Service Revenue Growth: Expected in the 3% range .
      3. Broadband Revenue Growth: Expected to increase by 7%-plus .
      4. Consolidated Revenue: Expected to continue growing .
      5. Mobility EBITDA: Expected to grow in the mid-single digits .
      6. Business Wireline EBITDA: Expected to decline by about 10% plus or minus .
      7. Consumer Wireline EBITDA: Expected to grow in the mid-single-digit range .
      8. Consolidated Adjusted EBITDA Growth: Expected in the 3% range .
      9. Adjusted EPS: Expected in the range of $2.15 to $2.25 .
      10. Free Cash Flow: Expected in the $17 billion to $18 billion range .
      11. Capital Investment: Expected in the $21 billion to $22 billion range .
      12. Cash Taxes: Expected to increase by about $1.5 billion .
      13. DIRECTV Cash Distributions: Expected to decline by about 20% annually .

    Competitors mentioned in the company's latest 10K filing.

    • América Móvil: Significant market share competitor in Mexico for wireless services .
    • Two national wireless providers: Competitors in the U.S. service areas for wireless services .
    • Regional providers and resellers: Competitors in the U.S. service areas for wireless services .
    • Certain cable companies: Competitors in the U.S. service areas for wireless services .
    • Providers offering voice, text messaging, and other services as applications on data networks: Competitors in the wireless market .
    • Large cable companies and wireless broadband providers: Competitors for high-speed internet and voice services in most U.S. markets .
    • Wireless, cable, and VoIP providers: Competitors for legacy voice and data services, offering comparable services at lower prices .
    • Large internet service providers, wireless carriers, other telephone companies, cable companies, and systems integrators: Competitors for local and interstate telephone and switched services .