At&t Inc ((T)) has held its Q4 earnings call. Read on for the main highlights of the call.
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AT&T’s latest earnings call conveyed a largely positive sentiment, with strong growth in mobility and fiber segments, substantial capital investments, and improved financial performance taking center stage. While there were noted challenges in the Business Wireline segment and a transition from legacy copper networks, the company’s subscriber growth and financial strength were emphasized as key positive highlights that outweigh these concerns.
Strong Mobility Performance
AT&T demonstrated impressive performance in its mobility sector, boasting 1.7 million postpaid phone net additions and achieving a 3.5% growth in service revenue. The company is poised to lead the industry in postpaid phone churn for the 14th time in the last 16 quarters, underscoring its robust position in the market.
Fiber Subscriber Growth
The earnings call highlighted AT&T’s success in fiber subscriber growth, adding 1 million or more subscribers for seven consecutive years. Recognized as America’s fastest Internet by Ookla, AT&T also achieved six consecutive quarters of positive broadband net additions, reinforcing its strength in the broadband market.
Record Capital Investment
AT&T maintained industry-leading levels of capital investment, pouring approximately $22 billion into its operations last year. This significant investment underscores the company’s commitment to expanding and modernizing its network infrastructure.
Financial Performance
AT&T reported a nearly 1% increase in fourth-quarter revenues, driven by wireless service, equipment revenues, and broadband revenues. Adjusted EBITDA for the quarter rose by 2.2%, reflecting the company’s solid financial footing and operational efficiency.
Cash Flow and Debt Reduction
AT&T’s financial health was further bolstered by a fourth-quarter free cash flow of $4.8 billion and a reduction in net debt by $8.8 billion over the year. These figures highlight the company’s effective cash management and focus on strengthening its balance sheet.
Business Wireline Decline
Despite the overall positive performance, AT&T’s Business Wireline segment faced challenges, with revenues declining by 10% and EBITDA down 22% in the fourth quarter. The decline is attributed to secular declines in legacy services, posing a challenge for the company moving forward.
Challenges with Legacy Copper Network
AT&T is actively working on transitioning away from its legacy copper network operations, aiming for completion by 2029. This strategic shift is expected to yield cost savings as the company evolves its technology stacks, although it presents transitional challenges.
Forward-Looking Guidance
Looking ahead, AT&T’s guidance for the upcoming year emphasizes maintaining strong operational performance and strategic investments. The company plans to continue growing its 5G and fiber subscriber base, reflecting its momentum from 2024. With a targeted net debt to adjusted EBITDA ratio of 2.5 times by mid-2025, AT&T anticipates commencing share repurchases as part of a broader $40 billion shareholder return plan. Additionally, $3 billion in cost savings are targeted by 2027, facilitated by AI integration and network transition efforts. Capital investment is projected to remain around $22 billion, supporting continued network modernization.
In summary, AT&T’s earnings call painted a picture of a company in a strong position, with robust growth in key segments and a clear strategic vision for the future. While challenges persist in certain areas, the company’s focus on subscriber growth, capital investment, and financial performance bodes well for its long-term success.
