Analyst on AT&T Q4: “Something’s Gotta Give”

AT&T Inc. (NYSE:T) yesterday reported fourth-quarter results that they say showed continuing subscriber growth in wireless and fiber while continuing to reflect strong cash flows and financial strength.

Analyst Craig Moffett of MoffettNathanson said AT&T is clearly pivoting back towards growth over profitability. He said before the auction, AT&T had no good alternatives. “Sitting out the auction would have left them far behind in 5G; buying spectrum would leave their dividend looking even more unsustainable. Damned if you do; damned if you don’t,” Moffett said. “Selling DirecTV will help slow the overall rate of EBITDA decline, but it won’t solve the basic problem. AT&T’s leverage is too high for a shrinking company, and their dividend is too high for them to do anything serious about lowering it. Something’s gotta give,” he said.

“We ended the year with strong momentum in our market focus areas of broadband connectivity and software-based entertainment,” said AT&T CEO John Stankey. “By investing in our high-quality wireless customer base, we had our best full-year of postpaid phone net adds in a decade and our second lowest postpaid phone churn ever. Our fiber broadband net adds passed the 1 million mark for the year. And the release of Wonder Woman 1984 helped drive our domestic HBO Max and HBO subscribers to more than 41 million, a full two years faster than our initial forecast.”

Fourth-Quarter Highlights included:

• 800,000 postpaid phone net adds; 1.5 million for full year
• 1.2 million postpaid net adds; 2.2 million for full year
• Nearly 6 million total domestic wireless net adds
• Postpaid phone churn of 0.76 percent, second-lowest quarter ever; full-year churn of 0.79 percent
• Revenues up 7.6 percent; service revenues up 0.5 percent; equipment revenues up 28.3 percent
• Nation’s fastest 5G wireless network and, for the 8th consecutive quarter in a row, the fastest network in the nation
• 273,000 AT&T Fiber net adds; more than 1 million for full year
• Solid IP broadband ARPU growth of 4.6 percent growth