AT&T Reports “Solid” Second-Quarter Results, Analysts Disagree


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AT&T referred to its Q2 earnings as “solid” including consolidated revenue growth, expanding operating income margin and record operating and free cash flow.

“We’re halfway through the year and on track to deliver on all our 2019 priorities,” said Randall Stephenson, AT&T chairman and CEO. “We continue to pay down debt and are more confident than ever that we’ll meet our year end deleveraging goal, and we’ll take a look at buying back stock. 

Our FirstNet build is not only running ahead of schedule – it’s become a driver of our wireless network leadership in speed, reliability and network performance. It also sets us up to have nationwide commercially available 5G coverage in the first half of 2020.”

“Our wireless business grew revenues,” Stephenson said, “profitability and phone customers, both postpaid and prepaid. WarnerMedia delivered another strong quarter with both revenue and operating income growth. And our Entertainment Group profitability continued to stabilize, and even grow. Across the board, it was a solid quarter that puts us in position to have a really strong year.”

According to Craig Moffett, Senior Analyst at MoffetNathanson:

“There’s a certain irony in hoping for an improving wireless segment to offset a weakening ‘everything else.’ After all, it was wireless that AT&T was diversifying away from when they first embarked on their ‘modern media company’ strategy.”

Jonathan Chaplin of New Street Research said: “They are 60 percent done; a long way to go; and the improvements in the 60 percent are likely in the very early days. They have gained a couple of hundred thousand FirstNet subscribers so far, and they are seeing gains in rural markets as they roll out new distribution along with the spectrum deployments,” Chaplin said. “These two factors probably account for most of the improvement in sub trends we have seen. The real benefit, if churn falls across the base, is still to come.”

Highlights of Second-Quarter Consolidated Results

  • Diluted EPS of $0.51 as reported compared to $0.81 in the year-ago quarter
  • Adjusted EPS of $0.89 compared to $0.91 in the year-ago quarter
  • Consolidated revenues of $45.0 billion, up 15.3 percent
  • Cash from operations of $14.3 billion, up 40 percent
  • Capital expenditures of $5.5 billion
  • Free cash flow of $8.8 billion
  • Company Raises Free Cash Flow Guidance to $28 Billion Range
  • Reaffirms Remainder of 2019 Guidance
  • Low single-digit adjusted EPS growth
  • Dividend payout ratio in the 50s percent range
  • End-of-year net debt to adjusted EBITDA in the 2.5x range
  • Gross capital investment in the $23 billion range

July 25, 2019        

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