AT&T Inc. (NYSE:T) reported “solid revenue, earnings and free cash flow growth” in the third quarter, led by gains in Mobility and Warner Media. The media giant announced that wireless results in the third quarter included positive postpaid phone net adds, strong prepaid phone gains and growing service revenues. (On a GAAP basis, service revenues declined 3.4 percent; however, on a comparable basis, service revenues grew 2.3 percent.)
“I’m pleased with the progress we made on a number of fronts in the third quarter,” said Randall Stephenson, AT&T chairman and CEO. “Our U.S. wireless business is growing and it’s the single biggest contributor to our earnings and cash flow. Warner Media was immediately accretive in its first full quarter, contributing 5 cents to EPS, and our free cash flow grew by double digits.”
Jonathan Chaplain of New Street Research concurred saying “Wireless revenue and EBITDA are growing again, mostly due to a return to ARPU growth on price increases.”
“With more than $250B of debt (including capitalized operating leases and unfunded pension and post-retirement health benefits), and with leverage roughly 4x EBITDA,” said Craig Moffett of MoffettNathanson, “the needs of the bond market must now take priority over the needs of the equity market. The equity market cares about growth. The bond market cares more about cash,” he said.
“This simple statement of priorities is particularly useful,” Moffett said “given the mind-numbing complexity that comes with the inclusion of TWX, and with AT&T’s third segment reshuffling in as many years.”
October 25, 2018
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