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AT&T adds more wireless subscribers than expected; shares rise

AT&T beats wireless subscriber estimates; earnings hit by $25 billion charge
AT&T beats wireless subscriber estimates; earnings hit by $25 billion charge Copyright Thomson Reuters 2023
Copyright Thomson Reuters 2023
By Reuters
Published on Updated
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By Eva Mathews and Samrhitha A

-AT&T Inc's better-than-expected quarterly subscriber additions overshadowed a $25 billion non-cash charge related to the impact of higher interest rates on its businesses and triggered a 6% rise in its shares.

The carrier has used discounts and trade-in offers to lure customers in the highly competitive telecoms market, as it ramps up competition with Verizon and T-Mobile US after shedding its media business last year.

"With improving churn numbers and strong 5G wireless net adds, AT&T is entering 2023 in a good position," Third Bridge analyst Jamie Lumley said.

But indicators point to the company running out of room for growth in the near future, Lumley added.

Apart from 5G technology, AT&T is also investing in bolstering its fiber-optic network, which lets it sell both broadband services and video packages. The company added 280,000 fiber customers in the December quarter.

AT&T on Wednesday forecast adjusted earnings in the range of $2.35 and $2.45 per share, which included a 25-cent charge related to non-cash pension costs and an expected higher tax rate. Analysts were expecting a profit of $2.56 per share, according to Refinitiv data.

As the United States stares at a recession, companies are turning increasingly cautious about growth and taking big steps to cut costs.

"We don't have an outlook that says we've solved the (economy) problem," Chief Executive John Stankey told analysts on a conference call.

"We will be operating in a challenging macroeconomic environment where wireless industry growth is likely to return to more normalized levels."

For the latest quarter, AT&T added 656,000 postpaid phone subscribers, above Factset estimates of 644,800 additions. The number also came in well above Verizon's 217,000 additions, although it failed to match T-Mobile's expected 927,000 additions.

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