AT&T's strong subscriber adds in Q3 reflect ongoing wireless momentum

[AT&T Stock Jumps On Strong Earnings Report]
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U.S. telecom AT&T (NYSE:T [https://seekingalpha.com/symbol/T]) beat expectations for key subscriber metrics in the third quarter, which helped investors overlook the in-line profit and revenue miss.

Shares of the company were up 1% in premarket NYSE trading on Wednesday.

In Q3, the company added 288,000 fiber subscribers, ahead of the Bloomberg consensus estimate of 273,747, and wireless postpaid phone net adds of 405,000 were comfortably ahead of the 331,126 estimate.

However, wireless postpaid net subscribers were 328,000, below the estimates of 354,791.

Postpaid phone-only churn in Q3 was 0.92%, up 14 basis points year-over-year, and comparable to the consensus estimate of 0.90%. Free cash flow was $4.9B vs. $4.6B for the same period last year.

Danil Sereda [https://seekingalpha.com/author/danil-sereda], Investing Group Leader for Beyond the Wall Investing, said in his immediate reaction to the report that AT&T's results reflect continued growth.

"The strong postpaid phone net adds and low churn in mobility services, along with a 2.3% rise in mobility service revenues, means that the firm is experiencing continued strength in their core wireless business," Sereda said in his commentary.

Net income attributable to common stock for the quarter was $9.28B, or $1.29 per share, compared with a net loss of $226M, or a $0.03 loss per share, for the same period last year. Q3 net income included a $5.5B gain from closing the sale of the 70% stake in DIRECTV.

Excluding items, on a per-share basis, the Dallas, Texas-based company earned 54 cents, matching the consensus estimate of the same.

Revenue rose 1.7% to $30.71B but was below the consensus mark by nearly $200M.

For 2025, AT&T continues to forecast consolidated service revenue growth in the low-single-digit range, adjusted EPS in the higher end of the $1.97 to $2.07 range (midpoint $2.02) vs. $2.06 consensus, along with adjusted EBITDA growth of 3% or better.

It continues to forecast mobility service revenue growth of 3% or better and consumer fiber broadband revenue growth in the mid-to-high teens.

Capex for 2025 is expected to be in the $22B to $22.5B range and FCF is in the low-to-mid $16B range.

"The management reiterated their guidance, and it's a major bullish sign that everything goes according to their plans, and it lowers the dividend cut risks that some value-minded investors were still seeing before the earning date," Sereda said.

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