Shares of AT&T were gaining in premarket trading Thursday after the telecommunications giant posted better-than-expected profit for its third quarter and continued to see strong subscriber additions in its wireless business.
The company posted net income of $5.9 billion, or 2 cents a share, roughly double the $2.8 billion, or 39 cents a share, that AT&T T, +0.33% reported in the year-prior quarter. After adjustments, AT&T earned 87 cents a share, up from 76 cents a year earlier and above the FactSet consensus, which called for 78 cents a share.
AT&T’s revenue declined to $39.9 billion from $42.3 billion, which the company said reflected the spinoff of its U.S. video business as well as lower business wireless revenue. Analysts tracked by FactSet were modeling $40.6 billion.
Shares are up 1.1% in premarket trading Thursday.
Revenue for AT&T’s communications unit increased to $28.2 billion from $27.2 billion. That included revenue from the company’s mobility unit, which rose to $19.1 billion from $17.9 billion as AT&T benefited from higher service and equipment revenue. Within mobility, AT&T saw 1.22 million net additions, including 928,000 postpaid phone net additions.
The company’s postpaid phone churn was 0.72% in the quarter compared with 0.69% a year earlier, though AT&T said that churn improved when adjusted for the Keep America Connected program, through which telecommunications companies pledged to continue providing service to customers who had trouble paying their bills due to the pandemic.
The WarnerMedia business saw revenue grow to $8.4 billion from $7.4 billion. WarnerMedia benefited from higher content revenue and saw a “partial recovery from prior-year impacts of the pandemic,” per its release. Subscription revenue increased to $4.0 billion from $3.5 billion, mainly reflecting traction for the HBO Max streaming service. AT&T had 69.4 million global HBO Max and HBO subscribers at the end of the third quarter.
AT&T anticipates that its full-year adjusted earnings per share will “be at the high end of the low- to mid-single digit growth range” and the company said that it’s “on track” with its free-cash-flow target, which is in the “$26 billion range.” AT&T also expects that its HBO Max and HBO global subscriber count will fall at the “higher end” of its 70 million to 73 million target.
Shares of AT&T have declined 9.9% so far this year as the S&P 500 SPX, +0.03% has risen 20.8%.
AT&T sees big subscriber gains as earnings top expectations – MarketWatch