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Will Higher Communications Revenues Aid AT&T (T) Q1 Earnings?
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AT&T Inc. (T - Free Report) is scheduled to report first-quarter 2022 results, before the opening bell, on Apr 21. In the first quarter, the Communications segment is likely to have recorded year-over-year higher revenues owing to a healthy momentum in the wireless business.
Factors at Play
The Communications segment has three business units — Mobility, Entertainment Group and Business Wireline.
The company’s 5G network currently covers more than 255 million users across the country and its 5G+ network is available in parts of 44 cities. AT&T deployed the C-Band spectrum in the first quarter to further expand its 5G+ coverage. The company aims to reach 70 million to 75 million people by the end of 2022 with its 5G+ service and targets to cover up to 200 million people in 2023. It is benefiting from lower levels of wireless churn due to seamless access to 5G technology on its unlimited wireless plans for consumers and businesses and the growing adoption of Unlimited Elite wireless plans. The company is aiming to profitably increase its postpaid subscriber base by leveraging its network quality and market penetration capabilities. Riding on its go-to-market strategy, AT&T expects to witness healthy subscriber momentum with the migration of customers to its unlimited plans. Such initiatives are likely to get reflected in the upcoming results.
During the to-be-reported quarter, AT&T intensified its 5G focus by joining Ericsson 5G Startup Program to spearhead innovation and unlock the full potential of 5G services for consumers. The collaboration aims to offer value-added services to bring new immersive experiences to users, utilizing AR and VR technology across the spectrum. By joining this program, AT&T will gain access to a curated list of firms that develop scalable services, devices and applications over 5G. This, in turn, will likely facilitate it to differentiate its 5G offering and gain a competitive advantage by bundling relevant use cases and tariff features to drive higher 5G consumer adoption. This is expected to have translated into higher revenues for the Communications segment.
During the quarter, AT&T continued with its aggressive fiber build-out initiatives as it aims to connect 3.5-4 million additional locations with fiber each year to significantly increase its existing fiber footprint to more than 30 million locations by the end of 2025. The company expects that 75% of its network footprint will be either served by fiber or 5G, which will likely halve its legacy copper services exposure. These simplification initiatives are likely to have driven additional cost savings while creating new revenue opportunities.
In the first quarter, AT&T was selected by the Texas Department of Information Resources as a connectivity and technology services provider. It will simplify the process for customers by providing them access to a range of solutions across its network through a single-source procurement process. These include Managed Services, IoT connectivity and public safety communications. Such technology collaborations are likely to have benefited the company.
However, adverse foreign currency translations and high operating costs for 5G deployments are likely to have led to soft margins in the quarter. The company expects to connect significant locations with fiber as it aims to expand its fiber builds in metro areas. Continuous infrastructure investments for 5G deployments are further likely to have weighed on the margins. The company’s wireline division is also struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. AT&T is facing a steady decline in linear TV subscribers and legacy services. High-speed Internet revenues are also contracting due to legacy Digital Subscriber Line decline, simplified pricing and bundle discount. Adverse foreign currency translations, TV content-cost pressure, high programming costs and new video platform expenses are also likely to have hurt the bottom line.
Overall Expectations
The Zacks Consensus Estimate for revenues from Communications is pegged at $28,657 million, indicating an improvement from $28,178 million reported in the year-ago quarter. Operating income is pegged at $7,163 million, implying a decline from $7,365 million reported in the prior-year quarter. The consensus mark for EBITDA from the segment stands at $11,338 million, suggesting a fall from $11,419 million.
The Zacks Consensus Estimate for total revenues of the company stands at $38,304 million, indicating a decline from $43,939 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 78 cents per share. It had reported earnings of 86 cents per share in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for AT&T for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -2.39%, with the former pegged at 76 cents and the latter at 78 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
The Earnings ESP for Nokia Corporation (NOK - Free Report) is +28.57% and it carries a Zacks Rank of 2. The company is set to report quarterly numbers on Apr 28.
The Earnings ESP for Apple Inc. (AAPL - Free Report) is +1.78% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 28.
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Will Higher Communications Revenues Aid AT&T (T) Q1 Earnings?
AT&T Inc. (T - Free Report) is scheduled to report first-quarter 2022 results, before the opening bell, on Apr 21. In the first quarter, the Communications segment is likely to have recorded year-over-year higher revenues owing to a healthy momentum in the wireless business.
Factors at Play
The Communications segment has three business units — Mobility, Entertainment Group and Business Wireline.
The company’s 5G network currently covers more than 255 million users across the country and its 5G+ network is available in parts of 44 cities. AT&T deployed the C-Band spectrum in the first quarter to further expand its 5G+ coverage. The company aims to reach 70 million to 75 million people by the end of 2022 with its 5G+ service and targets to cover up to 200 million people in 2023. It is benefiting from lower levels of wireless churn due to seamless access to 5G technology on its unlimited wireless plans for consumers and businesses and the growing adoption of Unlimited Elite wireless plans. The company is aiming to profitably increase its postpaid subscriber base by leveraging its network quality and market penetration capabilities. Riding on its go-to-market strategy, AT&T expects to witness healthy subscriber momentum with the migration of customers to its unlimited plans. Such initiatives are likely to get reflected in the upcoming results.
During the to-be-reported quarter, AT&T intensified its 5G focus by joining Ericsson 5G Startup Program to spearhead innovation and unlock the full potential of 5G services for consumers. The collaboration aims to offer value-added services to bring new immersive experiences to users, utilizing AR and VR technology across the spectrum. By joining this program, AT&T will gain access to a curated list of firms that develop scalable services, devices and applications over 5G. This, in turn, will likely facilitate it to differentiate its 5G offering and gain a competitive advantage by bundling relevant use cases and tariff features to drive higher 5G consumer adoption. This is expected to have translated into higher revenues for the Communications segment.
During the quarter, AT&T continued with its aggressive fiber build-out initiatives as it aims to connect 3.5-4 million additional locations with fiber each year to significantly increase its existing fiber footprint to more than 30 million locations by the end of 2025. The company expects that 75% of its network footprint will be either served by fiber or 5G, which will likely halve its legacy copper services exposure. These simplification initiatives are likely to have driven additional cost savings while creating new revenue opportunities.
In the first quarter, AT&T was selected by the Texas Department of Information Resources as a connectivity and technology services provider. It will simplify the process for customers by providing them access to a range of solutions across its network through a single-source procurement process. These include Managed Services, IoT connectivity and public safety communications. Such technology collaborations are likely to have benefited the company.
However, adverse foreign currency translations and high operating costs for 5G deployments are likely to have led to soft margins in the quarter. The company expects to connect significant locations with fiber as it aims to expand its fiber builds in metro areas. Continuous infrastructure investments for 5G deployments are further likely to have weighed on the margins. The company’s wireline division is also struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. AT&T is facing a steady decline in linear TV subscribers and legacy services. High-speed Internet revenues are also contracting due to legacy Digital Subscriber Line decline, simplified pricing and bundle discount. Adverse foreign currency translations, TV content-cost pressure, high programming costs and new video platform expenses are also likely to have hurt the bottom line.
Overall Expectations
The Zacks Consensus Estimate for revenues from Communications is pegged at $28,657 million, indicating an improvement from $28,178 million reported in the year-ago quarter. Operating income is pegged at $7,163 million, implying a decline from $7,365 million reported in the prior-year quarter. The consensus mark for EBITDA from the segment stands at $11,338 million, suggesting a fall from $11,419 million.
The Zacks Consensus Estimate for total revenues of the company stands at $38,304 million, indicating a decline from $43,939 million reported in the prior-year quarter. The consensus mark for earnings is currently pegged at 78 cents per share. It had reported earnings of 86 cents per share in the year-earlier quarter.
Earnings Whispers
Our proven model does not predict an earnings beat for AT&T for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -2.39%, with the former pegged at 76 cents and the latter at 78 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
AT&T Inc. Price and EPS Surprise
AT&T Inc. price-eps-surprise | AT&T Inc. Quote
Zacks Rank: AT&T has a Zacks Rank #3.
Stocks to Consider
Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this season:
Microsoft Corporation (MSFT - Free Report) is set to release quarterly numbers on Apr 26. It has an Earnings ESP of +0.03% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Earnings ESP for Nokia Corporation (NOK - Free Report) is +28.57% and it carries a Zacks Rank of 2. The company is set to report quarterly numbers on Apr 28.
The Earnings ESP for Apple Inc. (AAPL - Free Report) is +1.78% and it carries a Zacks Rank of 2. The company is scheduled to report quarterly numbers on Apr 28.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.