We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
AT&T Inc. (T - Free Report) reported relatively healthy fourth-quarter 2023 results as solid wireless traction and customer additions was partially offset by lower demand for legacy voice and data services. The company recorded strong subscriber growth backed by a resilient business model and robust cash flow position driven by a diligent execution of operational plans.
AT&T expects to continue investing in key areas of 5G and fiber and adjust its business according to the evolving market scenario to fuel long-term growth, while maintaining a healthy dividend payment and actively pruning debt.
Net Income
On a GAAP basis, AT&T reported net income of $2,135 million or 30 cents per share against a loss of $23,571 million or a loss of $3.20 per share in the year-ago quarter. The significant year-over-year improvement was primarily attributable to high asset impairment charges in the year-earlier quarter.
Excluding non-recurring items, adjusted earnings from continuing operations were 54 cents per share compared with 61 cents in the year-ago quarter. Adjusted earnings for the fourth quarter missed the Zacks Consensus Estimate by a penny.
For 2023, GAAP net income was $14,192 million or $1.97 per share against a loss of $8,727 million or a loss of $1.13 per share in 2022. Adjusted earnings from continuing operations in 2023 were $2.41 per share compared with $2.57 in 2022.
Quarter Details
Quarterly GAAP operating revenues increased 2.2% year over year to $32,022 million, largely due to higher Mobility, Mexico and Consumer Wireline revenues, partially offset by lower revenues from Business Wireline services. The top line beat the consensus mark of $31,459 million. For 2023, operating revenues increased 1.4% year over year to $122,428 million.
Adjusted operating income for the quarter was $5,810 million compared with $5,652 million in the prior-year quarter. This resulted in respective adjusted operating income margins of 18.1% and 18%. Adjusted EBITDA improved to $10,555 million from $10,231 million.
AT&T witnessed solid subscriber momentum with 759,000 post-paid net additions. This included 526,000 postpaid wireless phone additions. Postpaid churn was 1.01% while postpaid phone-only average revenue per user (ARPU) increased 1.4% year over year to $56.23 due to improved international roaming, pricing actions and transition to higher-priced unlimited plans. AT&T is currently covering about 210 million people with mid-band 5G spectrum, more than its target of 200 million people by the end of 2023.
Segmental Performance
Communications: Total segment operating revenues were up to $30,797 million from $30,365 million as decline in Business Wireline (down 10.3% to $5,052 million) was offset by a gain in the Mobility business (up 4.1% to $22,393 million) and Consumer Wireline (up 3.8% to $3,352 million). The segment revenues beat our estimates of $30,326.4 million.
Service revenues from the Mobility unit improved 3.9% to $16,039 million driven by solid subscriber gains, while equipment revenues increased 4.7% year over year to $6,354 million driven by sales of higher-priced phones. Revenues from Consumer Wireline business were up due to gain in fiber broadband. AT&T recorded net fiber additions of 273,000 and has the ability to serve 26 million consumer and business customer locations in more than 100 U.S. metro areas with fiber. Revenues from Business Wireline were down due to decline in legacy products as customers shifted to more advanced IP-based offerings.
Segment operating income was $6,608 million compared with $6,577 million in the year-ago quarter for respective operating margin of 21.5% and 21.7%. Adjusted EBITDA was $11,019 million compared with $10,835 million in the year-ago quarter.
Latin America: Total operating revenues were $1,090 million, up 26.6% year over year, due to growth in service and equipment revenues driven by favorable currency impact and higher sales. Adjusted EBITDA improved to $137 million from $85 million in the year-ago quarter for respective margins of 12.6% and 9.9%.
Cash Flow & Liquidity
AT&T generated $38,314 million of cash from operations in 2023 compared with $35,812 million in the prior-year period. Free cash flow at quarter end was $6,373 million compared with $6,103 million in the year-ago period, bringing the respective tallies for 2023 and 2022 to $16,768 and $14,138. As of Dec 31, 2023, AT&T had $6,722 million of cash and cash equivalents with long-term debt of $127,854 million compared with respective tallies of $3,701 million and $128,423 million in the prior-year period. Net debt to adjusted EBITDA was about 2.97x.
Guidance
While optimizing operations, AT&T is aiming to increase efficiencies to lower operating costs, while focusing on 5G and fiber-based connectivity along with expanded reach of software-based entertainment platforms. Wireless service revenue is likely to improve in the vicinity of 3%, while broadband revenue is likely to be up in excess of 7%. Adjusted earnings are expected to be within $2.15 and $2.25 per share.
Free cash flow in 2024 is expected to be within $17billion-$18 billion due to cost savings. The company is also aiming to reduce its debt burden by monetizing non-core assets. AT&T firmly remains on track to pass more than 30 million fiber locations by the end of 2025.
Here are some better-ranked stocks from the broader industry.
Workday Inc. (WDAY - Free Report) , carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 13.24%. In the last reported quarter, it delivered an earnings surprise of 9.29%. It has a long-term earnings growth expectation of 26.5%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Headquartered in Wilmington, DE, InterDigital, Inc. (IDCC - Free Report) is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
This Zacks Rank #1 stock has a long-term earnings growth expectation of 17.4% and has surged 75.3% in the past year. A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. The addition of technologies related to sensors, user interface and video to its already strong portfolio of wireless technology solutions is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
Juniper Networks Inc. (JNPR - Free Report) , sporting a Zacks Rank #1, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products.
It delivered an earnings surprise of 6.5%, on average, in the trailing four quarters. Juniper has a long-term earnings growth expectation of 9.9%. It has a VGM Score of B.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
AT&T (T) Misses Q4 Earnings Estimates Despite Higher Revenues
AT&T Inc. (T - Free Report) reported relatively healthy fourth-quarter 2023 results as solid wireless traction and customer additions was partially offset by lower demand for legacy voice and data services. The company recorded strong subscriber growth backed by a resilient business model and robust cash flow position driven by a diligent execution of operational plans.
AT&T expects to continue investing in key areas of 5G and fiber and adjust its business according to the evolving market scenario to fuel long-term growth, while maintaining a healthy dividend payment and actively pruning debt.
Net Income
On a GAAP basis, AT&T reported net income of $2,135 million or 30 cents per share against a loss of $23,571 million or a loss of $3.20 per share in the year-ago quarter. The significant year-over-year improvement was primarily attributable to high asset impairment charges in the year-earlier quarter.
Excluding non-recurring items, adjusted earnings from continuing operations were 54 cents per share compared with 61 cents in the year-ago quarter. Adjusted earnings for the fourth quarter missed the Zacks Consensus Estimate by a penny.
AT&T Inc. Price, Consensus and EPS Surprise
AT&T Inc. price-consensus-eps-surprise-chart | AT&T Inc. Quote
For 2023, GAAP net income was $14,192 million or $1.97 per share against a loss of $8,727 million or a loss of $1.13 per share in 2022. Adjusted earnings from continuing operations in 2023 were $2.41 per share compared with $2.57 in 2022.
Quarter Details
Quarterly GAAP operating revenues increased 2.2% year over year to $32,022 million, largely due to higher Mobility, Mexico and Consumer Wireline revenues, partially offset by lower revenues from Business Wireline services. The top line beat the consensus mark of $31,459 million. For 2023, operating revenues increased 1.4% year over year to $122,428 million.
Adjusted operating income for the quarter was $5,810 million compared with $5,652 million in the prior-year quarter. This resulted in respective adjusted operating income margins of 18.1% and 18%. Adjusted EBITDA improved to $10,555 million from $10,231 million.
AT&T witnessed solid subscriber momentum with 759,000 post-paid net additions. This included 526,000 postpaid wireless phone additions. Postpaid churn was 1.01% while postpaid phone-only average revenue per user (ARPU) increased 1.4% year over year to $56.23 due to improved international roaming, pricing actions and transition to higher-priced unlimited plans. AT&T is currently covering about 210 million people with mid-band 5G spectrum, more than its target of 200 million people by the end of 2023.
Segmental Performance
Communications: Total segment operating revenues were up to $30,797 million from $30,365 million as decline in Business Wireline (down 10.3% to $5,052 million) was offset by a gain in the Mobility business (up 4.1% to $22,393 million) and Consumer Wireline (up 3.8% to $3,352 million). The segment revenues beat our estimates of $30,326.4 million.
Service revenues from the Mobility unit improved 3.9% to $16,039 million driven by solid subscriber gains, while equipment revenues increased 4.7% year over year to $6,354 million driven by sales of higher-priced phones. Revenues from Consumer Wireline business were up due to gain in fiber broadband. AT&T recorded net fiber additions of 273,000 and has the ability to serve 26 million consumer and business customer locations in more than 100 U.S. metro areas with fiber. Revenues from Business Wireline were down due to decline in legacy products as customers shifted to more advanced IP-based offerings.
Segment operating income was $6,608 million compared with $6,577 million in the year-ago quarter for respective operating margin of 21.5% and 21.7%. Adjusted EBITDA was $11,019 million compared with $10,835 million in the year-ago quarter.
Latin America: Total operating revenues were $1,090 million, up 26.6% year over year, due to growth in service and equipment revenues driven by favorable currency impact and higher sales. Adjusted EBITDA improved to $137 million from $85 million in the year-ago quarter for respective margins of 12.6% and 9.9%.
Cash Flow & Liquidity
AT&T generated $38,314 million of cash from operations in 2023 compared with $35,812 million in the prior-year period. Free cash flow at quarter end was $6,373 million compared with $6,103 million in the year-ago period, bringing the respective tallies for 2023 and 2022 to $16,768 and $14,138. As of Dec 31, 2023, AT&T had $6,722 million of cash and cash equivalents with long-term debt of $127,854 million compared with respective tallies of $3,701 million and $128,423 million in the prior-year period. Net debt to adjusted EBITDA was about 2.97x.
Guidance
While optimizing operations, AT&T is aiming to increase efficiencies to lower operating costs, while focusing on 5G and fiber-based connectivity along with expanded reach of software-based entertainment platforms. Wireless service revenue is likely to improve in the vicinity of 3%, while broadband revenue is likely to be up in excess of 7%. Adjusted earnings are expected to be within $2.15 and $2.25 per share.
Free cash flow in 2024 is expected to be within $17billion-$18 billion due to cost savings. The company is also aiming to reduce its debt burden by monetizing non-core assets. AT&T firmly remains on track to pass more than 30 million fiber locations by the end of 2025.
Zacks Rank & Stock to Consider
AT&T currently has a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Here are some better-ranked stocks from the broader industry.
Workday Inc. (WDAY - Free Report) , carrying a Zacks Rank #2 (Buy), delivered a trailing four-quarter average earnings surprise of 13.24%. In the last reported quarter, it delivered an earnings surprise of 9.29%. It has a long-term earnings growth expectation of 26.5%.
Workday is a provider of enterprise-level software solutions for financial management and human resource domains. The company’s cloud-based platform combines finance and HR in a single system that makes it easier for organizations to provide analytical insights and decision support.
Headquartered in Wilmington, DE, InterDigital, Inc. (IDCC - Free Report) is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks.
This Zacks Rank #1 stock has a long-term earnings growth expectation of 17.4% and has surged 75.3% in the past year. A well-established global footprint, diversified product portfolio and ability to penetrate different markets are key growth drivers for InterDigital. The addition of technologies related to sensors, user interface and video to its already strong portfolio of wireless technology solutions is likely to drive considerable value, given the massive size of the market it offers licensing technologies to.
Juniper Networks Inc. (JNPR - Free Report) , sporting a Zacks Rank #1, is a leading provider of networking solutions and communication devices. The company develops, designs and sells products that help build network infrastructure used for services and applications based on a single Internet protocol network worldwide. Juniper offers a broad range of routing, switching and security products.
It delivered an earnings surprise of 6.5%, on average, in the trailing four quarters. Juniper has a long-term earnings growth expectation of 9.9%. It has a VGM Score of B.