In Short:
AT&T exceeded expectations for adding wireless customers in the second quarter, with a rise in shares. The company added 419,000 monthly bill-paying subscribers. Their lower-priced unlimited plans helped attract budget-conscious customers and retain existing customers, with low postpaid phone churn. Free cash flow also increased. However, slower phone upgrades impacted revenue. AT&T also faced challenges with data breaches and outages, leading to potential fines.
AT&T Exceeds Market Expectations for Wireless Subscriber Additions in Q2
AT&T exceeded market expectations for wireless subscriber additions in the second quarter, with 419,000 monthly bill-paying wireless phone subscribers added. This surpassed analyst expectations of 284,800 additions, according to FactSet.
The telecom operator’s higher-tier unlimited plans have attracted customers, leading to a 2.4% rise in the company’s shares in premarket trading.
AT&T’s Strategy and Performance
AT&T’s budget-friendly unlimited plans have helped the company attract budget-conscious customers in a competitive market, facing tough competition from T-Mobile and Verizon. The company has also been successful in retaining customers, with a postpaid phone churn rate of 0.70% for the second quarter, the second lowest in the industry.
Free cash flow, a key metric for dividend payouts, increased by more than 9% to $4.6 billion, surpassing estimates.
However, slower phone upgrades in the U.S. impacted AT&T’s revenue, similar to the challenges faced by Verizon. Mobility equipment revenue declined by 8% in the April-June period, with total revenue of $29.8 billion missing estimates.
Challenges Faced by AT&T
AT&T, one of the largest telecom operators in the U.S., faced challenges this year, including data breaches and prolonged outages. The Federal Communications Commission reported a nationwide outage in February that blocked over 92 million voice calls and more than 25,000 attempts to reach 911, potentially resulting in a fine for the company.
