Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- AT&T Inc (T, Financial) reported growth in consolidated service revenue and adjusted EBITDA, driven by strong postpaid phone and fiber net additions.
- The company achieved growth in adjusted EPS and free cash flow, excluding DIRECTV, consistent with their March outlook.
- AT&T Inc (T) is on track to surpass its target of passing over 30 million total locations with its fiber network by mid-year 2025.
- The company plans to commence share repurchases during the second quarter, indicating confidence in its financial guidance.
- AT&T Inc (T) continues to see strong performance in its Mobility and Consumer Wireline businesses, offsetting pressures in Business Wireline.
Negative Points
- The macro environment presents diminished visibility, with potential impacts from announced tariffs on smartphones and network equipment.
- Postpaid phone churn increased due to normalization of customers reaching the end of their equipment promotional financing periods.
- Business Wireline revenues declined approximately 9% year-over-year, primarily due to pressures on legacy services.
- The company faces a competitive wireless market, with shifts in offers and promotions impacting churn.
- There is a potential for increased costs due to tariffs, which could affect consumer and business demand.
Q & A Highlights
Q: How might AT&T and the industry react if tariffs increase the cost of phones? Also, what are the expense reduction opportunities in a slower growth environment?
A: John Stankey, CEO, explained that if tariffs increase handset costs, AT&T would likely pass these costs to customers, as has been done with previous cost increases. The company will continue to find creative ways to support customers. Regarding expense reduction, AT&T is focused on improving efficiency across the business, including call centers and digital channels, and is confident in its ability to manage costs effectively.
Q: Can you comment on AT&T's potential acquisition of Lumen's mass market consumer fiber business and the impact of recent FCC orders on legacy infrastructure?
A: John Stankey, CEO, did not comment on acquisition rumors but emphasized that AT&T is open to inorganic opportunities that align with its strategy. Regarding the FCC orders, he noted that AT&T is now focused on operational execution, with regulatory hurdles largely cleared, allowing for faster cost reductions in legacy infrastructure.
Q: What is the impact of higher upgrades on wireless margins and EBITDA growth, and what is the outlook for Business Wireline EBITDA?
A: Pascal Desroches, CFO, indicated that upgrades have accelerated, possibly due to tariff concerns, and are expected to remain elevated. Business Wireline EBITDA benefited from cost rationalization and vendor settlements, but some trends may moderate, and legacy revenue declines are expected to increase.
Q: How is AT&T viewing the penetration and financial prospects of fixed wireless, and what are the opportunities for ARPU improvement?
A: John Stankey, CEO, stated that AT&T's fixed wireless strategy remains focused on specific use cases, and the company is improving its ability to serve these markets. For ARPU, AT&T will continue to find opportunities to adjust pricing based on product performance and market conditions, with fiber expected to drive margin improvements.
Q: What is AT&T's confidence in achieving the higher end of Mobility service revenue and EBITDA guidance, and does the macroeconomic environment affect fiber targets?
A: Pascal Desroches, CFO, expressed confidence in meeting guidance due to cost actions and adjustments like auto bill pay discounts. John Stankey, CEO, emphasized that fiber is a long-term investment, and AT&T plans to continue its fiber build-out despite economic uncertainties, as it is a strategic priority.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
