AT&T(T) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues grew by 1.6% year over year, adjusted EBITDA increased by 2.4%, and adjusted EBITDA margins expanded by 30 basis points [12] - Adjusted EPS was $0.54, consistent with the prior year, while free cash flow was $4.9 billion compared to $4.6 billion a year ago [12][26] - Capital investment decreased to $5.3 billion, down $200 million year over year [13] Business Line Data and Key Metrics Changes - Mobility service revenue grew by 2.3% year over year, contributing to EBITDA growth of 2.2% [14] - Consumer Wireline revenues increased by 4.1%, driven by a 16.8% growth in fiber revenue, with Consumer Wireline EBITDA growing over 15% [19] - Business Wireline revenues declined by 7.8% year over year, while EBITDA decreased by about 13% [22] Market Data and Key Metrics Changes - Over 400,000 postpaid phone net adds were recorded, slightly ahead of the previous year's performance [3] - AT&T Fiber subscribers surpassed 10 million, with the company achieving its highest total broadband net adds in over eight years [5][21] - The convergence rate of fiber customers who also subscribe to mobility services reached 41.5%, up 180 basis points from a year ago [21] Company Strategy and Development Direction - The company aims to become the best advanced communications provider in America and lead the industry in retail connectivity service revenue by the end of the decade [7] - Planned acquisitions of spectrum licenses from EchoStar and fiber assets from Lumen are expected to enhance the advanced connectivity portfolio [7][9] - The company is focused on transitioning away from legacy infrastructure and investing in AI-ready connectivity [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving full-year financial guidance, with expectations for service revenue growth in the low single-digit range and adjusted EBITDA growth of 3% or better [26] - The competitive environment remains challenging, but the company believes its focus on converged customer relationships will drive profitability and reduce churn [61][65] - Management is optimistic about the impact of upcoming acquisitions on organic growth and profitability [28][90] Other Important Information - The company returned $3.5 billion to shareholders, including nearly $1.5 billion in stock repurchases [23] - The company ended the quarter with over $20 billion in cash, positioning it well for capital returns and pending acquisitions [24] - The company expects to achieve full-year free cash flow in the low to mid-$16 billion range [26] Q&A Session Summary Question: Concerns about fiber expansion and competition - Management expressed confidence in their ability to build effectively and penetrate markets, stating that they have a scalable build engine and can manage capital allocation strategically [31][35] Question: Fixed Wireless Access (FWA) market segmentation - Management highlighted the importance of targeted marketing and operational support to ensure effective segmentation between fiber and fixed wireless offerings [43][46] Question: Impact of competitive activity on wireless margins - Management believes they are well-positioned for a competitive market and will continue to focus on converged customers to drive profitability [60][62] Question: Confidence in Lumen and EchoStar acquisitions - Management reiterated confidence in the strategic value of the Lumen and EchoStar assets, expecting them to enhance organic growth and profitability [81][84]