AT&T Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Connectivity Franchise: Attracted and retained high-value customers. Mobility had over 400,000 postpaid phone net adds. Consumer Wireline saw strong broadband growth with over 550,000 new broadband subscribers, reaching over 10 million AT&T Fiber subscribers.
• Acquisitions: Planned acquisitions of EchoStar spectrum and Lumen fiber assets enhance connectivity portfolio. Progressed in deploying EchoStar spectrum and preparing to close Lumen transaction.
• Convergence: High convergence rates between wireless and broadband customers. Over 41% of AT&T Fiber households also use wireless, and over half of Internet Air subscribers use wireless, driving lower churn and higher lifetime values.

Segment Performance

• Mobility: Mobility service revenue grew 2.3% year over year, contributing to EBITDA growth of 2.2%. Reported 405,000 postpaid phone net adds, postpaid phone churn was 0.92%, and postpaid phone ARPU was $56.64.
• Consumer Wireline: Total revenues grew 4.1% year over year, driven by 16.8% growth in fiber revenue. Added 288,000 AT&T Fiber customers and 270,000 AT&T Internet Air net adds. Consumer Wireline EBITDA margins expanded by 350 basis points.
• Business Wireline: Revenues declined 7.8% year over year, while EBITDA declined about 13%, but fiber and advanced connectivity service revenues grew 6% year over year.

Guidance

• Consolidated: Service revenue growth in the low single-digit range and adjusted EBITDA growth of 3% or better. Full-year free cash flow expected in the low to mid $16 billion range, capital investment in the $22 billion to $22.5 billion range. Adjusted EPS expected to be $1.97 to $2.07, likely closer to the high end.
• Acquisitions: Expect update on long-term financial outlook early next year, with acquisitions anticipated to boost organic revenue and profitability.

Risks

• Market Competition: Competitive landscape in wireless leading to higher equipment and subscriber acquisition costs, potentially impacting margins.
• Seasonality: Holiday season may cause deferral of Internet service provider changes, affecting subscriber growth.
• Regulatory and Partner Risks: Uncertainties around regulatory approvals for acquisitions and performance of wholesale partners in reaching fiber targets.

Question and Answer

Q: Hi, good morning. The broadband results were really striking, and I have two questions on broadband...

A: Good morning, Peter, and thank you for noting the broadband results...

Q: Thank you. Two questions. John, the AT&T Internet Air momentum is pretty clear in your results...

A: Good morning, Ben. So first of all, one of the big changes you've seen us make in our messaging...

Q: Great, thanks. Good morning, guys. If I may. Maybe first on wireless...

A: Good morning, John. Look, I think the answer to the question is we're well-positioned for a competitive market...

Q: Hey, guys. Thank you so much for taking the questions. I appreciate it. So John, just if I put all the pieces together...

A: Hi, Dave. First of all, never going to answer a question absolutely and say never...

Q: Hey, good morning. Thank you for the questions. Following up on the comment related to boosting the long-term organic revenue growth...

A: Hi, Mike. I don't think there's any change in our point of view. First of all, we're not that far down the road of when we did the transaction...

Q: Hi, thanks for taking the question. Maybe Pascal or John, just a clarification question on FWA...

A: Good morning, Sebastiano. So, I'd say there are elements about the holiday season that I can speak to the Stankey household...

Q: Thanks and good morning. John, there's some about whether or not LEO satellites pose competitive threats to your mobile services...

A: Hi, Mike. Don't know that I'm going to add anything to what you probably heard me say before publicly. Have you the LEO technology is really exciting technology...