AT&T delivered a robust third-quarter performance, reporting a significant swing to profit and a modest increase in overall revenue, signaling continued momentum in its strategic pivot back to core telecom operations. The Dallas-based giant posted adjusted earnings per share that largely met analyst expectations, driven by strong growth in its high-margin mobility service revenue and accelerating fiber expansion. However, the report wasn't entirely without its nuances; the company acknowledged lower-than-expected phone sales in its crucial mobility segment, a point that might give some investors pause.
For the three months ending September 30, AT&T reported net income of $4.5 billion, or $0.63 per diluted share, a stark reversal from a net loss in the prior-year period. Total consolidated revenue advanced to $30.4 billion, up 1.8% year-over-year, primarily fueled by its thriving wireless and fiber broadband businesses. This revenue growth, while modest, underscores the company's ability to drive top-line expansion even amidst a challenging macroeconomic environment characterized by inflationary pressures and intense competition.
The star of the show remains AT&T's mobility segment, which saw service revenue climb by a healthy 4.0%. The company added an impressive 650,000 postpaid phone net subscribers during the quarter, indicating strong demand for its network services. This growth in higher-value customers contributed to an increase in Average Revenue Per User (ARPU) for postpaid phones, which rose by 2.8% to $56.10. Such figures highlight AT&T's success in attracting and retaining customers willing to pay for premium connectivity.
However, the quarter’s narrative wasn't uniformly positive. Management noted that equipment revenue, largely driven by handset sales, experienced a decline of down 15% compared to the same period last year. This dip suggests that fewer customers are upgrading their devices or purchasing new phones through AT&T, potentially due to longer phone lifecycles, economic caution, or aggressive promotions from competitors. While service revenue typically carries higher margins than equipment sales, a sustained slowdown in handset upgrades could impact customer engagement and future service attachment rates.
"We're incredibly pleased with our consistent execution this quarter, delivering strong subscriber growth in both postpaid phones and fiber, which are the bedrock of our strategy," stated John Stankey, CEO of AT&T, in a press release.
"While equipment sales faced some headwinds, our focus remains squarely on profitable service revenue growth and expanding our fiber footprint, where we continue to see robust demand and superior customer satisfaction. Our disciplined approach to capital allocation and operational efficiency is clearly paying off, as evidenced by our strong free cash flow generation."
Indeed, the company's strategic emphasis on fiber broadband continues to yield positive results. AT&T Fiber added 300,000 net subscribers, bringing its total fiber customer base to nearly 8.3 million. This relentless buildout of a modern, high-speed network is crucial for AT&T's long-term competitive positioning, offering a premium alternative to cable internet providers and supporting future revenue streams. The fiber business also boasts significantly lower churn rates and higher ARPU compared to legacy copper-based services.
Looking ahead, AT&T reaffirmed its full-year guidance, projecting continued growth in postpaid phone subscribers and fiber net additions. The company also reiterated its outlook for free cash flow, underscoring its commitment to deleveraging its balance sheet following several years of strategic divestitures, including its media assets. Analysts will be closely watching how AT&T navigates the competitive landscape in wireless, particularly as rivals continue to offer aggressive promotions, and how it manages the ongoing shift in consumer purchasing habits for mobile devices.
Ultimately, AT&T's third quarter reflected a company that's largely on track with its refined strategy. A significant swing to profit, coupled with healthy service revenue growth and robust fiber expansion, paints a picture of a telecom giant successfully repositioning itself. The challenge of lower phone sales, while a notable detail, appears to be outweighed by the strength of its core service offerings, suggesting a resilient path forward for the venerable carrier.
