AT&T Inc. topped expectations for free-cash flow in its latest quarter while sticking with its full-year outlook on the metric.
The telecommunications company delivered $4.2 billion in free-cash flow for the latest quarter, ahead of the $3.7 billion that analysts tracked by FactSet had been expecting. The upside marked a reversal from what was seen three months ago, when AT&T fell way short of Wall Street’s forecasts on the closely watched metric amid what it said were misaligned expectations about its quarterly cadence.
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continues to expect at least $16 billion in free-cash flow for the full year, meaning that the company needs to rake in about $11 billion in the second half of the year, and it expects that to be weighted toward the fourth quarter.
The company added 326,000 postpaid phone net subscribers in the second quarter, while recording 251,000 fiber net additions. AT&T said last month that it expects postpaid phone net additions to fall in the low 300,000s.
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“Until recently, AT&T had strongly prioritized unit (subscriber) growth over profitability,” SVB MoffettNathanson analyst Craig Moffett wrote. “More recently, they have seemingly achieved a much more sustainable balance between the two. Subscriber growth is slower, but virtually all financial metrics are commensurately better.”
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Revenue ticked up to $29.9 billion from $29.6 billion, while analysts were modeling $30.0 billion. The company saw a 4.9% boost in mobility service revenue along with a 7.0% increase in broadband revenue.
AT&T logged net income of $4.5 billion, or 61 cents a share, compared with $4.2 billion, or 57 cents a share, in the year-prior quarter. On an adjusted basis, AT&T logged 63 cents a share in earnings, down from 65 cents a share a year before but ahead of the FactSet consensus, which was 60 cents a share.
AT&T also reported adjusted earnings before interest, taxes, depreciation and amortization of $11.1 billion, up from $10.3 billion a year prior, whereas the FactSet consensus was for $10.7 billion.
“Our wireless business is growing share in ARPU [average revenue per user] with low churn and improving margins, and our fiber business is accelerating new build penetration, growing share in ARPU, while lowering churn and improving margins,” Chief Executive John Stankey said on the earnings call, according to a transcript provided by AlphaSense/Sentieo. “This is the formula for sustainable top- and bottom-line results, and we’re confident this success will be sustainable over the next three years.”
The company is in the midst of a cost-cutting push, disclosing Tuesday that it achieved its run-rate cost-savings target of $6 billion ahead of schedule. AT&T is now aiming to eliminate $2 billion more in costs.
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This post was originally published on Market Watch
