AT&T Surpasses Expectations with Strong Wireless Subscriber Growth, Shares Up 4.8%

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AT&T (T.N) surpassed market expectations for wireless subscriber additions in the second quarter, buoyed by its appeal to budget-conscious customers with higher-tier unlimited plans. This strong performance led to a notable 4.8% increase in the company’s shares on Wednesday.

The telecom giant reported an addition of 419,000 monthly bill-paying wireless phone subscribers, far exceeding the anticipated 284,800 additions, according to a FactSet survey of five analysts.

“Our substantial investments in 5G and fiber, coupled with our consistent operational execution, are driving robust growth across most areas of our business,” said CEO John Stankey during the post-earnings conference call.

AT&T’s success in attracting customers can be attributed to its competitive pricing for unlimited plans, which often come at lower rates than those of its competitors. This strategic move has helped the company attract budget-conscious consumers and retain them better than its rivals, with a postpaid phone churn rate of 0.70%—the second-lowest reported for a second quarter.

The company’s policy of offering uniform deals on all smartphones for both new and existing customers has also contributed to maintaining low churn levels.

In addition to strong subscriber growth, AT&T saw its free cash flow rise by more than 9% to $4.6 billion, exceeding LSEG estimates of $4.22 billion. However, slower phone upgrades in the U.S. have impacted revenue, echoing challenges faced by competitor Verizon (VZ.N).

Mobility equipment revenue decreased by 8% in the April-June period, and total revenue of $29.8 billion fell short of the $29.92 billion forecasted by LSEG.

The recent nationwide outage in February, which lasted over 12 hours and affected more than 92 million voice calls and 25,000 emergency 911 attempts, added pressure on AT&T. Despite these challenges, Jamie Lumley, analyst at Third Bridge, noted that the company delivered several positive outcomes. These include stable wireless customer growth, expansion in its fiber business, and continued momentum in converged service adoption.