Why did AT&T's earnings per share decline year over year?

Diluted EPS fell to $0.47 from $0.57. The decline reflects roughly $0.08 per share of net significant items in 2024, mainly Open RAN restructuring charges, noncash impairments, and DIRECTV intangible amortization. It also reflects higher depreciation from fiber and 5G investment and lower pension and postretirement credits in other income.

Is AT&T's wireless business still growing?

Yes, on a service basis. Mobility service revenue grew 3.3 percent on subscriber growth and postpaid phone ARPU growth, and postpaid phone-only churn improved meaningfully. Total Mobility equipment revenue declined 9.8 percent because of lower device sales volumes, so total Mobility revenue was roughly flat at up 0.1 percent.

What is driving the weakness in Business Wireline?

Business Wireline revenue fell 7.8 percent, mainly due to lower demand for legacy voice and data services and product simplification. Partial offsets came from connectivity services and equipment. The operating margin fell sharply to 1.3 percent, reflecting the revenue decline and higher equipment costs.

How is AT&T managing its debt and capital spending?

AT&T reduced total debt and cut capital investment to $4.6 billion, including vendor financing, from $6.4 billion a year earlier. The debt ratio improved to 52.4 percent from 55.9 percent. Operating cash flow of $7.5 billion, up $0.9 billion, supported the deleveraging, though part of the cash-flow improvement reflected timing of working capital and higher receivable sales.

What is the Open RAN deployment and why does it matter for results?

Open RAN is AT&T's commercial-scale open radio access network deployment with Ericsson. It led to restructuring charges and a shortened useful life for network equipment being replaced early, which raised depreciation expense and reduced reported earnings. These effects are expected to be concentrated in the near term as the network transition proceeds.

AT&T INC. 8-K SEC Disclosure

01—Abstract

Summary

Summary of the 8-K filed April 24, 2024. Cited figures are marked; the original filing is the authoritative source.

AT&T reported first-quarter 2024 net income attributable to common stock of $3.4 billion^a, or $0.47 per diluted share, versus $4.2 billion, or $0.57 per diluted share, a year earlier.

The results include roughly $0.7 billion^b in pre-tax significant items, or $(0.08) per share, mainly restructuring charges tied to the Open RAN deployment with Ericsson, noncash impairments, and DIRECTV intangible amortization. Operating revenues were $30.0 billion, down 0.4 percent, as lower Mobility equipment revenue and continued Business Wireline declines offset service growth in Mobility and Consumer Wireline. Operating income fell 2.6 percent to $5.8 billion, and the operating margin slipped to 19.5 percent from 19.9 percent.

The core wireless business remained a bright spot. Mobility service revenue grew 3.3 percent, postpaid phone-only churn improved to 0.72 percent from 0.81 percent, and Mobility's operating margin expanded to 31.4 percent. Consumer Wireline also improved, with revenue up 3.4 percent on fiber broadband growth and a margin of 6.4 percent.

Business Wireline remains the main weak spot, with revenue down 7.8 percent and its operating margin collapsing to 1.3 percent from 7.1 percent. Latin America (Mexico) revenue rose 20.4 percent, helped by favorable foreign exchange, and reached a near-breakeven 0.3 percent margin. Cash flow and balance sheet trends were mixed but generally constructive.

Operating cash flow rose to $7.5 billion^c from $6.7 billion, and capital investment fell to $4.6 billion from $6.4 billion, including vendor financing. Total debt declined, with long-term debt down about $2.2 billion and debt maturing within one year down about $2.4 billion since December 31, 2023. Cash and equivalents fell to $3.5 billion.

The debt ratio improved to 52.4 percent from 55.9 percent. Investors should weigh the pressure on Business Wireline and the restructuring and depreciation headwinds against steady wireless service growth and deleveraging.

02—Key points

Key Highlights

Net income attributable to common stock was $3.4 billion ($0.47 per diluted share), down from $4.2 billion ($0.57) a year earlier, with about $0.08 per share of net significant items drag.
Operating revenues were $30.0 billion, down 0.4 percent, while operating income fell 2.6 percent to $5.8 billion and the operating margin was 19.5 percent versus 19.9 percent.
Mobility service revenue grew 3.3 percent, postpaid phone-only churn improved to 0.72 percent from 0.81 percent, and the Mobility operating margin rose to 31.4 percent.
Business Wireline revenue fell 7.8 percent and its operating margin dropped to 1.3 percent from 7.1 percent, the clearest weak spot in the quarter.
Consumer Wireline revenue rose 3.4 percent on fiber broadband growth, with 252,000 fiber net adds and a margin of 6.4 percent.
Operating cash flow rose to $7.5 billion, and capital investment fell to $4.6 billion from $6.4 billion including vendor financing.
Debt declined, with the debt ratio improving to 52.4 percent from 55.9 percent a year earlier, and long-term debt down about $2.2 billion since year-end 2023.

03—Questions

Frequently Asked Questions

Why did AT&T's earnings per share decline year over year?
Diluted EPS fell to $0.47 from $0.57. The decline reflects roughly $0.08 per share of net significant items in 2024, mainly Open RAN restructuring charges, noncash impairments, and DIRECTV intangible amortization. It also reflects higher depreciation from fiber and 5G investment and lower pension and postretirement credits in other income.
Is AT&T's wireless business still growing?
Yes, on a service basis. Mobility service revenue grew 3.3 percent on subscriber growth and postpaid phone ARPU growth, and postpaid phone-only churn improved meaningfully. Total Mobility equipment revenue declined 9.8 percent because of lower device sales volumes, so total Mobility revenue was roughly flat at up 0.1 percent.
What is driving the weakness in Business Wireline?
Business Wireline revenue fell 7.8 percent, mainly due to lower demand for legacy voice and data services and product simplification. Partial offsets came from connectivity services and equipment. The operating margin fell sharply to 1.3 percent, reflecting the revenue decline and higher equipment costs.
How is AT&T managing its debt and capital spending?
AT&T reduced total debt and cut capital investment to $4.6 billion, including vendor financing, from $6.4 billion a year earlier. The debt ratio improved to 52.4 percent from 55.9 percent. Operating cash flow of $7.5 billion, up $0.9 billion, supported the deleveraging, though part of the cash-flow improvement reflected timing of working capital and higher receivable sales.
What is the Open RAN deployment and why does it matter for results?
Open RAN is AT&T's commercial-scale open radio access network deployment with Ericsson. It led to restructuring charges and a shortened useful life for network equipment being replaced early, which raised depreciation expense and reduced reported earnings. These effects are expected to be concentrated in the near term as the network transition proceeds.

04—Continue

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