01—Abstract
Summary
Summary of the 8-K filed October 23, 2024. Cited figures are marked; the original filing is the authoritative source.
AT&T reported third-quarter 2024 results that were mixed: consolidated revenue of $30.2 billiona was down 0.5% year over year, and GAAP diluted EPS was $(0.03), driven by a $4.4 billion non-cash goodwill impairment tied to the Business Wireline unit.
Excluding this and other adjusting items, adjusted EPS was $0.60b versus $0.64 a year ago, and adjusted EBITDA rose to $11.6 billion from $11.2 billion. Management reiterated all full-year 2024 consolidated guidance, including adjusted EPS of $2.15-$2.25 and free cash flow of $17-$18 billion. The core consumer franchise showed clear momentum.
Mobility service revenue grew 4.0% to $16.5 billionc, postpaid phone net adds were 403,000, and postpaid phone churn was an industry-leading 0.78%. Mobility EBITDA reached a record third-quarter level of $9.5 billion, and Consumer Wireline broadband revenue rose 6.4%, supported by 226,000 fiber net adds and 135,000 AT&T Internet Air adds. Note that the Mobility results include roughly $90 million of one-time administrative fee revenue that is not repeatable.
The weak spot is Business Wireline, where revenue fell 11.8%d and EBITDA dropped 20%. Management now expects full-year Business Wireline EBITDA to decline in the high-teens percent range, worse than the prior mid-teens guidance.
Free cash flow was $5.1 billion for the quarter, roughly flat year over year, but up $2.4 billion year to date. Net debt stood at $125.8 billion, and the company continues to target net debt-to-adjusted EBITDA in the 2.5x range by the first half of 2025, versus 2.82x annualized at quarter end.
02—Key points
Key Highlights
- Consolidated revenue of $30.2 billion, down 0.5% YoY, with Mobility service revenue up 4.0% to $16.5 billion
- GAAP diluted EPS of $(0.03) reflects a $4.4 billion non-cash goodwill impairment in Business Wireline; adjusted EPS was $0.60 versus $0.64 a year ago
- Adjusted EBITDA rose to $11.6 billion from $11.2 billion; Mobility EBITDA hit a record third-quarter level of $9.5 billion (up 6.7%)
- Business Wireline revenue fell 11.8% and EBITDA fell 20%; full-year EBITDA decline guidance worsened to high-teens from mid-teens
- Strong subscriber trends: 403,000 postpaid phone net adds, 0.78% postpaid phone churn, 226,000 fiber net adds, and 135,000 Internet Air net adds
- Free cash flow of $5.1 billion in the quarter and $12.8 billion year to date (up $2.4 billion YoY); total debt $129.0 billion, net debt $125.8 billion
- Full-year 2024 consolidated guidance reiterated, including adjusted EPS of $2.15-$2.25, free cash flow of $17-$18 billion, and capital investment of $21-$22 billion
03—Questions
Frequently Asked Questions
Why did AT&T report a GAAP loss per share in the third quarter when the business appears to be performing well?
The GAAP diluted EPS of $(0.03) was driven mainly by a $4.4 billion non-cash goodwill impairment on the Business Wireline unit, reflecting faster-than-expected secular decline in legacy voice and data services. The impairment is excluded from adjusted EPS of $0.60, which is the measure management emphasizes. Investors should weigh the impairment as a signal about the long-term value of the Business Wireline business, even though it does not affect cash flow.
Is AT&T's full-year 2024 guidance still intact?
Largely yes. AT&T reiterated its consolidated guidance, including adjusted EPS of $2.15-$2.25, adjusted EBITDA growth in the 3% range, and free cash flow of $17-$18 billion. However, the Business Wireline EBITDA decline outlook was worsened to a high-teens percentage drop from a mid-teens drop. Management also flagged that the adjusted EPS outlook depends on a mark-to-market pension adjustment that is not reasonably estimable.
How sustainable is the Mobility growth, given the one-time revenue included in the quarter?
Mobility service revenue growth of 4.0% included approximately $90 million of one-time administrative fee revenue from aligning billing timing, which management said did not reflect a price increase. Excluding that item, growth would be modestly lower but still solid, supported by 403,000 postpaid phone net adds and a 1.9% increase in postpaid phone ARPU. Postpaid phone churn of 0.78% also indicates customer retention remains strong.
How is AT&T's balance sheet and debt position trending?
Total debt was $129.0 billion and net debt was $125.8 billion at September 30, 2024, down from roughly $138.0 billion total debt and $128.7 billion net debt a year earlier. Net debt to adjusted EBITDA was 2.82x on an annualized basis. Management continues to target about 2.5x by the first half of 2025, and year-to-date free cash flow of $12.8 billion supports debt reduction.
04—Continue