- Subscriber Beat: AT&T added 405,000 monthly bill-paying wireless subscribers in the third quarter, significantly surpassing analyst expectations of 334,100.
- Strategic Success: Growth was fueled by aggressive promotions for the new iPhone 17 and successful bundling of wireless and fiber broadband services.
- Mixed Financials: Despite the subscriber surge, total revenue of $30.7 billion narrowly missed estimates, and the company’s business wireline unit saw a sharp decline.
- Rising Costs: Higher phone sales and increased marketing spending pushed operating costs in the mobility division up by 3.8%.
AT&T Navigates Fierce Competition with Subscriber Surge
In a fiercely competitive telecommunications market, AT&T demonstrated significant strength in its third-quarter performance, adding more wireless subscribers than anticipated. The company’s success highlights the effectiveness of its strategic focus on bundled services and heavy promotions surrounding the launch of Apple’s latest iPhone.
The third quarter, which ended in September, is a critical battleground for U.S. wireless carriers. AT&T successfully capitalized on this period, adding 405,000 monthly bill-paying wireless subscribers. This figure comfortably beat the FactSet consensus estimate of 334,100 additions, signaling that the company’s customer acquisition strategy is resonating with consumers.
iPhone Promotions and Bundling Prove a Winning Formula
Two key factors drove the impressive subscriber numbers: aggressive marketing and strategic service packaging. Like its rivals, AT&T rolled out lucrative promotions for the iPhone 17 series, aiming to attract new customers and incentivize existing ones to upgrade to more expensive plans.
Furthermore, the company’s strategy of bundling wireless and fiber broadband services at a discount is paying dividends. This approach not only attracts new customers but also increases loyalty and reduces churn. According to the company, over 41% of its fiber broadband households have also signed up for its mobile plans, creating a stickier customer ecosystem.
A Closer Look at the Financials
While the subscriber growth was a clear win, the overall financial picture was more nuanced. On an adjusted basis, AT&T reported earnings of 54 cents per share, which was largely in line with LSEG estimates. However, total third-quarter revenue came in at $30.7 billion, just shy of the projected $30.87 billion.
The push for new subscribers came at a cost. Equipment revenue saw a healthy 6.1% increase, driven by strong sales of higher-priced phones. Consequently, operating costs for the mobility unit climbed by 3.8% due to the expense of these devices and increased spending on marketing and promotions.
Legacy Challenges and Future Investments
A significant headwind for the company remains its business wireline unit, which experienced a 7.8% decline in revenue as demand for legacy voice and data services continues to fall.
Looking ahead, investor focus is also on AT&T’s strategic investments to enhance its network capabilities. The company recently announced a landmark $23 billion agreement to acquire wireless spectrum licenses from EchoStar, a move designed to bolster its network infrastructure for the future. This indicates a clear focus on strengthening its core wireless business while managing the decline in older, legacy segments.