AT&T Posts Strong Q4 Earnings, Boosted by 5G and Fiber Subscriber Growth

AT&T (NYSE: T) delivered better-than-expected fourth-quarter 2024 earnings, driven by strong subscriber growth in its 5G and fiber businesses. The telecommunications giant reported adjusted earnings per share (EPS) of $0.54, surpassing analysts' estimates of $0.50 and matching last year’s performance. Revenue rose 0.9% year-over-year to $32.3 billion, slightly above the $32.03 billion forecast. The results were well-received by investors, with AT&T stock rising over 2% in premarket trading.

The company’s wireless segment showed significant momentum, with postpaid phone net additions of 482,000, beating estimates of 441,511. AT&T Fiber also delivered a strong quarter, adding 307,000 net subscribers, well above the anticipated 265,604. Notably, mobile service revenue increased 3.3% year-over-year to $16.6 billion, while consumer broadband revenue rose 7.8% to $2.9 billion. These gains highlight AT&T’s successful strategy of bundling 5G and fiber services, which continues to attract high-value customers.

Adjusted EBITDA came in at $10.8 billion, representing a 1.9% increase from the previous year but falling slightly short of Wall Street’s $10.84 billion estimate. Free cash flow of $4.8 billion, though down 25% year-over-year, aligned with expectations. Capital expenditures were higher than anticipated at $7.1 billion, compared to an estimate of $5.86 billion, reflecting continued investment in network infrastructure.

Guidance and Strategic Outlook

AT&T reaffirmed its guidance for 2025, projecting adjusted EPS of $1.97 to $2.07, which falls below the consensus estimate of $2.16. The company also maintained its forecast for at least 3% adjusted EBITDA growth and capital expenditures of approximately $22 billion. Despite falling short of some earnings expectations, the guidance underscores AT&T’s focus on long-term growth through strategic investments in 5G and fiber expansion.

CEO John Stankey emphasized the company’s progress during the earnings call, stating, "The strong results this quarter are the result of a four-plus-year period of hard work and consistent execution by our teams, which has positioned us well for a new era of growth." Stankey also noted AT&T’s plans to make detailed filings with the Federal Communications Commission (FCC) to phase out legacy products in approximately 1,300 wire centers, signaling a continued focus on modernizing its network.

The company highlighted its strategy of leveraging promotions and bundled offerings to maintain subscriber growth, particularly in a competitive U.S. telecom market where the pool of potential new wireless customers is shrinking. AT&T’s approach has paid off, as evidenced by its robust postpaid phone churn rate of 0.85%, which improved from 0.84% in the year-ago quarter.

Stock Reaction and Competitive Landscape

Investors reacted positively to the results, with AT&T stock climbing 2.4% in premarket trading to $23.26. The stock’s performance comes amid a broader market slump driven by disruptions in the tech sector following news of Chinese AI startup DeepSeek’s advancements. AT&T’s strong operational performance and subscriber growth appear to have provided a buffer against these external pressures.

The telecom sector is seeing a mixed earnings season, with rival Verizon posting its best quarterly wireless subscriber growth in five years on Friday. Verizon added 568,000 net postpaid phone subscribers, surpassing AT&T’s net additions but highlighting the competitive intensity in the industry. T-Mobile is set to report its earnings on Wednesday, and its results will likely provide further insights into market dynamics.

Key Takeaways for Investors

AT&T’s fourth-quarter results underscore the company’s ability to execute its strategy in a challenging market. The strong performance in 5G and fiber subscriber growth demonstrates the success of its bundled offerings and premium plans. However, higher capital expenditures and cautious guidance may temper enthusiasm for the stock in the near term.

For investors, AT&T’s results highlight the importance of focusing on long-term trends in telecom and broadband infrastructure. With shares up 32% over the past 12 months, AT&T has proven resilient in an evolving market. The reaffirmed 2025 guidance and continued investment in 5G and fiber suggest the company is well-positioned for sustainable growth, making it a compelling option for income-focused investors seeking dividend stability.

Looking ahead, investor attention will turn to upcoming earnings calls from AT&T’s rivals, as well as management’s commentary on capital allocation and competitive pressures. While AT&T’s stock appears to offer solid value, further insights from the telecom industry’s earnings season will help clarify the outlook for 2025 and beyond.