AT&T posts phone and fibre growth in Q1

Strong mobile customer additions and some positive metrics on earnings, cash and spending meant AT&T posted a strong set of first quarter financials this week, despite the fact its headline figures dropped off slightly.

Mary Lennighan

April 25, 2024

4 Min Read

The US operator was particularly keen to boast about the 349,000 postpaid phone net adds it recorded in the three months to the end of March, even though that number represents a fall of 35,000 on the year-ago quarter. In a market in which all the main players have suffered weak customer growth of late, it's a strong figure that beat analysts' expectations – by tens of thousands, according to Reuters' estimates from FactSet – and significantly overshadowed Verizon, whose 68,000 retail postpaid phone customer losses in Q1 represented an improvement, but was still a net loss.

T-Mobile US has yet to report but is usually stronger on wireless net additions. AT&T believes its postpaid phone churn figure of 0.72% is likely to be the best in the industry though, which is something to celebrate.

The Q1 numbers naturally brought myriad comparisons with the other big two US operators. The most interesting is arguably in fixed wireless access (FWA), where AT&T has a growing presence but is pushing significantly less hard than its main two rivals.

AT&T added 110,000 Internet Air FWA customers during the quarter, almost double the number it brought in in Q4, taking its total base to 203,000. The service launched as recently as August last year, so there are no year-ago comparisons to be made, with AT&T extending the offer to business customers last month.

Internet Air is picking up customer at pace, but it remains some way behind similar services offered by Verizon and T-Mobile. The former announced 354,000 net adds for Q1, weighted slightly towards the consumer side, to take its total 3.43 million. T-Mobile has yet to report, but it was getting close to the 5 million mark at the end of last year.

AT&T has little interest in playing FWA catch-up though. It concedes that the technology has a part to play in the growth of its overall consumer broadband customer base; Q1 represented the third consecutive quarter of growth, and CEO John Stankey said he expects that trend to continue, speaking on the telco's results call on Wednesday. But it is pretty clear that the major part of its effort will be in building up its fibre base. The operator added 252,000 AT&T Fiber customers in Q1, taking its total to 8.6 million.

"Ultimately, we couldn't be more excited about the future of Consumer Wireline with AT&T Fiber well positioned to lead our growth and AT&T Internet Air helping us provide quality broadband service to customers where we don't offer fibre," added AT&T's finance chief Pascal Desroches. The operator is "pleased" with early demand for the business version of the service and expects it to contribute to results in the second half of the year, he said.

If there were any doubt that FWA will be an in-fill product, particularly in the business space, Stankey cleared it up for analysts on the call.

"We want to be mindful of making sure that we match the product to businesses that have the right usage characteristics...There are many businesses that match that," Stankey said. "And there are many businesses that have usage characteristics and behaviours that are atypical to a typical single-family dwelling. And that's why we think it's a good place to invest time, energy, money. And I think that was consistent with what our expectations were from the founding of the product and where we thought we'd go to market with it."

Essentially, as we already knew, AT&T is not throwing its full weight behind FWA, preferring to focus on getting businesses hooked up to fibre.

Lower Business Wireline revenues – FWA forms part of this segment – were one reason given by AT&T for a slight fall in group revenues in Q1; the telco's top line slid by 0.4% year-on-year to $30 billion. Operating income also dropped and net income fell to $3.8 billion from $4.5 billion.

That said, there was some big positives on the balance sheet. AT&T raised adjusted EBITDA to $11 billion from $10.6 billion; free cash flow came in at $3.1 billion, up from $1 billion in the year-ago quarter; and the telco shaved $500 million from capital expenditure, which totalled $3.8 billion.

All in all, AT&T followed Verizon in posting a good set of Q1 numbers. All eyes will now be on T-Mobile to see how its data stacks up.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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