AT&T reported a first quarter in which it saw its mobile subscriber growth slide compared to last year’s performance and its free cash flow figure fell short of analysts’ expectations, leading to a 10% drop in the company’s stock in midday trading.
AT&T reported 424,000 postpaid phone net additions, with a total wireless net add figure of 5.1 million; comparatively, it saw 691,000 postpaid phone net adds in the year-ago quarter and 5.5 million total wireless net adds. In the first quarter 2023, 542,000 of its net additions were postpaid; it saw a loss of 56,000 postpaid tablets and other computing devices. Prepaid net adds were 40,000, and the company reported 174,000 other net additions.
Postpaid churn was up slightly year-over-year to 0.99% from 0.94%; prepaid churn was 2.73%, a reduction from 2.77% in the first quarter of 2022.
AT&T also said that it has reached about 4.7 million connections for FirstNet.
In terms of infrastructure build-out, the carrier said that its midband 5G now covers more than 160 million people, with total 5G coverage reaching 290 million Americans. Its fiber network passes 19.7 million consumer and more than 3 million enterprise locations, and it expects to surpass 30 million fiber locations by the end of 2025.
Broadband revenues were up 7.3%, with AT&T’s fiber offerings seeing particularly strong revenue growth of 30.7%. AT&T added 272,000 fiber net adds, but its broadband segment as a whole saw a net loss of 23,000 because of losses in non-fiber services.
First-quarter revenues were up 1.4% to $30.1 billion, with gains in its mobility segment and consumer wireline business, as well as strong growth in its Mexico operations. Business wireline revenues were down.
AT&T said its capital expenditures in the first quarter were $4.3 billion, down from $4.6 billion in the year-ago period; total capital investment, which included $2.1 billion in cash payments for vendor financing, was $6.4 billion.
CEO John Stankey emphasized that the carrier’s strategy is to “[establish] a foundation for durable, long-term growth.” The company, he said, has a “proven and sustainable playbook that centers on simple, customer-centric experiences. As a result, we’re adding high-value customers, and when they choose AT&T, they stay with us.”
In AT&T’s mobility segment, revenues were up 2.5% year-over-year to $20.6 billion. Service revenues accounted for $15.5 billion of that, up 5.2% from 2022’s first quarter and driven by subscriber and postpaid ARPU growth, the carrier said. Equipment revenues were down 4.7% year-over-year to $5.1 billion, due to lower volumes of device sales.
AT&T notes that its operating expenses were essentially flat, but said that it did see higher marketing costs, higher network and customer support costs and higher bad debt expenses.
In the carrier’s Latin American wireless segment, AT&T saw revenues jump nearly 30% year-over-year to $883 million, with service revenues up 20.6% from the same period last year due to subscriber growth, more wholesale revenue and favorable foreign exchange rates, the company said. In Mexico, the company said total wireless net adds of 10,000, including 49,000 postpaid net adds and 19,000 from resellers, but prepaid net losses of 58,000.
