Telecom & Wireless

Did AT&T Beat Out Verizon in Q4?

AT&T Inc. (NYSE: T) released its fourth-quarter financial results before the markets opened on Wednesday. So far it seems that AT&T and Verizon Communications Inc. (NYSE: VZ) are equally matched in earnings as the initial reaction for these two has been the same. It is yet to be seen if Wednesday’s market tailwinds can help out AT&T.

AT&T said that it had $0.86 in earnings per share (EPS) and $48.0 billion in revenue, while consensus estimates had called for $0.86 in EPS and revenue of $48.5 billion. In the same period of last year, AT&T said it had EPS of $0.78 and $41.83 billion in revenue.

Revenues increased about 15% year over year primarily due to the Time Warner acquisition. Declines in legacy wireline services, wireless equipment, domestic video and Vrio were more than offset by WarnerMedia and growth in domestic wireless services and Xandr.

During the quarter, AT&T boasted 3.8 million total wireless net adds, with 2.8 million in the United States, driven by connected devices and smartphones and 1.0 million in Mexico.

Looking ahead to the 2019 full year, the company expects to see low single-digit adjusted EPS growth, with free cash flow in the $26 billion range and end-of-year net debt to adjusted EBITDA in the 2.5-times range. Consensus estimates call for $3.57 in EPS and $185.06 billion in revenue for the coming year.

Randall Stephenson, AT&T’s board chair and CEO, commented:

Our top priority for 2018 and 2019 is reducing our debt and I couldn’t be more pleased with how we closed the year. In 2018, we generated record free cash flow while investing at near-record levels. Our dividend payout as a percent of free cash flow was 46% for the quarter and 60% for the year, allowing us to increase the dividend for the 35th consecutive year. This momentum will carry us into 2019 allowing us to continue reducing our debt while investing in the business and continuing our strong record for paying dividends.

Shares of AT&T closed Tuesday at $30.70, in a 52-week range of $26.80 to $39.20. The consensus analyst price target is $34.32. Following the announcement, the stock was down nearly 3% at $29.86 in early trading indications Wednesday.