On Wednesday, AT&T’s stock saw a notable rise following the release of its second-quarter earnings report, which highlighted a strong performance in subscriber growth despite some mixed financial results. The telecommunications giant reported adding 419,000 new monthly postpaid subscribers, far exceeding analysts’ expectations of 251,800 new customers. This surge in new subscribers was a significant positive development for the company, reflecting a robust demand for its services and effective customer acquisition strategies.
Additionally, AT&T’s customer churn rate—an important metric that measures the percentage of customers who discontinue their service—stood at a low 0.7%. This figure was better than anticipated, suggesting that the company is doing well in retaining its existing customers and managing customer satisfaction effectively.
However, the overall earnings results were somewhat disappointing. AT&T reported diluted earnings per share (EPS) of $0.49, which fell short of the consensus estimate of $0.52 per share. Revenue came in at $29.8 billion, missing the projected $30.01 billion. Despite these earnings misses, AT&T provided reassurance to investors by reaffirming its full-year earnings guidance, projecting adjusted EPS to be between $2.15 and $2.25. This guidance helped bolster investor confidence and contributed to the 4% rise in the company’s stock price.
This stock increase made AT&T a rare gainer in the S&P 500’s communications services sector, which has been under pressure from declining shares of other major tech and media companies, such as Alphabet (Google’s parent company) and Meta Platforms (Facebook’s parent company). The broader sector struggles were driven by various factors, including regulatory challenges, market volatility, and shifting consumer preferences.
In addition to its financial performance, AT&T faced scrutiny from regulators over network reliability. On Monday, the Federal Communications Commission (FCC) released a report criticizing the company for a major network outage that occurred on February 24. The outage, which lasted for more than 12 hours, affected over 92 million voice calls. The FCC’s report indicated that an equipment configuration error during a network change caused the network to enter “protect mode,” which disrupted both voice and 5G data services for wireless users.
This network issue added to AT&T’s challenges, which also include a significant data breach disclosed earlier this month. The breach, which occurred in April, compromised call and text records for nearly all of AT&T’s cellular customers. This incident has raised concerns about the company’s data security practices and added to the regulatory and operational challenges the company faces.
Overall, while AT&T’s strong subscriber growth and positive stock performance provide some positive news, the company must address the regulatory issues, network reliability concerns, and data security breaches to maintain investor confidence and sustain its growth trajectory in a highly competitive and scrutinized telecommunications industry.