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AT&T reports 468,000 postpaid phone net adds in Q3 2023


All eyes were on AT&T’s free cash flow number today, during its Q3 earnings call, as the relatively low free cash flow reported during the company’s first couple of quarters had caused some investor concern.


Happily for AT&T, it reported free cash flow of $5.2 billion for the third quarter, up $1.3 billion year over year. And year-to-date free cash flow is up $2.4 billion versus the same period a year ago. The company now expects full-year free cash flow of about $16.5 billion, versus prior guidance of $16 billion or better.


The company’s stock price is at $15.47, up 8.02% as of this writing.



AT&T also reported 468,000 postpaid phone net adds in the quarter, and mobility service revenues of $15.9 billion were up 3.7% year over year.


Postpaid phone average revenue per user (ARPU) was $55.99, up 0.6% versus the year-ago quarter. And postpaid phone churn improved to 0.79% versus 0.84% in the year-ago quarter.


AT&T’s CFO Pascal Desroches said, “Year to date wireless service revenues have grown 4.6%. The primary drivers on ARPU are higher ARPUs on legacy plans, continued mix-shift to higher value rate plans with higher margins and continued improvement in consumer international roaming trends.”


AT&T’s emergency responder network First Net reported connections reached about 5.3 million across nearly 27,000 agencies.


The company has completed a $6 billion cost-cutting strategy for the past three years, and today it said it will cut $2 billion more in costs over the next three years.


In terms of notable news during the quarter, AT&T launched its AT&T Internet Air fixed wireless access residential service in August. It expects the FWA service to be in 30+ locations by the end of the year.


AT&T CEO John Stankey gave some credit to AT&T Internet Air for helping the company return to positive broadband growth, as it continues to sunset its old copper plant and simultaneously roll out new fiber.


He said AT&T Internet Air has already added about 25,000 subscribers since its launch.

In other wireless-related news from today’s call, Stankey said, “We’ve expanded our nationwide 5G network and are on track to reach 200 million people or more with mid-band 5G spectrum by the end of the year.”


Asked about the competitive landscape, Stankey said, “Despite what’s being reported by MVNOs or cable, our base is incredibly stable. If we’re growing ARPUs and if we’re growing accretive customers and if our churn is stable, I think I’m OK with what’s going on.”

In terms of the cheaper pricing for wireless service from the cable MVNOs, he said, “I don’t think it’s a sustainable strategy. Our job is to play for the long haul.”


He was also asked about wireless device upgrade rates. T-Mobile has implemented an offering to allow subscribers on some plans to upgrade their devices more frequently. But Stankey said, “We’ve been seeing, in general, the devices, frankly from generation to generation change a little bit less. It’s harder to get differentiation in the hardware. People are taking better care of them, they last a little bit longer.”


Although he said when the new iPhone 15 rolled out, AT&T saw a pre-order rate “that was probably the best we’ve seen in a long time.”


New Street Research analyst Jonathan Chaplin wrote today, “AT&T’s churn was very low. If this is a theme for the industry, perhaps driven by delayed switching due to the late launch of the iPhone, it will be harder for T-Mobile to take share (ditto for cable). We should see switching pick up in 4Q, which will make for faster share gains from the challengers.”

Finally, AT&T said its capex spend for 2023 would be similar to 2022, which implies that it will be spending about $6 billion for the fourth quarter 2023. “That seems high, given where they are in the 5G process, but when asked, management was adamant,” wrote Chaplin. “This would be $1.3 billion more than the same quarter last year.”

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