(Bloomberg) -- AT&T Inc. gained more mobile subscribers in the third quarter than analysts expected, continuing the winning streak from the previous period.
The company added 403,000 net new monthly wireless phone subscribers, outpacing analysts’ projected gains of 394,600, according to data compiled by Bloomberg. Revenue was little changed from a year earlier at $30.2 billion, compared with analysts’ average estimate of $30.4 billion, the company said in a statement Wednesday.
The stock was up about 2.6% at 7:06 a.m. in premarket trading in New York after initially sliding after the results were released.
In addition to new subscribers signing up, AT&T is also hanging on to existing customers, with a churn rate of less than 1%, the company reported. Customers aren’t upgrading their phones as often, however, leading to lower equipment revenue, which weighed on sales.
As the pool of potential new wireless customers tightens, AT&T and its peers have been pushing broadband internet services, through fiber-optic lines and fixed wireless service, which delivers service over the airwaves. AT&T Chief Executive Officer John Stankey has said customers like it when their provider can offer high-speed internet and wireless services “at home, at work and on the go,” what the industry calls converged connectivity. AT&T said about four in 10 fiber customers also choose AT&T wireless service.
Their efforts are increasingly encroaching on the space of traditional cable companies. The big three telecom companies, including T-Mobile US Inc. and Verizon Communications Inc., are expected to report they added more than 900,000 broadband customers in the third quarter, including wireless home service and fiber, according to according to estimates compiled by Bloomberg.
AT&T has outrun its peers in deploying fiber and it now offers wired broadband connections to roughly a third of the country. The company added 226,000 net fiber internet subscribers in the third quarter, missing analysts’ estimates for 265,390 due to severe weather and a work stoppage in the Southeast.
AT&T added 135,000 fixed wireless subscribers, less than the 147,000 analysts were anticipating. Its Internet Air fixed wireless product lags behind competitors such as Verizon as AT&T focuses more on its leading fiber optic network. AT&T’s strategy has been to capture home broadband customers with the wireless offering as a bridge solution while building fiber connections to those areas.
On Tuesday, Verizon also reported third-quarter sales that fell slightly short of expectations due to the slower pace of new phone purchases, as the September release of the new iPhone 16 didn’t rise to must-have status. Its stock fell 5%.
Telecom executives, including Stankey, said they didn’t expect Apple Inc.’s latest iPhone, which came out in September, to spur a significant upgrade cycle. The iPhone 16 offers only modest hardware upgrades, and its advanced artificial intelligence technology will only be gradually added to the device via incremental software updates.
“You might even argue whether or not everything that Apple is offering right now on this device really requires a hardware change,” Stankey said at an investor conference in September.
In September, AT&T ended its expensive foray into the pay-TV business, agreeing to sell its remaining stake in satellite television operator DirecTV to the investment firm TPG Inc. for $7.6 billion in cash spread out over five years. Doing so allows AT&T to hand off responsibility for hemorrhaging video subscriber numbers, which plummeted from more than 18 million in 2014 to about 10 million now. The company said it will instead focus on delivering wireless 5G and its “fiber to the home” product while also strengthening its balance sheet.
Dallas-based AT&T reported adjusted earnings of 60 cents a share in the third quarter, beating the average analyst estimate of 57 cents. The adjusted figure excludes a 61 cent-impact driven by a non-cash goodwill impairment associated with its business wireline offerings, as corporations rely less on fixed voice services. The company reiterated its full-year guidance, including adjusted Ebitda growth of about 3% and adjusted earnings per share in the range of $2.15-$2.25.
AT&T stock has gained about 28% this year, compared with a 37% increase for T-Mobile and 10% for Verizon. T-Mobile will report results after the market closes on Wednesday.
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