AT&T Q3 Adj. EPS Meets Estimates, Revenues Top

at&t jan30 22oct20 lt

Telecom giant AT&T, Inc. (T) reported Thursday a 24 percent decline in profit for the third quarter, primarily hurt by lower revenues across all its operating segments amid the impact from COVID-19 pandemic.

Adjusted earnings for the quarter met analysts' expectations, while quarterly revenues topped their estimates.

"We delivered a solid quarter with good subscriber momentum in our market focus areas of connectivity and software-based entertainment," said John Stankey, AT&T chief executive officer.

For the third quarter, net income attributable to AT&T was $2.82 billion or $0.39 per share, lower than $3.70 billion or $0.50 per share in the year-ago quarter.

Results for the latest quarter include $0.21 per share of impacts from COVID-19, including $0.02 per share of incremental costs and $0.19 per share of estimated revenues.

Excluding other items, adjusted earnings was $0.76 per share, compared to $0.94 per share in the year-ago quarter.

AT&T's consolidated revenues for the quarter declined 5.0 percent to $42.34 billion from $44.59 billion in the same quarter last year, primarily due lower revenues across all its operating segments amid the impact from COVID-19 pandemic.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.76 per share on revenues of $41.61 billion for the quarter. Analysts' estimates typically exclude special items.

Revenues were impacted by the COVID-19 pandemic across all segments, most significantly contributing to lower content revenues at WarnerMedia and domestic wireless service revenues in the Communications segment, primarily from lower international roaming..

Revenues were also lower due to continued declines in domestic video, Warner Bros. television and theatrical products, legacy wireline services and Latin America due to foreign exchange pressure.

These declines were partly offset by higher wireless equipment revenues and higher advertising revenues associated with timing shift of sports from the first half of 2020.

Operating revenues for the communications segment, consisting Mobility, Entertainment Group and Business Wireline business units, declined 3.1 percent to $34.3 billion from last year.

WarnerMedia operating revenues, consisting of Turner, Home Box Office (HBO) and Warner Bros. business units, also decreased 10.0 percent to $7.5 billion from last year.

Operating revenues for the Latin America segment, consisting of Vrio and Mexico business units and is subject to foreign currency fluctuations, were down 19.1 percent year-over-year to $1.4 billion.

Revenues from AT&T Business Solutions declined 1.4 percent to $9.0 billion, driven by declines in legacy voice and data services, partially offset by growth in strategic and managed services and in wireless service revenues.

However, total AT&T advertising revenues grew 10.2 percent to $1.7 billion, primarily driven by the resumption of the NBA season and political advertising.

Operating income plunged 22.4 percent to $6.13 billion from last year's $7.90 billion, due to the impact of lower revenues and operating expenses and incremental COVID-19 costs.

Operating expenses edged down 1.3 percent to $36.21 billion from $36.69 billion in the year-ago quarter, primarily due to lower content costs associated with subscriber declines in the Entertainment Group, lower film and television production costs associated with revenues in the WarnerMedia segment and lower costs at Latin America from foreign exchange.

These expense decreases were partially offset by higher programming and production costs associated with the shift of sports from the first half of the year, higher HBO Max investments and incremental COVID-19 costs

The Company now expects the total dividend payout ratio at year-end 2020 to be in the 50s percent range and continues to expect gross capital investment in the $20 billion range in 2020.

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