AT&T Q2 Results Top Estimates; Updates FY21 Outlook

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Telecom major AT&T Inc. reported Thursday higher profit in its second quarter benefited by strong operating revenues. Adjusted earnings per share and topline beat market estimates. Further, the company updated its fiscal 2021 outlook.

In pre-market activity on the NYSE, AT&T shares were gaining around 1 percent to trade at $28.21.

Looking ahead for fiscal 2021, the company now expects, on a comparative basis excluding the impact of the DIRECTV/TPG transaction, adjusted earnings per share growth in the low- to mid-single digits and consolidated revenue growth in the 2 percent to 3 percent range.

The company expects the DIRECTV/TPG transaction to close in the next few weeks, which will impact certain aspects of guidance. Assuming that time frame, the expected impact of the deal on the remainder of 2021 is revenues to be lower by $9 billion and EBITDA to be lower by $1 billion.

John Stankey, AT&T CEO said, "we're raising our global HBO Max year-end forecast to 70 million to 73 million subscribers."

For the second quarter, net income attributable to AT&T climbed 22.6 percent to $1.57 billion from last year's $1.28 billion. Earnings per share were $0.21, up 23.5 percent from $0.17 a year ago.

Adjusted earnings per share was $0.89, compared to $0.83 in the year-ago quarter.

Analysts had expected the company to earn $0.79 per share, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items

Pre-tax income grew 5.1 percent to $2.63 billion from $2.50 billion last year. Meanwhile, operating income fell 7.4 percent to $3.27 billion from last year's $3.53 billion.

Total operating revenues increased 7.6 percent to $44.05 billion from last year's $40.95 billion, reflecting partial recovery from the prior-year impacts of COVID-19. Analysts expected revenues of $42.64 billion.

Service revenues increased 5.1 percent from last year to $38.96 billion, and Equipment revenues climbed 30.5 percent to $5.09 billion.

In the communications segment, which provides wireless and wireline telecom and broadband services, Segment operating revenues grew 6.1 percent to $28.13 billion. Mobility revenues increased 10.4 percent, and Consumer wireline revenues went up 3 percent, while business Wireline revenues fell 4 percent in the quarter.

Total Broadband connections grew 1.8 percent from last year to 15.48 million, and total Broadband net additions were 46 thousand in the quarter, compared to prior year's loss of 114 million.

Total Mobility Subscribers climbed 11.8 percent to 191.65 million, and total Mobility net additions more than doubled to 5.54 million.

WarnerMedia segment, which develops, produces and distributes feature films, television, gaming and other content, reported 30.7 percent rise in revenues to $8.79 billion, with strong double-digit growth in all divisions.

Vrio, which provides entertainment services in Latin America and the Caribbean, reported 0.4 percent drop in revenues. AT&T Wednesday said it agreed to sell Vrio business unit to Grupo Werthein, a private holding company.

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