AT&T Surpasses Subscriber Expectations Amid Competitive Landscape
- AT&T has reported wireless subscriber growth exceeding market expectations for the second quarter of the year.
- The company's success is attributed to its higher-tier unlimited plans that appeal to customers.
- This increase indicates a positive trend for AT&T in a competitive wireless market.
AT&T reported stronger-than-expected wireless subscriber growth in the second quarter, adding 419,000 monthly bill-paying customers, significantly surpassing analyst predictions of 284,800. The telecom giant's success is attributed to its competitively priced higher-tier unlimited plans, which have attracted budget-conscious consumers in a challenging market dominated by rivals T-Mobile and Verizon. This strategy has not only bolstered customer acquisition but also improved retention, with AT&T's postpaid phone churn rate at a low 0.70%. Despite the positive subscriber growth, AT&T faced challenges with revenue generation. The company reported a total revenue of $29.8 billion, falling short of the anticipated $29.92 billion. Contributing to this shortfall was an 8% decline in mobility equipment revenue during the April-June period, reflecting a broader trend of slower phone upgrades across the U.S. market, a sentiment echoed by Verizon. On a positive note, AT&T's free cash flow increased by over 9% to $4.6 billion, exceeding estimates of $4.22 billion. This metric is crucial for determining the company's ability to sustain dividend payouts, which is a key focus for investors. However, the company continues to grapple with operational challenges, including data breaches and significant service outages earlier this year. The Federal Communications Commission reported that a nationwide outage in February, which lasted over 12 hours, blocked over 92 million voice calls and hindered more than 25,000 911 calls, potentially exposing AT&T to regulatory fines.