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AT&T reported stronger-than-expected wireless subscriber additions for the second quarter, driven by its competitive unlimited plans.
The company added 419,000 monthly bill-paying wireless phone subscribers, surpassing the 284,800 additions expected by analysts polled by FactSet. This positive performance resulted in a 2.4% rise in AT&T’s shares in premarket trading.
Attracting and Retaining Customers:
AT&T’s lower-priced unlimited plans have appealed to budget-conscious customers, allowing the company to compete effectively against T-Mobile and Verizon.
The company’s postpaid phone churn rate, which measures the percentage of customers disconnecting from the service, stood at 0.70%, the second lowest reported for a second quarter, indicating strong customer retention.
Financial Highlights and Challenges:
AT&T’s free cash flow, a key metric for determining dividend payouts, rose by more than 9% to $4.6 billion, exceeding LSEG estimates of $4.22 billion.
However, the company faced challenges with slower phone upgrades in the U.S., a trend also observed by Verizon.
This slowdown contributed to an 8% decline in mobility equipment revenue from April to June. AT&T’s total revenue for the quarter was $29.8 billion, slightly below the estimated $29.92 billion.
Operational and Regulatory Issues:
The company has faced operational challenges, including data breaches and significant outages.
A nationwide outage lasting over 12 hours in February blocked over 92 million voice calls and prevented over 25,000 attempts to reach 911 emergency services.
The U.S. Federal Communications Commission (FCC) noted this incident in a recent report, which could potentially lead to regulatory penalties for AT&T.
