AT&T Crushes Subscriber Growth--But Wall Street Shrugs

AT&T T did a lot right this quarterbut not quite enough to impress Wall Street. Shares slipped a bit by 0.11% at 10.55am today after the company stuck to its full-year earnings forecast of $1.97 to $2.07 per share, a notch below the $2.09 analysts had penciled in. That guidance miss took some shine off an otherwise solid quarter: revenue came in at $30.8 billion vs. the $30.4 billion estimate, and earnings per share hit 54 cents, beating the Street's 52-cent target. Free cash flow landed at $4.4 billion.

But the real story was subscriber momentum. AT&T added 401,000 postpaid phone customerscrushing estimates of 301,000 and outperforming Verizon, which saw subscriber losses. Its fixed wireless product, Internet Air, brought in 203,000 new users, ahead of expectations. The fiber business also saw strong gains, with 243,000 net additions. Still, with rival Verizon using tax savings from President Donald Trump's economic package to raise parts of its full-year outlook earlier this week, AT&T's cautious earnings stance stood out. The market wanted bold. What it got was steady.

AT&T isn't sitting still, though. Management expects up to $8 billion in cash tax savings through 2027 and plans to pour $3.5 billion into fiber expansiontargeting 4 million new locations annually by 2026. A pending deal for Lumen's consumer fiber unit could push AT&T past 70 million households passed by 2030. CFO Pascal Desroches says the balance sheet is in good shape and expenses are trending down once you strip out growth-related spending. The company has already repurchased $1.3 billion in stock and is targeting $4 billion for the full year. Operationally strong. Financially conservative. The market just might have been looking for a bit more swagger.