AT&T boosted its full-year profit outlook and posted continued revenue growth in the third quarter, but shares fell as some on Wall Street were disappointed by its core wireless-subscriber numbers and rising expenses.
AT&T's stock was down as much as 6% in morning trading before rebounding slightly.
For the full year, AT&T now expects adjusted earnings per share of about $2.40, compared with a prior forecast of $2.25 to $2.35. Analysts polled by FactSet project $2.34.
AT&T said it expects its debt ratios to return to target levels in 2029; the company agreed last year to buy spectrum licenses from EchoStar in a $23 billion deal. It backed its capital-investments outlook of $23 billion to $24 billion for the year and said it expects that figure to come down in the longer term, guiding for a range of $22 billion to $23 billion annually in 2027 and 2028.
Third-quarter earnings from continuing operations were 13 cents a share, compared with $1.29 a share a year earlier. The figure from the recent quarter was dented by a noncash impairment charge tied to the company's Mexico wireless business it plans to sell, as well as employee separation charges, while the year-ago figure includes a gain recognized from its sale of a stake in DirecTV.
Operating expenses rose 3.6%, due in part to increased equipment costs and advertising outlay.
Adjusted earnings per share were 65 cents, above analyst estimates of 60 cents, according to FactSet. Revenue rose 5.3% to $32.3 billion, topping analyst estimates of $31.69 billion.
Sales in the company's advanced connectivity segment, which makes up the bulk of its topline, increased 7.2% to $29.48 billion. AT&T pointed to a boost from growth in retail wireless subscribers in underpenetrated categories and converged accounts, as well as higher prices that were partially offset by discounts.
Latin America revenue rose 13% to $1.24 billion. AT&T last week said it has reached a deal to sell its Mexico wireless business, which comprises the entirety of its Latin America segment, to Grupo Televisa and Fintech Holdings. Under the deal, AT&T will receive $2 billion in cash at closing.
AT&T added 379,000 net subscribers for its postpaid phone service in the quarter, compared with analysts' estimate of about 379,300. Postpaid phone churn was 0.9%.
The company also added a record 769,000 total consumer and business customers for its internet service, including 442,000 for its fiber-optic network and 327,000 for fixed wireless.
The results come as SpaceX emerges as a potential competitor to the leading wireless carriers. The Elon Musk-led company made its biggest move yet into the wireless market earlier this month, signing an $8 billion deal to buy cellular spectrum licenses from investment firm Grain Management. SpaceX has said it wants to move its Starlink satellite service beyond broadband, and the spectrum acquisition could make it a more serious threat to AT&T, Verizon and T-Mobile.