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AT&T Shares Are Trading Higher As Q1 Results Exceed Analyst Estimates; Expects Dip In FY21 Free Cash Flow

AT&T Shares Are Trading Higher As Q1 Results Exceed Analyst Estimates; Expects Dip In FY21 Free Cash Flow
  • AT&T Inc (NYSE: Treported first-quarter FY21 consolidated revenue growth of 2.7% year-on-year to $43.9 billion, exceeding the consensus estimate of $42.69 billion. EPS rose 2.4% to $0.86, beating the analyst estimate of $0.78.
  • Higher Mobility revenues, mainly from equipment sales, and higher WarnerMedia revenues drove the growth, partially offset by a decline in the domestic video, business wireline, and Latin America.
  • Communication revenue rose 5.2% Y/Y to $28.2 billion from growth in Mobility, partially offset by a decline in Business Wireline and stable Consumer Wireline. The operating margin contracted 150 basis points to 26.1%.
  • Mobility’s operating margin contracted 180 basis points to 31.5%, Business Wireline’s operating margin rose 10 basis points to 17.5%, and Consumer Wireline’s operating margin contracted 690 basis points to 9.8%.
  • WarnerMedia revenue rose 9.8% to $8.5 billion from higher subscription, advertising, and content revenues. The operating margin contracted 270 basis points to 23%.
  • Latin American revenue declined 13.6% to $1.4 billion from adverse foreign exchange and the pandemic. Vrio revenue declined 16.2% to $743 million. Mexico revenue declined 10.2% to $631 million.  
  • The consolidated operating income rose 2.7% to $7.7 billion from higher revenues and lower merger amortization costs.
  • AT&T generated $9.9 billion in operating cash flow and $5.9 billion in free cash flow. Net debt rose by $21.4 billion sequentially due to the funding of C-band spectrum payments.
  • FY21 Outlook: AT&T expects a 1% annual consolidated revenue growth and stable EPS with FY20; Free cash flow of roughly $26 billion compared to $27.5 billion last year; total dividend payout ratio in the high 50% range.
  • Price action: T shares traded higher by 2.99% at $31.01 in the premarket session on the last check Thursday.

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