AT&T shares rise as subscriber growth exceeds analyst expectations

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A pedestrian walks in front of an AT&T location in New York.

Scott Mlynn | TBEN

AT&T shares rose Wednesday after the carrier reported fourth-quarter subscriber growth that exceeded Wall Street estimates, shaking off its rivals’ lower pricing strategies.

The US phone service provider added a total of 217 million subscribers across its divisions in the fourth quarter, surpassing StreetAccount estimates of 215 million. New phone subscribers, in particular, missed analyst expectations, coming in at 656,000 net additions, versus an estimate of 678,400, according to StreetAccount.

Shares of AT&T closed 6% higher on Wednesday, trading at $20 a share.

The company continues to ignore the idea that the phone carrier industry is in a price war.

“I don’t think there’s a race to the bottom going on. I actually think the industry is doing pretty well,” CEO John Stankey said in an interview on TBEN’s “Squawk on the Street.”

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T-Mobile has touted its ongoing “Price Lock,” which promises the company won’t raise monthly phone rates in response to inflation, even though it increased millions of other customer charges in early 2022, according to a Bloomberg report. The carrier has called on Verizon and AT&T for raising rates.

That marketing campaign sparked speculation about whether the competing service providers would adjust their pricing strategies to entice more subscribers. T-Mobile has also offered customers discounts for switching competing carriers.

AT&T’s refusal to participate in the price war doesn’t seem to be taking a toll. The company reported a churn rate of 0.84%, a slight improvement from a churn rate of 0.85% in the fourth quarter of last year.

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Here’s how AT&T performed in the fourth quarter compared to what Wall Street expected, based on an average of analyst estimates compiled by Refinitiv:

  • Adjusted earnings per share: 61 cents versus an expected 57 cents
  • The total turnover: $31.34 billion versus an expected $31.38 billion

The company expects wireless revenue growth of 4% in 2023, below analyst expectations.

Stankey said on the company’s earnings call that it remains “very conservative” as it heads into its new fiscal year and looks forward to both a recession and geopolitical disruption.

Verizon also reported fourth-quarter numbers this week that matched analyst expectations. It added 217,000 phone subscribers, up from 8,000 in the third quarter, but lagged AT&T’s subscriber growth.

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Speaking to analysts, Hans Vestberg, CEO of Verizon, explained that the company has been able to lean on its enterprise customers to support subscriber numbers, but said it is still working to rebuild the consumer side of its business.

Verizon raised prices last year to offset rising costs, which hurt the consumer base at the lower end of price levels.

Vestberg said in an interview on TBEN’s “Squawk Box” on Tuesday that he wants to see “where inflation goes this year” to gauge Verizon’s pricing strategy for 2023.

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