AT&T beats subscriber estimates as convergence strategy pays off
AT&T's strategy of bundling mobile and broadband services drove better-than-expected wireless and broadband subscriber growth in the second quarter, pushing premarket shares up 5%.
AT&T added 432,000 net monthly bill-paying wireless subscribers in the second quarter, comfortably exceeding the 338,500 additions forecast by FactSet. The performance, driven by revamped low-cost plans and bundled offerings, pushed the telecom's shares 5% higher in premarket trading on Wednesday.
The quarterly results validate AT&T's aggressive pivot toward service convergence. For US telecom operators, acquiring new customers is increasingly difficult in a saturated market where the pool of eligible users is largely finite. Bundling mobile and broadband addresses this by making the economics of customer acquisition more efficient while creating deeper ties to the household.
Central to this effort is OneConnect, a single-bill subscription for unlimited wireless and home internet launched in March. AT&T has supplemented this with customizable Build-A-Plan options and data-rich entry-level tiers designed to attract value-conscious consumers. The cross-selling metrics confirm the strategy is taking hold: 42.5% of homes using AT&T's advanced internet services now also take its wireless.
The bundled approach yielded record broadband additions during the April to June period. AT&T netted 367,000 new fiber internet users alongside 279,000 fixed wireless subscribers. These figures reflect the company's continued heavy capital expenditure in expanding its fiber footprint, a necessary infrastructure investment to make the convergence model viable at scale.
From a financial perspective, the second quarter highlights a favorable shift in AT&T's profit dynamics. Adjusted earnings per share reached 65 cents, notably ahead of the average analyst estimate of 59 cents. Total revenue landed at $31.6 billion, marginally below the $31.80 billion consensus compiled by LSEG.
For market professionals, the combination of a slight revenue miss and an earnings beat signals that management is successfully tightening cost controls or improving margins on its newer bundled plans. If AT&T can sustain these subscriber growth rates and continue expanding its fiber network, the convergence strategy may finally provide the steady revenue base investors have sought.
