VALUATION HIGHLIGHTS

1. Communication constitutes 98% of the Trefis price estimate for AT&T's stock.

WHAT HAS CHANGED?

Latest Earnings Update (Q4 2023)

AT&T published a mixed set of Q4 2023 results. While earnings came in at $0.54 per share, missing estimates, revenue grew 2% to $32.2 billion. The company added a total of 526,000 postpaid phone subscribers, with average revenues per user also rising, driven by migration to 5G plans.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of AT&T's value that present opportunities for upside or downside to the current Trefis price estimate for AT&T.

• Mobility Revenues: AT&T's mobility business remains one of its most valuable segments, accounting for a bulk of the value of its communications business. Mobility revenues have risen from around $71 billion in 2017 to $81 billion in 2022, driven by a rising postpaid wireless subscriber base and higher equipment-related revenues. We expect Mobility Revenues to grow to over $92 billion by the end of our review period. However, if the metric increases to about $100 billion by the end of our review period, it could increase our price estimate by over 10%.

For additional details, select a driver above or select a division from the interactive Trefis split for AT&T at the top of the page.

BUSINESS SUMMARY

AT&T is a leading provider of telecommunications services. The company derives most of its revenues from its Communications business, which includes its wireless phone business and broadband. AT&T divested a majority of its pay-TV, media, and advertising assets between 2021 and 2022 in order to focus on its core wireless business.

SOURCES OF VALUE

AT&T's Communications services units account for a majority of AT&T's value, given the company's large share of the U.S. wireless phone market. As of March 2023, AT&T served over 190 million wireless subscribers, including wholesale and retail phones and connected devices.

KEY TRENDS

Carriers have essentially become mobile data providers

Mobile data usage has skyrocketed in the last few years due to the increasing proliferation of smartphones and related applications and services. Carriers have also been tailoring their plans based on the monthly amount of data offered while typically offering free unlimited voice and text.

Saturating wireless market

The U.S. wireless market is saturated, with the total number of wireless phone subscribers exceeding the U.S. population. It's likely that growth in the number of wireless phone connections - representing the most lucrative segment of the wireless market - will slow from now on. Carriers are likely to focus on retaining existing customers and winning over porting customers while driving an incremental upside from areas such as connected devices and tablets, M2M connections, and wholesale services to drive growth in service revenues. AT&T, for its part, has been focusing on postpaid smartphone and prepaid customers while reducing its emphasis on postpaid feature phone users, who often have ARPUs lower than its prepaid ARPU. The carrier is also the largest player in the M2M and connected auto space in the U.S.