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.
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.
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.
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.
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.
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.
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.