WarnerMedia, Postpaid Business In Focus As AT&T Reports Q1 Results

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AT&T (NYSE:T) is expected to publish its Q1 2019 results on Wednesday, April 24. Below, we take a look at some of the key trends we will be watching when the company reports results.

What to expect from Q1 results

  • Consensus revenues of $45.1 billion, marking an increase of about 18% year-over-year due to the Time Warner acquisition.
  • Consensus EPS of $0.86, roughly flat year-over-year.

What will drive the results?

  • Warner Media: Business should fare well, on better cost management and stronger revenues
  • Communications: Stronger performance of wireless business likely to be offset by potential declines in pay TV and legacy wireline

How will the communications business fare?

The communications business accounts for over 70% of AT&T’s revenue and will be the biggest driver of results

  • AT&T’s bread-and-butter postpaid business has been underperforming rivals (134k postpaid phone adds in Q4’18, vs 1 million for T-Mobile) and it’s likely that trend will continue.
  • Churn levels could remain under pressure due to higher competition and relatively limited promotional activity.
  • Prepaid business could benefit from strong sales of Cricket Wireless and a focus on higher-value customers.

How will the WarnerMedia business fare?

  • Turner should see gains in subscription revenues, driven by higher domestic affiliate rates, although ad revenues may see pressure
  • HBO results could face some headwinds due to the carriage dispute with Dish Network, which caused it to withdraw HBO and Cinemax from the pay-TV operator
  • While Warner Bros benefited from strong theatrical performances over the holidays, it could see a sequential slowdown

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