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

April 17th, 2019 by Trefis Team
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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
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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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