AT&T: Key Items To Watch In Q1 Earnings

AT&T (T) is due to report its first-quarter earnings on April 22. Investors would be curious to see whether the company meets or beats the street’s revenue estimates. But along with tracking the company’s revenue figures, investors should also look at its subscriber additions, churn rate, ARPUs as well as management comments around how the coronavirus outbreak has impacted their business. These items are likely going to dictate how AT&T’s shares react post its earnings release.

Mobility Subscriber trends

First of all, AT&T’s mobility division accounts for 38.8% of its overall revenue. So, any operational disruption in this segment could significantly impact the company’s revenue and profitability in 2020. This makes it all the more important for us to track the performance of its mobility division at a granular level.

Companies in the US, in general, have asked their employees to work from home in light of the coronavirus outbreak over the past few weeks. This has given people more free time at home which has benefited wireless and telecom operators. If we talk about comparables, then Vodafone and BT saw a 50% to 60% increase in their network traffic very recently, as more and more people switched to working from home.

The effects were seen in major streaming sites as well. Netflix and Youtube have had to throttle their streaming quality in order to avoid network congestion. So, if there is a similar situation with AT&T, we could see a noteworthy increase in its ARPU during Q1.

(Click on image to enlarge)

(Source: Business Quant)

Besides, companies across the US have also had to lay off a certain portion of their workforce in recent weeks to cut on costs. The laid-off employees may disconnect their wireless services in order to be frugal with their bills. On top of that, AT&T’s staff may not be able to conduct maintenance on its network infrastructure from time-to-time due to restricted access and lack of spare parts available, which might cost them to lose a few of their subscribers. So, I’m also expecting a marginal increase in AT&T’s churn rate during Q1.

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