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Telecommunications conglomerate AT&T (NYSE:T) announced better-than-expected revenue in Q1 CY2025, with sales up 2% year on year to $30.63 billion. Its non-GAAP profit of $0.51 per share was in line with analysts’ consensus estimates.
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AT&T (T) Q1 CY2025 Highlights:
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Revenue: $30.63 billion vs analyst estimates of $30.34 billion (2% year-on-year growth, 1% beat)
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Adjusted EPS: $0.51 vs analyst estimates of $0.52 (in line)
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Adjusted EBITDA: $11.53 billion vs analyst estimates of $11.32 billion (37.7% margin, 1.9% beat)
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Operating Margin: 18.8%, in line with the same quarter last year
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Free Cash Flow Margin: 14.9%, up from 10.5% in the same quarter last year
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Market Capitalization: $195.2 billion
StockStory’s Take
AT&T’s first quarter results reflected management’s emphasis on expanding high-value customer relationships through its converged fiber and wireless offerings. Executives attributed performance to increased customer acquisition and retention investments, the ongoing transition from legacy copper to fiber and 5G, and operational improvements in both mobility and consumer wireline segments. CEO John Stankey highlighted the company’s progress toward its fiber expansion goals and underscored the strategic importance of converged accounts, noting that more than 40% of AT&T fiber households now also subscribe to mobility services, which carry a higher lifetime value.
Looking forward, management’s guidance centers on maintaining growth and margins despite a less predictable economic environment and the potential impact of new tariffs on equipment and devices. Stankey acknowledged the fluidity of current market conditions, stating, "We are well-positioned to drive sustainable growth through a range of market and economic cycles," but cautioned that cost pressures from tariffs could affect consumer and business demand. The company aims to manage these risks by accelerating cost reduction initiatives and leveraging its balance sheet to continue share repurchases and strategic investments.
Key Insights from Management’s Remarks
AT&T’s management detailed how its investment-led strategy and ongoing network modernization are driving growth in high-value customer segments, while also outlining the challenges of a shifting macro environment and the company’s response.
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Converged Customer Penetration: The integration of fiber and wireless services within households continues to rise, with more than 40% of AT&T fiber customers now also subscribing to mobility services. Management emphasized that converged accounts deliver lifetime values over 15% higher than stand-alone services, driving the company’s focus on bundling and cross-selling.
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Fiber Expansion Milestone: AT&T is ahead of schedule in its fiber buildout, expecting to surpass 30 million locations passed before midyear 2025. Management reaffirmed the target of reaching over 50 million locations by 2029 through a combination of organic builds and partnerships, positioning fiber as a long-term growth engine.
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Mobility Segment Dynamics: Strong postpaid phone net additions and ARPU (average revenue per user) growth were cited as key drivers in mobility, although increased competition led to higher churn rates compared to last year. The launch of the AT&T guarantee and elevated promotional activity increased marketing expenses but were viewed as necessary for customer acquisition.
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Cost Efficiency and Legacy Transition: Cost savings from retiring legacy copper infrastructure and executing on workforce and vendor reductions contributed to margin stability. Recent FCC orders are expected to further accelerate the retirement of legacy assets, with management noting that operational execution is now the primary focus.
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Tariff and Macro Environment Risks: Management flagged potential cost increases from announced tariffs on smartphones and network equipment, acknowledging limited visibility into how much of the cost will be passed to consumers. The team believes it can manage these pressures within its current financial plan but will adjust strategy as needed if economic conditions deteriorate.