MW AT&T's stock pops as the company hits a milestone that matters for investors

By Emily Bary

The company reached its target leverage ratio, meaning it can start share repurchases a bit earlier than expected. AT&T also beat subscriber numbers by a wide margin.

AT&T Inc. crushed subscriber expectations in its first quarter, while saying Wednesday that it plans to restart buybacks sooner than expected.

Wireless investors got a bit nervous in March when AT&T $(T)$ and Verizon Communications Inc. $(VZ)$ warned of soft postpaid subscriber trends early in the year. But AT&T's earnings report Wednesday morning showed that the January weakness was a blip, as the company went on to post 324,000 postpaid phone net additions for the first quarter. Analysts tracked by FactSet were modeling 255,000.

Postpaid phone subscribers are those who pay for service after the month is up, whereas prepaid subscribers pay before using the service.

AT&T also offers fiber service, and the company indicated that its convergence strategy of offering both internet and wireless service to more customers in markets where it has a fiber footprint is succeeding. The company disclosed that more than 40% of AT&T Fiber households select AT&T for wireless as well.

The company also noted that it plans to resume share repurchases in the second quarter, slightly earlier than expected. AT&T previously announced that it planned to put $20 billion toward buybacks over several years, once it reached its goal for net leverage, which was for a ratio of about 2.5 times net debt to adjusted earnings before interest, taxes, depreciation and amortization. The company expected to begin buybacks in the second half of this year, but AT&T said Wednesday that it's already operating at its target range.

Read: AT&T plans to plow $20 billion into buybacks in signal of business turnaround

AT&T's buybacks would be the company's first since the beginning of 2020.

Shares are up about 3% in premarket action Wednesday.

From a financial perspective, AT&T posted revenue of $30.6 billion, above the $30.4 billion FactSet consensus. Mobility service revenue grew 4.1% to $16.7 billion.

The company recorded 51 cents in adjusted earnings per share when excluding its stake in DirecTV, which AT&T is selling. That's in line with the FactSet consensus and above the guidance for at least 48 cents that AT&T gave in mid-March.

See also: Are AT&T and Verizon good stocks for a recession? This analyst makes the case.

AT&T is sticking with its full-year guidance, which calls for mobility service revenue of 2% to 3% and free cash flow of at least $16 billion, among other items.

-Emily Bary

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April 23, 2025 07:01 ET (11:01 GMT)

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