AT&T Inc. (NYSE: T)

AT&T delivered solid first-quarter results with revenue growth of 2.0% to $30.6 billion, driven primarily by strength in Mobility and Consumer Wireline segments. The company's net income increased 23.7% to $4.7 billion, resulting in diluted EPS of $0.61, up 29.8% from the prior year. This performance was driven by higher operating income from core growth segments and increased equity income from DIRECTV. While reported operating income remained essentially flat year-over-year at $5.8 billion, adjusted operating income improved 6.7% to $6.4 billion, reflecting the company's focus on operational efficiency in its growth businesses. The adjusted EBITDA of $11.5 billion represented a 4.5% increase year-over-year, demonstrating AT&T's ability to translate revenue growth into improved profitability.

The Communications segment, which represents the vast majority of AT&T's business, delivered revenue growth of 2.4% to $29.56 billion, with operating income increasing 3.6% to $6.99 billion. Within this segment, Mobility was the standout performer with 4.7% revenue growth driven by service revenue growth of 4.1% from subscriber gains and ARPU growth, as well as equipment revenue growth of 6.9%. Consumer Wireline showed strong growth with revenues up 5.1% and operating income surging 63.8%, primarily driven by fiber broadband revenue growth of 19.0%. These growth segments were partially offset by Business Wireline, which experienced a 9.1% revenue decline due to secular pressures on legacy services and the divestiture of the cybersecurity business to LevelBlue in 2024. The Latin America segment saw an 8.7% revenue decline, largely due to unfavorable foreign exchange impacts, though operating income and EBITDA improved year-over-year.

AT&T's operational performance in Q1 2025 reflects the company's continued success in growing its core connectivity businesses. In Mobility, the company added 324,000 postpaid phone customers despite a slight increase in churn (0.83% vs. 0.72% in Q1'24). More importantly, postpaid phone ARPU increased 1.8% to $56.56, driving 4.1% growth in mobility service revenues. In the broadband segment, AT&T Fiber continued its impressive growth trajectory with 261,000 net adds, marking the 21st consecutive quarter with at least 200,000 fiber net additions. Fiber adoption is driving strong financial performance, with consumer fiber broadband revenues growing 19.0% year-over-year. The company has now passed 29.5 million consumer and business locations with fiber, and broadband ARPU increased 7.4% to $70.87, reflecting customers' willingness to pay a premium for high-quality connectivity. A key growth driver is the bundling of services, with more than 4 out of every 10 AT&T Fiber households now also choosing AT&T wireless.

AT&T's financial position continued to strengthen in Q1 2025, with cash from operating activities increasing 20.0% year-over-year to $9.0 billion. This improvement reflects $1.4 billion in cash flows related to DIRECTV, including a $1.1 billion dividend, as well as underlying operational growth. Free cash flow increased 10.7% to $3.1 billion despite higher capital expenditures of $4.3 billion, which were up 13.2% from the prior year. The company has achieved its target net debt-to-adjusted EBITDA ratio in the 2.5x range and plans to commence share repurchases in the second quarter, reflecting confidence in its financial position and future cash flow generation. The expected sale of AT&T's entire 70% stake in DIRECTV to TPG, which is projected to close in mid-2025, will further strengthen the company's balance sheet and provide additional financial flexibility.

AT&T has reiterated all of its 2025 full-year financial and operational guidance, reflecting confidence in its business fundamentals and growth strategy. The company expects consolidated service revenue to grow in the low-single-digit range, with mobility service revenue growth in the higher end of the 2% to 3% range. Consumer fiber broadband revenue is projected to grow in the mid-teens, continuing its strong momentum. From a profitability standpoint, AT&T forecasts adjusted EBITDA growth of 3% or better, with Mobility EBITDA growth in the higher end of the 3% to 4% range, partly offset by Business Wireline EBITDA declining in the mid-teens range. Consumer Wireline EBITDA is expected to grow in the high-single to low-double-digit range. The company anticipates capital investment in the $22 billion range and free cash flow of $16 billion or more for the full year. Adjusted EPS is projected to be in the range of $1.97 to $2.07. Additionally, AT&T plans to commence share repurchases in the second quarter, signaling confidence in its financial outlook.