AT&T is getting more momentum – and a key driver is its traditional businesses.
The Dallas-based provider of telecommunications and media content reported better overall sales again in the second quarter in a report Thursday. It also sees stronger sales for the year than earlier expected — and better news on adjusted profits as well.
AT&T, after pulling away from some bigger acquisitions, is putting more focus on its core business of providing phones and mobile service as well as fast Internet connections to homes. It’s also emerging from COVID-19, which pressured results amid restrictions.
"Last year we saw the brunt of the pandemic's impact on our Q2 results," CFO Pascal Desroches said during a call with analysts. "While the pandemic is still having some impact on our results we're seeing our businesses emerge stronger than before, with growth accelerating in our market focus areas."
The company is getting more streamlined. During the second quarter, AT&T and Discovery Inc. announced an agreement to combine the assets of its closely watched WarnerMedia unit with the content provider’s businesses to create a standalone company. In February, AT&T and TPG Capital said it would establish a new business to operate AT&T’s domestic video business unit, including DirecTV.
Those deals are set to make its wireless business more central to the company financials. During the second quarter, the mobile unit grew more than 10% as it racked up new customers and more existing clients stuck with AT&T.
Broadband revenue increased 8%, reflecting fiber subscriber growth, it said.
Overall, sales rose 7.6% during the second quarter while adjusted earnings per share rose 7.2%.
For the year, the company now expects revenue growth in the 2% to 3% range. That compares to 1% in its forecast after first-quarter results.
Adjusted EPS is set to grow in the low- to mid-single digits in 2021. Earlier this year it was set to be “stable” with 2020.
WarnerMedia showed improvement with comparisons to the second quarter of 2020 after the pandemic began. Revenue was $8.8 billion, an increase of over 30%. Subscription revenues improvied as there was more than 38% growth for direct-to-consumer HBO Max and HBO.
CEO John Stankey said the company is executing after management laid out its effort to improve the company, including growing subscriber relationships in key areas and transforming the business to be more effective and efficient -- along with capital allocation to support investment and make other efforts.
“Our work is far from over," Stankey said during the call with analysts. "We know that consistent execution is the only way to win and keep our investors confidence in the strategy we put forth. I couldn't be more pleased with the progress we're making."
