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What to Expect from AT&T’s 3Q17 Earnings

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Part 3
What to Expect from AT&T’s 3Q17 Earnings PART 3 OF 9

A Look at AT&T’s Combined Domestic Wireless Operations in 3Q17

AT&T’s EBITDA expectations in 3Q17

In the previous part of this series, we saw what analysts are expecting for AT&T’s (T) consolidated revenue growth in 3Q17. Now let’s take a look at AT&T’s combined domestic wireless operations and the expected EBITDA (earnings before interest, tax, depreciation, and amortization). Wall Street analysts are forecasting that EBITDA will fall ~1.3% YoY (year-over-year) to ~$7.4 billion in 3Q17.

In 2Q17, AT&T’s combined domestic wireless operations EBITDA was ~$7.3 billion. It was ~$7.4 billion in 2Q16. Its combined domestic wireless operations adjusted EBITDA margin improved from ~41.4% in 2Q16 to ~41.8% in 2Q17, reporting the best ever EBITDA margin, according to AT&T. In spite of the fact that the traditional US wireless business remains as intense as ever, AT&T was able to increase its EBITDA margin. The carrier appears to be making progress in both reducing its costs and retaining its users.

A Look at AT&amp;T&#8217;s Combined Domestic Wireless Operations in 3Q17

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AT&T’s management predicts about $1.0 billion in annual cost savings by the end of the year.

Peer comparison of EBITDA margin in 2Q17

According to company filings, in 2Q17, Verizon’s (VZ) and Sprint’s (S) consolidated adjusted EBITDA margins were 37.2% and 47.0%, respectively. T-Mobile’s (TMUS) was 40.0% for the same period. Sprint is enjoying higher margins than its rivals due to cost savings and higher equipment contribution.

In the next part, we’ll take a look at AT&T’s postpaid phone net customer additions.

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