Behind AT&T’s Earnings Trend in 3Q17
AT&T’s EBITDA for the past few quarters
AT&T’s (T) combined domestic wireless operations EBITDA (earnings before interest, tax, depreciation, and amortization) margin rose again YoY (year-over-year) in 3Q17, improving from ~41.2% in 3Q16 to ~42.0% in 3Q17—its best-ever EBITDA margin, according to the company.
AT&T’s combined domestic wireless operations EBITDA came in at ~$7.3 billion in 3Q17, compared with ~$7.5 billion in 3Q16.
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Although the traditional US wireless business remains as intense as ever, AT&T was able to increase its EBITDA margin, due to strong cost management and customer retention. AT&T’s management expects to realize ~$1.0 billion in annual cost savings by the end of year three of the proposed deal closure of Time Warner (TWX), which is anticipated to happen by the end of 2017.
Peer EBITDA margin comparison
According to company filings, Sprint’s (S) and Verizon Communications’ (VZ) consolidated adjusted EBITDA margins were 45.7% and 36.7%, respectively, in calendar 3Q17. T-Mobile’s (TMUS) adjusted EBITDA margin was 37.0% during the same quarter.
Sprint is enjoying a higher margin than rivals due to significant cost reductions and higher equipment contributions.
In the next part, we’ll look at AT&T’s postpaid phone customer net additions.