uploads///Telecom ATT Q EBITDA Margin

How Has AT&T’s EBITDA Margin Looked in Recent Quarters?

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Feb. 14 2017, Updated 9:08 a.m. ET

AT&T’s EBITDA margin in the last few quarters

In the previous part of the series, we discussed AT&T’s (T) revenue trend over the last few quarters. Now let’s take a look at AT&T’s consolidated EBITDA (earnings before interest, tax, depreciation, and amortization) margin. AT&T has been showing a large improvement in its EBITDA margins for the past few quarters. On the operating profitability front, AT&T’s adjusted EBITDA margin continued to strengthen year-over-year (or YoY) in 4Q16. This metric increased from ~33.9% in 4Q15 to ~35.7% in 4Q16, according to the company.

The main reason for this increase in EBITDA margin was due to the transition of customers to non-subsidized pricing plans. Wireless profitability should continue to improve in 2017 due to recent initiatives like AT&T raising activation charges and the price of “grandfathered” unlimited-data plans.

The company also expects solid synergy potential from the proposed acquisition of Time Warner (TWX) by the end of year three on a run rate for $1 billion in cost savings and cash flow generation.

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Peer EBITDA margins in 4Q16

As per company filings, Verizon (VZ) and Sprint’s (S) adjusted EBITDA margins were 35.5% and 38.7%, respectively, in 4Q16. Meanwhile, T-Mobile (TMUS) will report its results for 4Q16 on February 14, 2017. Sprint is enjoying higher margins than competitors due to cost savings and higher equipment contribution.

Continue to the next part for a look at AT&T’s postpaid phone net additions.

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