Chart in Focus: AT&T’s EBITDA Trend in 2Q17



AT&T’s EBITDA expectations in 2Q17

In the previous part, we learned how much revenue growth AT&T (T) may report for 2Q17. In this part, we’ll take a look at AT&T’s combined domestic wireless operations’ anticipated EBITDA.[1. earnings before interest, tax, depreciation, and amortization]

Wall Street expects AT&T’s combined domestic wireless operations EBITDA to fall ~3.0% YoY (year-over-year) to reach ~$7.2 billion in 2Q17.

In 1Q17, AT&T’s combined domestic wireless operations EBITDA reached ~$7.2 billion, down slightly from ~$7.3 billion in 1Q16. Additionally, AT&T’s combined domestic wireless operations EBITDA margin grew from ~40.8% in 1Q16 to ~41.8% in 1Q17.

AT&T was able to increase the EBITDA margin for its conventional wireless business. This trend resulted from the transition of users to non-subsidized pricing plans, as well as the company’s persistent operational efficiency and focus on powerful cost management.

AT&T’s management anticipates strong synergy potential from the proposed acquisition of Time Warner (TWX). The company expects $1.0 billion in annual run rate cost synergies within three years of the deal closing.

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AT&T’s peer comparison of EBITDA margin ins 1Q17

According to company filings, T-Mobile (TMUS) and Verizon (VZ) reported consolidated adjusted EBITDA margins of 36.0% and 37.3%, respectively, in 1Q17.

In fiscal 4Q16 (quarter ending March 2017), Sprint’s (S) adjusted EBITDA margin was 43.8%. Sprint is enjoying higher margins than its rivals 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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