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.

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

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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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