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Comparing the Q4 Earnings Results of AT&T and Verizon

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Mar. 18 2019, Published 7:37 a.m. ET

Fourth-quarter results

AT&T (T), the second-largest US wireless carrier, met its earnings estimates but missed on revenue in the fourth quarter of 2018. AT&T posted an EPS rise of 10.3% YoY (year-over-year) to $0.86 per share, while its revenue rose 15.1% YoY to $47.99 billion in the fourth quarter.

AT&T’s closest rival, Verizon (VZ), managed to beat earnings but missed Wall Street analysts’ expectations on revenue in the fourth quarter. While Verizon’s EPS of $1.12 increased 30.2% YoY in the fourth quarter, its revenue of $34.3 billion rose by only 1% YoY in the quarter.

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AT&T’s earnings likely to grow in 2019

AT&T’s earnings growth of 10.3% in the fourth quarter was driven by solid performances in its WarnerMedia and Mobility segments and postpaid phone customer additions. Its earnings have increased YoY for the past five straight quarters. In fact, Raymond James analyst Frank Louthan believes that “the combination of positive earnings growth and delivering over the course of the year will being investors back to AT&T.”

Analysts expect AT&T’s EPS to rise ~1.6% YoY to $3.58 compared to Verizon’s EPS expectation of $4.66 for 2019, down 1.07% YoY.

Postpaid phone customers

AT&T has been trying hard to grow its subscriber base in a saturated market. It added net postpaid phone subscribers of 134,000 in the fourth quarter. In comparison, AT&T’s peer Verizon managed to add 653,000 postpaid customers in the quarter. 

Both AT&T and Verizon lagged T-Mobile’s (TMUS) postpaid phone customer additions of 1 million in the quarter. Sprint (S), on the other hand, lost net 26,000 postpaid phone subscribers in the quarter that ended in December.

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