AT&T Q4 2021 Earnings Report: $0.75 EPS & 64% Surge in Wireless Subscribers

AT&T (T) delivered a strong Q4 2021 performance, with post-paid wireless phone net additions dramatically exceeding forecasts.

Highlights

• Adjusted EPS reached $0.75, slightly above the anticipated $0.74.
• Revenue outperformed analyst consensus.
• Post-paid wireless phone net additions soared approximately 64% beyond estimates.
• Domestic HBO Max and HBO subscribers surpassed 41 million, achieving this milestone two years ahead of schedule.

Detailed Overview

In Q4 2021, AT&T experienced a significant surge in post-paid wireless phone net additions, reporting around 800,000 new subscribers—far exceeding the expected 487,000. While both revenue and adjusted EPS surpassed projections, they showed a year-over-year decline. Notably, AT&T’s HBO and HBO Max services reached over 41 million subscribers well ahead of the company's original timeline, marking a significant achievement in its streaming business.

Market Context and Investor Focus

Over the past year, AT&T has faced challenges that hindered its stock market performance, including the pandemic's impact on its theatrical distribution and declining pay-TV subscriptions, particularly with DirecTV. Despite these headwinds, the wireless and broadband segments have remained relatively stable.

Investors are keenly observing Q4 results for signs of recovery. Analysts forecast a continued year-over-year drop in adjusted EPS and revenue. However, the standout metric remains the post-paid wireless phone net additions, which reflect new subscribers committed to ongoing wireless plans—a critical revenue driver for AT&T.

Despite strong subscriber growth, AT&T’s stock has underperformed the broader market, delivering a negative total return of 18.3% over the past year compared to the S&P 500’s 18.9% gain as of January 2021.

Financial Performance Trends

AT&T’s earnings growth has been modest or declining in recent quarters, with four out of seven quarters showing year-over-year adjusted EPS declines. The most recent quarter saw a sharp 19.2% drop, the steepest in several years. Analysts anticipate a further 16.9% decline in Q4 2021.

Revenue growth has also been sluggish, with year-over-year increases limited to just four quarters in the past four years. The last five quarters experienced declines up to 8.9%, and Q4 2021 is expected to see a 4.9% revenue decrease compared to the previous year.

Post-Paid Wireless Growth: A Bright Spot

The number of post-paid wireless phone net additions is a vital indicator of AT&T’s health, providing steady, recurring revenue. This segment has shown remarkable growth, with net additions accelerating from 23.4% in FY 2016 to 149.0% in FY 2019. In Q3 2021 alone, net additions increased by 538.6%, more than seven times the prior year’s pace. Analysts expect this trend to continue with a 112.9% increase in Q4 2021 and 125.7% growth for the entire year.

Given the pressures on other business areas like DirecTV, sustained growth in post-paid wireless subscribers is crucial for AT&T’s future success.

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