AT&T Reports Earnings Thursday. Here’s What to Expect.

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The focus will be on growth in subscribership in a shrinking market when

AT&T

reports its first-quarter results before the market opens on Thursday.

Competition among telecom providers is increasing, and analysts expect demand to swing back toward normal levels after surging during the pandemic, when social distancing made the world more dependent than usual on phones and the internet. That means some companies may lose subscribers as the industry as a whole continues the heavy investments needed to provide the best service.

Estimates for how many so-called postpaid subscribers—people who pay for phone or internet service via a monthly bill—AT&T (ticker: T) added vary widely. The consensus call among analysts tracked by

FactSet

is that the figure will come in at a net gain of 422,800 customers, but forecasts go as low as 344,000 and as high as 500,000.

BofA Global Research analyst David Barden, for example, is on the higher end of the range at 485,000 net additions. “We expect AT&T to outperform on post-paid phone net adds this quarter as it benefits from its customer retention and acquisition tactics,” Barden wrote in a note earlier this week.

Deutsche Bank

analyst Bryan Kraft is on the other side of the consensus fence, estimating 344,000 additions. That’s still “healthy levels of wireless customer growth for AT&T this year, but not at the same level as last year,” he wrote in a note on Tuesday.

AT&T added 691,000 postpaid phone subscribers in the first quarter of last year, followed by more than 700,000 in both of the following two quarters. The company added 656,000 subscribers in the fourth quarter.

Kraft’s mild pessimism is due to industry trends and competition. He expects the telecom industry to add above eight million postpaid phone subscribers this year, a decline from 9.3 million in 2022—slower growth that comes as

T-Mobile

increases its market share, Kraft said.

T-Mobile (TMUS) was a Barron’s stock pick in August last year.

AT&T has made it clear that it isn’t planning to offer promotions to bring in subscribers. Chief Financial Officer Pascal Desroches said in a conference call with Deutsche Bank analysts on Feb. 27 that “we have no intentions of degrading the economics of our business” even though the industry is competitive, and has always been so.

AT&T needs the money to invest. The company said in January that it plans to pour $24 billion this year into capital expenditures to build out its 5G wireless and fiber networks, consistent with 2022 levels. Analysts had predicted $22.1 billion. 

Cost-saving initiatives should also support the telecom company’s ambitions. The company earlier this year said it had achieved $5 billion in annual savings under a three-year plan aiming at $6 billion of cuts that it began in early 2020.

Adjusted earnings for the first quarter are expected to be 58 cents a share from revenue of $30 billion. The stock was 0.6% lower at $19.71 on Wednesday.

Corrections & Amplifications: The consensus forecast for AT&T’s first-quarter net growth in postpaid subscribers was for a gain of 422,800. An earlier version of this article incorrectly said the consensus call was for 485,000.

Write to Karishma Vanjani at [email protected]