AT&T, the United States' third largest telecom carrier, reported strong Q3 results on Thursday, with improved subscriber growth and increased free cash flow, continuing a steady profit increase. The company's stock price surged by 7% following the upgraded adjusted earnings growth guidance to 4% from 3%.
The telecom giant revised its free cash flow projection for 2023 upwards to $16.5 billion from $16 billion. This upward revision is driven by a record capital expenditure of $24 billion on its 5G and fiber networks. AT&T's Q3 free cash flow stood at $5.2 billion, exceeding management's forecast and surpassing last year's figure. According to InvestingPro Tips, the company's valuation implies a strong free cash flow yield which adds to the positive outlook.
In Q3, AT&T added 468,000 mobility postpaid phone subscribers, reversing a trend of four consecutive quarters of decline. Despite this positive development, CFO Pascal Desroches indicated that subscriber growth moderated in H2 2022. As a prominent player in the Diversified Telecommunication Services industry, as pointed out by InvestingPro Tips, AT&T's performance is closely watched by investors and analysts.
Q3 revenue rose by 1% to $30.4 billion with an adjusted profit of 64 cents a share. However, the company faces potential costs for cleaning lead-sheathed cables and carries a high net debt of $128.7 billion. Amid these challenges, AT&T's market cap stands at a robust $109.31 billion USD, according to InvestingPro data.
Investors will be keenly watching the upcoming earnings reports from Verizon (NYSE:VZ) and T-Mobile due on October 24 and October 25 respectively for further insights into the telecom sector's performance. AT&T's next earnings date is set for October 19, 2023, and the company is expected to report a P/E Ratio (Adjusted) of 6.89 for Q2 2023, as per InvestingPro's real-time metrics.
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