T Financial Analysis

Analysis Date: 1/28/2025

Business Model

AT&T generates revenue primarily through wireless service, equipment sales, and wireline services including fiber broadband

Revenue Sources

• Mobility services (51% of revenue)
• Equipment sales (22% of revenue)
• Consumer Wireline (11% of revenue)
• Business Wireline (14% of revenue)

Revenue Distribution by Channel

• Direct to consumer and business customers

Income Statement Analysis

• Operating revenues increased 0.9% YoY driven by Mobility service revenue growth
• Operating expenses up 0.8% YoY due to higher depreciation from network investments
• Net income increased 70.7% YoY due to higher operating income and other income

Balance Sheet Analysis

• Reduced net debt by $8.8B year-over-year to $120.1B
• Net debt-to-adjusted EBITDA ratio improved to 2.68x from 2.97x
• On track to reach net debt-to-adjusted EBITDA in 2.5x range by H1 2025

Cash Flow Analysis

• Operating cash flow increased $0.5B YoY to $11.9B
• Free cash flow of $4.8B, down YoY due to higher capital expenditures
• Full year 2024 free cash flow of $17.6B, up $0.9B YoY

Capital Allocation

AT&T maintains focus on network investments with capital investment of $22.1B in 2024. The company reduced net debt by $8.8B YoY and plans to begin share repurchases in H2 2025 under $10B authorization while maintaining dividend payments. Expected to close DIRECTV/TPG transaction in mid-2025.

Management Commentary

Strong Q4 results showcase momentum in gaining profitable 5G and fiber subscribers

Met all 2024 consolidated financial guidance

On track to reach net debt-to-adjusted EBITDA target in H1 2025

Accelerated decline in legacy Business Wireline services

Overall Sentiment: Positive with strong execution on strategic priorities and financial targets

Recommendation

Rating: Buy

Reason for Rating: Strong execution, improving balance sheet, and sustainable growth in core businesses

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/28/2025, 3:52:02 AM