AT&T (T) Resolves Call Disruptions

Telecommunications giant AT&T (NYSE:T) has resolved an issue that temporarily disrupted some customers’ ability to complete calls with another carrier. The company announced that it is collaborating with Verizon (NYSE:VZ) to identify the cause of the interoperability problem, which lasted for a few hours. This marks the second outage for AT&T so far this year.

In February, thousands of AT&T users experienced disruptions in calls and text messages. AT&T compensated affected users with a full day of service credit. These network outages and the subsequent compensation have the potential to negatively impact the company’s financials and operations.

AT&T’s Growing High-Value Subscribers

Despite the recent outage, AT&T is benefiting from growth in high-value postpaid subscribers. During the Q1 conference call, AT&T reported having approximately 71.6 million high-value postpaid phone subscribers, an increase of 1.5 million from the previous year.

The growth in its high-value customer base supports its average revenue per user (ARPU), drives adjusted operating income, and results in improved margins and lower postpaid churn. Its postpaid phone churn rate was 0.72% in Q1, the lowest Q1 churn in the company’s history. Moreover, the company expects to report the lowest postpaid phone churn among the major service providers in Q2 of 2024.

Looking ahead, AT&T continues to expand its 5G and fiber networks, which is expected to attract more subscribers and bolster its financials. Moreover, the company is actively working on cost savings and productivity initiatives to support its margins and EPS.

Is AT&T a Buy or Hold?

Wall Street is bullish about AT&T’s prospects. AT&T has a Strong Buy consensus rating, reflecting nine Buys and one Hold recommendation.

AT&T stock has gained nearly 28% in one year, outperforming the S&P 500’s (SPX) gain of almost 24%. Further, analysts’ average price target on T stock is $21.25, implying an upside potential of 15.8% from current levels.

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