Earnings preview: AT&T bets on wireless, media biz to lift Q4 earnings

It is widely believed that the mammoth acquisition of Time Warner will bring a paradigm change in the operations of AT&T (T), which is yet to fully launch the entertainment services under the new collaboration.

The telecom giant will be releasing the results for its most recent quarter on January 30 before the market opens. The company is expected to report adjusted earnings of $0.85 per share, representing a 9% increase from the fourth quarter of 2017. Revenues are seen rising 16% to $48.42 billion, driving up the bottom line. Like in the past, the growth will be led by the wireless business.

The company is expected to report adjusted earnings of $0.85 per share, representing a 9% increase from the prior year 

The current year will be crucial for AT&T’s transformation into a telecom-entertainment firm, with an array of new projects in the pipeline, including a video streaming service along the lines of Netflix (NFLX) and the rollout of 5G services. It is anticipated that the Time Warner buyout will revitalize the company the way the acquisition of DirecTV did a few years ago.

In the third quarter, earnings surged 33% annually to $0.65 per share, on the strength of the wireless business and contributions from WarnerMedia. Consolidated revenues grew 15.3% to $45.7 billion.

Meanwhile, the continuing drop in linear TV subscribers remains a cause for concern, and the slump is expected to squeeze revenues further, with more cord-cutters ditching traditional television. Also, margins remain stressed due to price competition and promotional offers.

Related: AT&T Q3 2018 Earnings Conference Call Transcript

Among AT&T’s peers, Verizon will be unveiling its fourth-quarter earnings on January 29, after reporting a 25% earnings growth in the third quarter. T-Mobile (TMUS) will report the December-quarter numbers on February 7 after the closing bell.

AT&T’s stock, which is currently in recovery mode after hitting a seven-year low last month, ended the week slightly higher. The shares lost about 19% over the last twelve months.

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