Categories Analysis, Industrials

AT&T (T): Strong content slate to boost subscriber growth in Q4

The company expects full-year 2021 adjusted EPS to be at the high end of the low to mid single digit growth range

Shares of AT&T Inc. (NYSE: T) stayed in red territory on Thursday after the company delivered mixed results for the third quarter of 2021. While earnings beat estimates, revenue fell short of expectations. However, subscriber growth and a strong content slate provide optimism for growth in the coming months.

Quarterly performance

Revenues in the third quarter fell 5.7% year-over-year to $39.9 billion, missing estimates, reflecting the separation of the US Video business, other divested businesses, and lower Business Wireline revenues. Adjusted EPS rose 14% to $0.87, surpassing expectations.


Revenues in WarnerMedia rose 14.2% to $8.4 billion in Q3 helped by higher content and other revenues. Growth in HBO Max helped drive a nearly 15% increase in subscription revenue while higher TV licensing and the recovery of TV production and theatrical releases drove growth of around 32% in content and other revenues.

Direct-to-Consumer subscription revenue grew 25% in Q3 fueled by the momentum in HBO Max. AT&T expects to close the WarnerMedia deal by the middle of 2022.


At the end of the third quarter, global HBO Max and HBO subscribers totaled 69.4 million, reflecting an increase of 12.5 million from the previous year and 1.9 million sequentially. Domestic HBO Max and HBO subscribers stood at 45.2 million which was up 7.1 million from the prior-year quarter. On a sequential basis, however, domestic subscribers decreased from 47 million in Q2, due to the discontinuation of HBO Max on the Amazon wholesale platform.

AT&T is seeing growth from international markets for HBO Max and HBO subscribers and although these markets generate lower ARPU, most of the subscriber additions for the rest of the year are expected to come from them. The timing of new content slowed down retail subscriber growth in Q3 but it is expected to pick up in Q4 thanks to a strong content slate.

The content line-up includes new seasons of Succession and Curb Your Enthusiasm along with the premieres of Dune, King Richard and The Matrix Resurrections. With the strong content and expanding global footprint, the company expects to reach the higher end of the year-end HBO Max/HBO global subscriber target of 70-73 million subscribers.


AT&T expects full-year 2021 adjusted EPS to be at the high end of the low to mid single digit growth range. The company is on track to achieve its goal of $26 billion in free cash flow.

Click here to read the full transcript of AT&T’s Q3 2021 earnings conference call

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