In an unexpected turn, AT&T reported a decline in third-quarter revenue, attributing the setback to challenges within its business wireline sector, which resulted in a multi-billion dollar write-down. Despite the drop, the telecom giant remains committed to achieving its full-year targets. For the three months ending September 30, AT&T's revenue dipped to $30.21 billion, down from $30.35 billion during the same period the previous year, which also fell short of the $30.45 billion average analyst estimate noted on Capital IQ.
Nevertheless, the adjusted earnings per share were reported at $0.60, slightly below last year's $0.64, but surpassing the Street's estimate of $0.57. In a positive response to the news, AT&T's shares experienced a 2.5% increase during Wednesday's trading session. The revenue decline was primarily driven by weaker business wireline service performance and decreased mobility equipment sales, although these losses were largely mitigated by growth in both wireless service and fiber revenues, as explained by Chief Financial Officer Pascal Desroches during a conference call with analysts.
Significantly, AT&T acknowledged a $4.4 billion noncash goodwill impairment charge related to its business wireline unit in the third quarter, a move reflecting 'an industry-wide secular decline of legacy services,' according to Desroches. When analyzing the company's service revenue, there was a modest increase of 0.1%, reaching $25.13 billion; in contrast, equipment sales experienced a downturn, falling by 3% to $5.08 billion.
Notably, AT&T's postpaid phone net additions dropped approximately 14% year-over-year, totaling 403,000, which slightly exceeded the Visible Alpha consensus estimate of 393,400. Furthermore, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased by 3.4% during the third quarter.
AT&T remains optimistic, continuing to project that this metric will grow within the 3% range for the entire year, despite incurring a financial impact of roughly $115 million attributed to hurricanes Helene and Milton; the consumer and business wireline sectors are expected to absorb the bulk of this impact.
Reiterating its guidance for the full year, AT&T maintains an adjusted EPS forecast of $2.15 to $2.25, aligning with the $2.20 consensus from Capital IQ. The company also anticipates wireless service revenue growth in the range of 3% and broadband revenue growth of at least 7%. The increase in broadband revenues is partly influenced by the positive momentum in fiber services.
In the third quarter, broadband revenues rose by 6.4%, fueled by nearly 17% growth in fiber revenue. Desroches commented, 'We continue to see solid uptake in higher-speed fiber tiers and healthy underlying pricing trends.'.