AT&T Reports Decline in Revenue and Profitability, Records Significant Goodwill Impairment Charge

AT&T Inc. reported its financial results for the third quarter and the nine-month period ending September 30, 2024, revealing significant challenges in revenue and profitability. The company recorded operating revenues of $30,213 million for Q3 2024, a slight decrease of 0.5% from $30,350 million in Q3 2023. For the nine-month period, revenues totaled $90,038 million, down 0.4% from $90,406 million in the prior year. The Communications segment, which includes wireless and wireline services, saw revenues decline by 0.6% in Q3 2024 to $29,074 million, and by 0.8% for the nine-month period to $86,513 million. In contrast, the Latin America segment, particularly in Mexico, experienced growth, with Q3 revenues increasing by 3.0% to $1,022 million and a 12.2% rise for the nine-month period to $3,188 million.

Operating income for Q3 2024 plummeted to $2,116 million, a 63.4% decrease from $5,782 million in Q3 2023. For the nine months, operating income was $13,723 million, down 24.6% from $18,190 million in the previous year. The decline in operating income was attributed to a $4,422 million goodwill impairment charge related to the Business Wireline unit, which was impacted by lower projected cash flows and a decline in legacy services. The overall net loss attributable to common stock for Q3 2024 was $(226) million, compared to a profit of $3,444 million in Q3 2023.

Operating expenses rose significantly, with Q3 2024 expenses totaling $28,097 million, an increase of 14.4% from $24,568 million in Q3 2023. This rise was primarily driven by the aforementioned goodwill impairment. The operating income margin for Q3 2024 fell to 7.0%, down from 19.1% in the same quarter of the previous year.

In terms of strategic developments, AT&T amended its 2019 Tower preferred interests in August 2024, effective November 2024, to adjust the rate and restructure membership interests. The company also reported a decrease in cash and cash equivalents, which fell to $2,586 million as of September 30, 2024, from $7,540 million a year earlier. Capital expenditures for the nine months ended September 30, 2024, were $13,420 million, with spectrum acquisitions totaling $322 million, down from $923 million in the same period of 2023.

AT&T's debt ratio improved slightly to 52.2% as of September 30, 2024, compared to 53.5% a year earlier. The company remains compliant with its revolving credit agreement covenants, which require a net debt-to-EBITDA ratio of no more than 3.75-to-1.