Overview

AT&T Inc. is a holding company that provides telecommunications and technology services through its subsidiaries and affiliates worldwide. The company has two main reportable segments: Communications and Latin America. The Communications segment, which accounts for around 97% of total revenue, provides wireless, business wireline, and consumer wireline services in the United States. The Latin America segment provides wireless service and equipment in Mexico.

Financial Performance

In 2024, AT&T’s total operating revenues were $122,336 million, a slight decrease of 0.1% from 2023. This was driven by declines in the Business Wireline unit and lower Mobility equipment revenues, partially offset by growth in Mobility service, Consumer Wireline, and Latin America revenues.

Operating income decreased 18.8% to $19,049 million in 2024, primarily due to a $4,422 million goodwill impairment charge related to the Business Wireline reporting unit. This impairment was driven by a faster-than-expected industry-wide decline in legacy services. Excluding this impairment, operating income would have decreased 2.5% year-over-year.

The Communications segment saw a 2.5% decline in operating income in 2024, with the Business Wireline unit reporting a loss. This was partially offset by increases in the Mobility and Consumer Wireline units. The Latin America segment returned to profitability in 2024, reporting operating income of $40 million compared to a loss of $141 million in 2023.

Strengths and Weaknesses

A key strength for AT&T is its leading position in the U.S. wireless market, with 118 million subscribers at the end of 2024. The company has been investing heavily in 5G network deployment, which now covers over 314 million people in the U.S. and North America. This positions AT&T well to capitalize on growing demand for high-speed wireless services.

Another strength is the company’s expanding fiber broadband footprint, which has driven growth in the Consumer Wireline unit. AT&T is focusing on integrating its wireless and fiber offerings to provide converged services to customers.

However, a weakness is the ongoing secular decline in legacy wireline services, particularly in the Business Wireline unit. This led to the $4,422 million goodwill impairment charge as the company adjusted its long-term outlook for this part of the business. Addressing this legacy decline while transitioning to newer fiber and wireless services will be an ongoing challenge.

The Latin America segment has also historically been a weak spot, with operating losses in recent years. While it returned to profitability in 2024, the segment only accounts for around 3% of total revenues, limiting its impact on the overall business.

Outlook and Future Trends

Looking ahead to 2025, AT&T expects to see continued revenue growth in its wireless and broadband businesses, driven by 5G deployment, fiber expansion, and increasing demand for high-speed connectivity. The company plans to focus on cost transformation initiatives and product simplification to offset ongoing declines in legacy wireline services.

Key initiatives for 2025 include:

• Continuing wireless subscriber and 5G network momentum
• Accelerating fiber deployment and broadband subscriber growth
• Deploying open radio access network (Open RAN) technology to drive network cost efficiencies
• Driving further operational efficiencies through cost transformation

The regulatory environment remains an area of focus, with ongoing debates around net neutrality rules, state-level broadband regulations, and the availability of wireless spectrum. AT&T will need to navigate these regulatory challenges while investing in its network infrastructure.

Conclusion

Overall, AT&T is navigating a period of transition, with growth in its wireless and fiber broadband businesses offsetting declines in legacy wireline services. The company’s strong wireless network and fiber assets position it well for the future, but it will need to effectively manage the secular decline in its Business Wireline unit and continue improving the performance of its Latin America segment.

Prudent cost management, strategic network investments, and the integration of wireless and fiber services will be critical to AT&T’s success in the coming years. While the company faces some near-term headwinds, its focus on high-growth areas of the market and ongoing transformation efforts should help position it for long-term success.