AT&T’s Solid First Quarter Performance Driven by Mobility and Consumer Wireline Growth

AT&T Inc. reported strong financial results for the first quarter of 2025, with consolidated operating revenues increasing 2.0% year-over-year to $30.6 billion. The company’s performance was driven by growth in its Mobility and Consumer Wireline business units, which offset declines in Business Wireline and the Latin America segment.

Consolidated Financial Performance

AT&T’s consolidated operating revenues increased 2.0% in Q1 2025 compared to the prior year period, reaching $30.6 billion. This was primarily due to higher Mobility and Consumer Wireline revenues, partially offset by declines in Business Wireline and the Latin America segment.

Operations and support expenses increased 2.9% to $19.7 billion, mainly due to higher Mobility equipment costs from increased wireless device sales volumes and higher restructuring charges. These increases were partially offset by expense declines from the company’s transformation efforts and lower network-related costs.

Depreciation and amortization expense rose 2.8% to $5.2 billion, primarily due to ongoing capital spending for strategic initiatives like fiber and network upgrades, partially offset by lower depreciation from the company’s Open RAN network modernization.

Operating income decreased 1.6% to $5.8 billion, with the operating income margin declining from 19.5% in Q1 2024 to 18.8% in Q1 2025. Interest expense decreased 3.8% to $1.7 billion, driven by lower debt balances, partially offset by lower capitalized interest.

Equity in net income of affiliates increased significantly to $1.4 billion, reflecting cash distributions received by AT&T in excess of the carrying amount of its DIRECTV investment. Other income increased 0.9% to $455 million.

Income before income taxes grew 23.0% to $6.0 billion, and net income attributable to AT&T increased 26.3% to $4.4 billion. The effective tax rate decreased from 23.0% in Q1 2024 to 21.7% in Q1 2025, reflecting larger discrete state tax benefits.

Segment Performance

The Communications segment, which includes Mobility, Business Wireline, and Consumer Wireline, reported a 2.4% increase in operating revenues to $29.6 billion. Segment operating income grew 3.6% to $7.0 billion, with the operating income margin improving from 23.4% to 23.7%. The Communications EBITDA margin also increased from 39.8% to 40.5%.

Mobility Results Mobility revenues increased 4.7% to $21.6 billion, driven by 4.1% growth in service revenues and a 6.9% increase in equipment revenues. Operating income rose 4.2% to $6.7 billion, with the operating margin decreasing slightly from 31.4% to 31.2%. The EBITDA margin declined from 43.5% to 43.0%.

Mobility added 120,000 net new subscribers in Q1 2025, down from 741,000 in the prior year period. Postpaid phone net additions decreased 7.2% to 324,000, while postpaid churn increased 10 basis points to 0.99% and postpaid phone-only churn increased 11 basis points to 0.83%. The increases in churn were driven by a normalization of customers reaching the end of their equipment promotional plans and a shift in competitive offers.

Postpaid ARPU increased, reflecting pricing actions and customers migrating to higher-priced plans. Equipment revenues grew due to higher wireless device sales volumes.

Business Wireline Results Business Wireline revenues declined 9.1% to $4.5 billion, as lower demand for legacy and VPN services, as well as the absence of revenues from the contributed cybersecurity business, more than offset growth in fiber and advanced connectivity services.

Operating income decreased to a loss of $98 million, with the operating margin declining from 1.3% to -2.2%. However, the EBITDA margin improved from 29.0% to 31.3%, driven by lower operations and support expenses from ongoing transformation initiatives and the contribution of the cybersecurity business.

Consumer Wireline Results Consumer Wireline revenues increased 5.1% to $3.5 billion, led by a 9.6% rise in broadband revenues, which offset declines in legacy voice and data services. Operating income grew 63.8% to $349 million, with the operating margin expanding from 6.4% to 9.9%. The EBITDA margin also improved from 32.7% to 36.9%.

Broadband net additions, including the company’s AIA service, were 137,000 in Q1 2025, up from 55,000 in the prior year period. Fiber broadband net additions increased 3.6% to 261,000. Operations and support expenses decreased 1.4%, driven by lower customer support and network-related costs.

Latin America Segment The Latin America segment, which includes wireless operations in Mexico, reported an 8.7% decline in operating revenues to $971 million, reflecting unfavorable foreign exchange impacts. Operating income improved to $43 million, with the operating margin increasing from 0.3% to 4.4%. The EBITDA margin also expanded from 16.9% to 19.9%.

Mexico wireless subscribers grew 5.1% to 23.6 million, with postpaid net additions of 160,000 partially offset by prepaid and reseller losses. Service revenues declined 10.9% due to the unfavorable foreign exchange impacts, while equipment revenues fell 4.6%.

Liquidity and Capital Resources

AT&T generated $9.0 billion in cash from operating activities in Q1 2025, up from $7.5 billion in the prior year period. This increase was driven by higher cash flows related to DIRECTV, including a $1.1 billion dividend, as well as operational growth.

Cash used in investing activities totaled $5.0 billion, primarily for $4.3 billion in capital expenditures (including $203 million in vendor financing payments). Financing activities used $553 million in cash, mainly for debt repayments, dividend payments, and vendor financing.

AT&T had $6.9 billion in cash and cash equivalents as of March 31, 2025, up from $3.3 billion at the end of 2024. Total debt stood at $126.2 billion, with a weighted average interest rate of approximately 4.2%.

The company’s credit facilities, including a $12.0 billion revolving credit agreement, provide ample liquidity to meet its short-term needs. AT&T was in compliance with the covenants for its credit facilities as of March 31, 2025.

Outlook and Key Strengths

AT&T’s solid first quarter performance demonstrates the company’s ability to navigate a competitive and evolving industry landscape. The Mobility and Consumer Wireline segments continue to drive growth, while the company works to transform its Business Wireline unit.

The company’s key strengths include its nationwide wireless network, expanding fiber footprint, and diversified portfolio of communications services. AT&T’s focus on 5G network deployment, fiber expansion, and strategic partnerships positions it well to meet the growing demand for high-speed connectivity and advanced enterprise solutions.

However, the company faces ongoing challenges in its Business Wireline segment, where legacy services continue to decline, and in the Latin America segment, where foreign exchange headwinds persist. Maintaining a disciplined approach to cost management and capital allocation will be critical to sustaining profitability and cash flow generation.

Overall, AT&T’s first quarter results reflect the company’s ability to execute on its strategic priorities and deliver value to shareholders. As it navigates the competitive landscape, AT&T remains well-positioned to capitalize on the growing demand for its communications services and drive long-term growth.