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AT&T Stock Slides After Q4 Earnings, Outlook; HBO Subscribers Near 74 Million

AT&T said it added 4.4 million subs to its HBO and HBO Max streaming services, taking the overall total to just under 74 million and powering a 15% increase in WarnerMedia revenues.

Updated at 12:36 pm EST

AT&T  (T) - Get AT&T Inc. Report posted stronger-than-expected fourth-quarter earnings Wednesday as subscribers to its HBO streaming services neared 74 million, boosting revenues in its WarnerMedia division.    

Shares in the group, however, were marked lower as investors reacted to a softer-than-expected 2022 outlook for adjusted earnings, which the group sees at $3.10 to $3.15 per share, as well as a 'low single-digit' growth estimate for group revenues.

AT&T said adjusted earnings for the three months ending in December were pegged at 78 cents per share, up 4% from the same period last year and 2 cents ahead of the Street consensus forecast. Group revenues, the company said, fell 10.3% to $41 billion, a figure that came in just ahead of analysts' estimates of a $40.44 billion tally. 

AT&T said it had 73.87 million global subscribers to its HBO and HBO Max streaming services, topping its plans for a total of between 70 million and 73 million, as it continues to challenge its larger rival Netflix  (NFLX) - Get Netflix, Inc. Report for new additions. WarnerMedia revenues, where HBO and HBO Max are based, rose 15.4% to $9.9 billion.

The group also added 884,000 post-paid wireless subscribers and 271,000 new broadband customers.

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 “A year and a half ago, we began simplifying our business to reposition AT&T for growth and we’re extremely pleased with how we’ve executed on that commitment,” said CEO John Stankey. “We ended 2021 the way we started it – by growing our customer relationships, running our operations more effectively and efficiently, and sharpening our focus. Our momentum is strong and we’re confident there is more opportunity to continue to grow our customer base and drive costs from the business."

“We’re at the dawn of a new age of connectivity. Our focus now is to be America’s best connectivity provider and also ensure our media assets are positioned to grow and truly become a global media distribution leader," he added. "Once we do this, we’ll unlock the true value of these businesses and provide a great opportunity for shareholders.”

AT&T shares were marked 5.5% lower in mid-day trading following the earnings release to change hands at $25.03 each.

AT&T has shed key assets, including DirecTV, from its balance sheet and planned the $43 billion merger of its media division with Discovery  (DISCA) - Get Discovery, Inc. Class A Report in a move towards its goal of becoming a so-called 'pure play' telecoms group that leverages off of 5G network growth.

Discovery, which sees the media deal closing in late spring, has forecast additional 2023 earnings of $4.1 billion, with upside potential of around $4.7 billion. AT&T has yet to determine how the deal will flow through to shareholders, either as a spin-off (providing cash) or a split-off (providing shares).

However, while reducing debt and boosting free-cash flow prospects, the moves have come at a cost to investors, with AT&T noting this spring that its dividend payout ratio, which was around 63% in the first quarter, will be "re-sized" to account for the distribution of WarnerMedia assets into a new company.