This inconsistency can make it difficult for investors to determine whether it is a good moment to invest in AT&T. After all, the company’s success was achieved in a difficult macroeconomic climate of high inflation and rising interest rates.

Let’s take a look at AT&T’s 2022 results to see where the iconic telecom stands today.

This data might help you decide whether now is the ideal moment to invest.

AT&T’s performance in 2022

After adjusting for divested businesses, AT&T ended 2022 with $120.7 billion in revenue, up from $118.2 billion in 2021.

The company’s mobile activities performed even better, earning $81.8 billion in 2022 versus $78.3 billion in 2021.

In fact, 2022 was the most profitable year in AT&T’s mobile business history, and profit growth is expected to continue this year.

Strong customer growth drove this company’s mobile success.

Net additions among postpaid phone customers, the telecom industry’s most valuable customer segment, totaled nearly 3 million in 2022 – and nearly 7 million since John Stankey took over as CEO in 2020, representing the company’s best period of customer growth in over a decade.

AT&T is also seeing an increase in customer adoption of its fiber optic internet service.

Last year was the fifth consecutive year that it added 1 million or more fiber customers.

Fiber surpassed non-fiber broadband connections for the first time in the second half of 2022, indicating that fiber’s momentum is continuing.

This is a significant milestone because both 5G and fiber expansion are critical to AT&T’s future revenue growth strategy.

Factors Contributing to AT&T’s Net Loss

With all its success in 2022, how did AT&T end the year with a net loss? Its old landline business was the culprit.

The company’s landline revenue is slowly withering away. AT&T’s business and consumer wireline divisions saw 2022 revenue sink to $35.3 billion from $36.5 billion in 2021.

Due to these declining assets, AT&T booked an accounting write-off of about $25 billion in Q4, called a goodwill impairment charge.

While the amount is substantial, it’s an understandable write-down since landlines are fading in favor of the secular trend of 5G wireless technology.

On top of this write-off, AT&T had allocated $24 billion in capital expenditures for 2022 to expand its fast-growing 5G and fiber optic networks.

These two factors combined to push AT&T into unprofitable territory last year.

Although costly, the capital investments are paying off. AT&T anticipates wireless service and broadband revenues to continue growing in 2023 by at least 4% over last year despite a tough macroeconomic environment.

Moreover, industry forecasts estimate consumers will aggressively adopt 5G as network coverage improves and 5G-compatible devices become cheaper.

Consequently, U.S. 5G subscriptions are expected to balloon from 14.4 million in 2020 to over 400 million by 2027. This trend bodes well for AT&T’s wireless business’s continuing expansion.

AT&T, Buy or Sell

Along with revenue growth, AT&T has sought to reduce debt, reducing net debt by around $24 billion last year, and preserving free cash flow (FCF).

Because FCF is required to finance AT&T’s high-yield dividend, the company’s FCF results are critical for investors.

AT&T needed $6 billion in Q4 FCF at the end of Q3 to meet its year-end target of $14 billion.

The telecom met its target of $6.1 billion in the fourth quarter. AT&T anticipates increased FCF in 2023, with a target of at least $16 billion.

The FCF estimate for this year provides assurance that this company’s dividend is secure.

Investors can gain from the dividend, which presently yields 5.8%, as the company’s revenue mix switches progressively to 5G wireless and fiber optic internet goods, with landlines contributing less and less over time.

As a result, an investment in AT&T would be long-term.

Under Stankey’s guidance, the corporation has shown to be in solid hands. It focuses on high-growth areas while maintaining cost and debt-reduction discipline.

All of these are evidence that AT&T is on the right course to long-term success in the extremely competitive US telecom market.

AT&T is an excellent long-term investment given the plethora of positives surrounding the company’s operations and a reliable dividend.

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