AT&T (NYSE: T) will be reporting its third-quarter results on Monday before the opening bell, days after the communications firm faced severe criticism from hedge fund Elliott Management, which holds a major stake in it, for poor operational efficiency. Market watchers predict earnings to rise 3% to $0.93 per share on revenues of $45 billion, which represents a 1.6% decline from last year.

Mobility

The Mobility segment has been a key contributor to the telecom giant’s top-line, with steady increase in subscription and revenue per user. Like in the past, the performance of this business in the September-quarter will be crucial as far as the stock’s future is concerned.

AT&T’s (T) Q2 revenue tops expectations; earnings in-line

Mobility accounts for more than a third of the total revenues, on average. The market will be closely watching its performance, considering the softness in net subscriber additions and rising churn rate in the postpaid unit.

Entertainment

Entertainment Group, which contributes the most to the overall business after Mobility, also plays an important role in deciding the shareholder value. Rising competition and changing customer tastes continue to pose challenges to the entertainment business, which is bound to affect the third-quarter outcome. With more are more customers shunning the  services, especially the premium TV service, the management needs to take immediate steps to sustain the user base.

Related: AT&T Q2 2019 Earnings Conference Call Transcript

The downtrend in revenue per user, due to customers’ continuing migration to video streaming services, could be a drag on profitability this time. It is obvious that at the post-earning conference call, the management will face some tough questions on its strategies for addressing the weakness in certain areas of the business.

Mixed Q2 Outcome

In the June-quarter, higher revenues at Mobility and the recently-added Warner Media resulted in a double digit top-line growth, which was partially offset by negative performance by the other segments, led by the Entertainment Group. Second-quarter earnings dropped 2% to $0.89 per share on revenues of $45 billion.

Rivals

Among others, Verizon (VZ) will be releasing its third-quarter numbers on Friday before the market opens, while T-Mobile (TMUS) is preparing to unveil results for the most recent quarter on October 28 after the market’s close.

Also read: AT&T to sell Puerto Rico operations to reduce debt

After making steady gains over the past twelve months, AT&T shares reached a new peak earlier this month, all along outperforming the sector. However, the stock lost momentum this weak ahead of the earnings announcement.

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