AT&T highlighted some bright spots in its third-quarter 2020 earnings, but the company’s outlook is still murky.

Wireless growth, especially net customer gains, was the undisputed high point for AT&T during the quarter, but “mobility’s performance wasn’t close to good enough to offset the weakness everywhere else,” analysts at MoffettNathanson wrote. 

Total impacts from the COVID-19 pandemic reached $2.5 billion during the quarter. The bulk of that, almost $1.6 billion was pinned to challenges at WarnerMedia, but the mobility segment was also strained by the crisis to the tune of $450 million during the quarter, according to AT&T.

The pandemic’s impact on AT&T’s wireless business was largely attributed to declines in international roaming, waived data overages, and late payments, explained CFO John Stephens during the earnings call.

Following seven months of uncertainty, CEO John Stankey said AT&T now has a “very pragmatic view of the broader economic picture and the COVID-driven challenges we face in some segments.”

A massive cost-cutting effort and sales of underperforming parts of AT&T’s business, which got underway a year ago, is ongoing, Stankey said, adding that there is more work to do to steady the ship.

The company pointed to the recently closed sale of its majority stake in Central European Media Enterprises and the sale of its assets in Puerto Rico and the U.S. Virgin Islands, which it expects to close by the end of the month, as clear examples of its effort to strengthen its balance sheet and pay down debt. 

AT&T’s net debt is down from a high of $180 billion in mid 2018 to $149 billion at the end of Q3 2020.

While multiple segments of AT&T’s business are sagging, it continues to focus on wireless, fiber, and software-based entertainment as vehicles for growth. 

“We have been very deliberate over the last several years, building a much higher quality network,” Stankey said, referring to its mobile business. “As COVID hit and the wireless networks became much more suburban oriented than urban oriented, our strength in low-band spectrum, our literally undisputed strength and volume of low-band spectrum has helped because the suburban experience is oftentimes a more distributed experience.”

Stankey, in a thinly veiled shot at T-Mobile US, which has repeatedly touted its strength in mid-band spectrum, argued that mid-band spectrum can’t penetrate buildings in a suburban environment. 

His comments also follow questions about AT&T’s financial wherewithal to participate in the upcoming mid-band spectrum auction. “The critical C-Band auction demands what could be a ten billion or more dollar investment in spectrum. … And then a many billion dollar more investment in buildout once it is required,” analysts at MoffettNathanson wrote.

The firm isn’t convinced AT&T has enough time to manage its declining businesses, slash costs, and jobs without hurting cash-generating prospects, and invest further in growth areas. “Time is of the essence. AT&T is playing the hand they’ve been dealt, and today’s results suggest they are doing so competently. But, one must also concede, it is a very weak hand,” the analysts concluded. 

AT&T declined to provide guidance on capex for 2021, but said it plans to do so before the end of the year. Mobility revenues increased 1% year-over-year to $17.9 billion during the quarter. AT&T’s total revenues were down 5% year-over-year to $42.3 billion, and net income slid 24% to $2.8 billion.