AT&T's Earnings Have a Different Feel Without a Deal

AT&T Inc. earnings hit after the close of trading today, and investors need to keep two possible scenarios in mind as they look at the numbers: 1) that the company’s Time Warner Inc. takeover gets done and allows the wireless giant to morph into a powerful media conglomerate a la Comcast Corp., or 2) that none of that happens, and what you get is what you see.

Without the deal, AT&T’s weaknesses will be more pronounced and its next chapter will be left open-ended—not to mention that nearly two years of planning, negotiations, adviser fees and legals costs will have been for nothing. If the deal does get done, the wireless-service and pay-TV provider’s bundling opportunities and bargaining power will be greatly enhanced, though it will also have to contend with an unprecedented level of debt that must be balanced against a dividend-hungry investor crowd and a costly but crucial 5G-network build. Interpreting the company’s quarterly results depends on which of these scenarios ultimately plays out.