Share prices of AT&T (T 2.15%) hit a 52-week low of $24.54 on Nov. 4 after the company delayed the rollout of its C-band spectrum, a component of its new 5G network, pending an aviation safety review. The stock remains around $25 at the time of this writing, creating an opportunity to pick up shares while the price is down.

But it's not a straightforward decision to buy shares, because today's AT&T is a company in transition. CEO John Stankey, who took over the top spot last year, is returning AT&T to its telco roots after his predecessor ventured into a number of expensive, entertainment-related acquisitions.

Person sitting outdoors looking at phone and smiling.

Image source: Getty Images.

These acquisitions saddled the company with massive debt at the same time AT&T is undertaking the costly implementation of its 5G network. Yet despite the challenges, reasons abound to consider investing in this venerable telco titan.

Achievements in AT&T's telecom business

A key reason to consider AT&T stock is its wireless business, which has experienced strong growth. Third-quarter results revealed the largest increase in postpaid phone net additions in over a decade. Postpaid phone net adds is a key metric since postpaid subscribers are the telecom industry's most valuable. Q3 was also the third consecutive quarter of growth in postpaid phone net adds, achieving 928,000.

Thanks to its customer gains, AT&T's mobility division has seen service revenue rise steadily since hitting a pandemic-induced low point in Q2 last year. In fact, the company's 2021 service revenue exceeds 2019's pre-pandemic levels.

Chart of AT&T mobility service revenue showing a steady revenue increase over the past 3 quarters.

Data source: AT&T. Chart by author.

AT&T's strong customer gains mean it's succeeding against rivals in a competitive U.S. telecom market. And AT&T isn't just acquiring customers, it's retaining them. The company maintained postpaid phone churn at record low levels in Q3 with 0.72% churn.

AT&T is still in the early stages of 5G adoption, so it has an opportunity to continue its customer growth. And since the use of a 5G network requires newer, 5G-enabled mobile phones, AT&T can capture additional upside through equipment sales. The company's Q3 equipment revenue was $4.6 billion, up a robust 15% year over year.

AT&T's streaming success

Part of the company's success lies in bundling higher-priced wireless plans with HBO Max, the streaming service under AT&T's WarnerMedia entertainment division. The WarnerMedia segment is rebounding in 2021 after suffering a pandemic-induced 13.7% year-over-year revenue drop in 2020.

WarnerMedia's Q3 revenue rose 14% year over year to $8.4 billion. The segment was helped by five consecutive quarters of subscription revenue growth since the HBO Max rollout in May of last year.

WarnerMedia's direct-to-consumer (DTC) business unit, under which HBO Max falls, reached 69.4 million global subscribers, its highest level since HBO Max's launch. This allowed DTC subscription revenue to increase about 25% year over year.

As part of the company's decision to focus on its telecommunications business, AT&T will merge WarnerMedia with Discovery into a new entertainment company, to be called Warner Bros. Discovery. AT&T plans to maintain a collaboration with Warner Bros. Discovery post-merger, which enables AT&T to continue offering its bundles. Investors benefit by receiving shares in Warner Bros. Discovery.

To buy or not to buy AT&T stock

Despite the successes, being a company in transition means bumps in the road to recovery. When AT&T loses its WarnerMedia revenue after the merger completes in mid-2022, subsequent year-over-year comparisons are likely to show a revenue decline. That was the case with third-quarter revenue results.

AT&T posted a 5.7% drop in total Q3 revenue year over year, from $42.3 billion to $39.9 billion. The decline came from the company's decision to spin off its video division, another entertainment acquisition which included DirecTV. Excluding this segment, AT&T's Q3 revenue would have increased 4.7% year over year.

Then there's AT&T's debt. While the company's been chipping away at the debt, its 5G implementation is costly. AT&T spent over $23 billion at a government auction in February to purchase spectrum for its 5G network.​ Consequently, total debt stood at $179 billion in Q3, up from $157 billion at the end of 2020.

But AT&T consistently generates billions of dollars in free cash flow every quarter, enabling it to meet its obligations. In Q3, free cash flow totaled $5.2 billion, and the company is on track to reach around $26 billion in free cash flow this year.

Patient investors willing to stick it out for the long term can look forward to a financially stronger AT&T while gaining shares in a new, growing entertainment company. Given the positives, this telecom stock is a worthwhile investment.