By Will Feuer

 

Shares of AT&T Inc. fell more than 10% in afternoon trading after the cellular carrier reported a steep drop in first-quarter free cash flow.

The stock is on track for its largest one-day percent decline since 2002. The results weighed on shares of AT&T's telecommunications rivals as well, sending Verizon Communications Inc. and T-Mobile US Inc. 3.5% lower and 1.3% lower, respectively.

AT&T reported first-quarter revenue that fell below Wall Street analysts' expectations, according to FactSet. While it grew its core base of wireless customers, growth slowed to the lowest amount since early in the pandemic. Free cash flow also tumbled 64% to $1 billion.

AT&T said the decline was caused by the timing of capital investments and backed its forecast to generate about $16 billion in free cash flow for the year. DirecTV also contributed less cash in the quarter, said AT&T, which owns a controlling stake in the satellite broadcaster.

Jonathan Chaplin, an analyst for NewStreet Research, said the selloff reflected Wall Street's skepticism that AT&T can still hit its full-year target. "They just don't trust management," he said Thursday in a research note. "We would take the other side of the trade on today's sell-off," he added.

However, he said commentary on the conference call suggested that the company could try to meet their full-year free cash flow guidance by throttling back on capital investments, which would be viewed negatively as the company is still building out its fiber-optic network and making 5G investments.

AT&T added 272,000 fiber subscribers in the first quarter, which Mr. Chaplin said was below expectations. "Investors will be worried that slower fiber growth presages bad news for Cable and other fiber providers," he said.

Craig Moffett, an analyst at MoffettNathanson, echoed Mr. Chaplin's view that fiber subscriber growth appears to have decelerated in the quarter. At the same time, average revenue per fiber user rose 8.2% from a year ago, signaling some maturation and strategic pricing from AT&T, Mr. Moffett said.

 

Write to Will Feuer at Will.Feuer@wsj.com

 

(END) Dow Jones Newswires

April 20, 2023 14:28 ET (18:28 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.
AT&T (NYSE:T)
Gráfico Histórico do Ativo
De Fev 2024 até Mar 2024 Click aqui para mais gráficos AT&T.
AT&T (NYSE:T)
Gráfico Histórico do Ativo
De Mar 2023 até Mar 2024 Click aqui para mais gráficos AT&T.