AT&T Stock Falls as 1Q Results Weigh on Telco Companies
20 Abril 2023 - 03:43PM
Dow Jones News
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.
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