AT&T shares fall after company says later payments, higher spending are hurting cash flow
AT&T shares
fell Thursday after the company said its cash flow was hurt by customers’ later
phone payments as it invested in establishing 5G infrastructure.
The company said customers have been paying
their bills about two days later than they did the same time last year. That
impacted cash flow by about $1 billion for the quarter, the company said.
“There’s
clearly some dynamics in the economy. We have customers that are stretching out
their payments a little bit,” AT&T CEO John Stankey told CNBC. “We expect
that they’re going to continue to pay their bills, but they’re taking longer to
do it. That’s not atypical in an economic cycle.”
Given those factors, AT&T lowered its
full-year free cash flow guidance from the $16 billion range to the $14 billion
range.
Shares of AT&T were down 8% at $18.91
in afternoon trading.
For its second quarter, AT&T reported
revenue of $29.64 billion, down from $35.7 billion in the year-ago period.
Excluding the impact of divestitures, operating revenue was up about 2%.
Analyst on average were expecting revenue
of $29.55 billion, according to Refinitiv.
The
company said its adjusted earnings were 65 cents per share, which was above the
61 cents per share analysts expected.
As part of its plan to combat cash flow
issues and the inflationary environment, AT&T said in May that it would
begin to raise prices on older wireless plans, according to Bloomberg. It increased monthly fees by up to
$6 a month on single-line plans, and up to $12 a month on family plans.
“We went in there and said that we’re going
to have to raise some prices on these long-standing plans,” Stankey said on
CNBC Thursday.
Stankey also forecast “a more tepid economic environment moving forward,” but said the investments the company is making would “build the franchise for decades to come.”
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