AT&T slides on softer 2024 outlook tied to tech change, mixed Q4 earnings

Updated at 7:17 AM EST

AT&T  (T) – Get Free Report posted softer-than-expected fourth-quarter earnings Wednesday and forecast muted 2024 profit tied to a write-down of some of its legacy telecom equipment as it moves toward a new, cost-effective technology.

AT&T said adjusted earnings for the three months ended in December came in at 54 cents a share, down 11.5% from the same period in 2022 and just shy of the Wall Street consensus forecast of 56 cents a share.

Related: Verizon leaps as outlook adds fuel to Q4 earnings beat

Revenue, the company said, rose 2.2% from 2022 levels to $32.02 billion, topping Wall Street forecasts of $31.48 billion. The group’s free cash flow was pegged at $6.4 billion, firmly ahead of forecasts and a $1.2 billion quarter-on-quarter gain as AT&T continues to cut costs.

Around 526,000 postpaid wireless subscribers were added over the quarter, the company said, topping the Wall Street consensus estimate of around 496,000, with around 273,000 net new fiber optic subscribers.

Looking into the current year, AT&T said sees earnings in the region of $2.15 to $2.25 a share, shy of the LSEG estimate of $2.46 a share. It estimates free cash flow between $17 billion and $18 billion, a 4.2% gain from the year-earlier level at the mid-point of the range.

AT&T: Charge to earnings for new equipment

AT&T said the 2024 earnings forecast includes a 7-cent-a-share charge linked to the write-down of telecom equipment purchased from Nokia. The cost is tied to its transition to open radio access network (Open RAN) technology from Ericsson.

AT&T has said the new and cheaper telecom network will cover 70% of its U.S. traffic by 2026.

“We accomplished exactly what we said we would in 2023, delivering sustainable growth and consistent business performance, resulting in full-year free cash flow of $16.8 billion, ahead of our raised guidance,” said CEO John Stankey. 

“As we advance our lead in converged connectivity, we will continue to scale our best-in-class 5G and fiber networks to meet customers’ growing demand for seamless, ubiquitous broadband, and drive durable growth for shareholders,” he added. 

AT&T shares were marked 3.4% lower in pre-market trading immediately following the earnings release to indicate an opening bell price of $16.60 each. 

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