(Bloomberg) — AT&T Inc . It missed analysts’ estimates for free cash flow in the first quarter, but said it was still on track to meet the full-year forecast. Shares fell in early trading.
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Free cash flow for the period was $1 billion, the Dallas-based phone company said in a statement Thursday. That was well below Wall Street’s forecast of $3.02 billion, according to a Bloomberg survey, and 6% of the company’s expected $16 billion for the year.
The shortfall renews concerns that AT&T is struggling with higher costs in phone inventory, network construction and lower contributions from its declining DirecTV joint venture. The company said it expects higher free cash flow levels in the second half of the year.
At the same time, according to AT&T lead analysts’ estimates of mobile-phone subscribers, the no. 3 US wireless carrier continues to build on its resurgent two years of growth. .
Shares of AT&T fell about 2.5% to $19.20 in premarket trading Thursday. The stock is up 7% this year, while its peer T-Mobile US Inc. and Verizon Communications Inc. above. 2% decline in
The company added 424,000 regular monthly phone subscribers in the first quarter, beating analysts’ forecast of 400,556. AT&T reported earnings of 60 cents a share, excluding certain items, on sales of $30.1 billion. Analysts had expected 59 cents on revenue of $30.3 billion.
While the company lost 23,000 broadband customers, excluding DSL losses, it signed 272,000 new fiber subscribers compared with 289,000 a year ago. AT&T says it’s still on track to reach 30 million homes and businesses with fiber by the end of 2025.
Since spinning off its WarnerMedia business to Discovery a year ago, AT&T has committed itself to connectivity, particularly expanding 5G wireless and fiber optic networks. A turnaround in business and higher capital expenditures contributed to a surprise drop in free cash flow last year.
Capital investment in the first quarter was $6.4 billion, including capital expenditures and $2.1 billion in vendor financing. Analysts forecast spending of $5 billion in the first quarter and $21 billion for the year. Net debt rose to $134.7 billion from $132.2 billion in the fourth quarter.
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