A woman walks past an AT&T store in Washington DC.
Ting Shen | Xinhua News Agency | Getty Images
AT&T Shares tumbled on Thursday after the company said its cash flow was hit by late customer phone payments and windfall costs to build 5G infrastructure.
The company said customers were paying their bills about two days later than at the same time last year. This impacted cash flow by about $1 billion for the quarter, the company said.
“There is clearly some dynamics in the economy. We have customers who are stretching their payments a bit,” AT&T CEO John Stankey told CNBC. “We expect them to continue paying their bills, but they need more time to do so. This is not typical for the business cycle.”
Given these factors, AT&T lowered its full-year free cash flow forecast from $16 billion to $14 billion.
Shares of AT&T fell 8% to $18.91 in afternoon trading.
In the second quarter, AT&T reported revenue of $29.64 billion, up from $35.7 billion in the same period last year. Analysts on average were expecting $29.55 billion in revenue, according to Refinitiv.
The company said its adjusted earnings were 65 cents per share, higher than analysts’ expectations of 61 cents per share.
As part of its plan to combat cash flow and an inflationary environment, AT&T said in May that it would start raising prices on old wireless plans. bloomberg. Monthly fees have increased to $6/month for single-line plans and $12/month for family plans.
“We went in there and said we were going to have to raise some prices on these long-term plans,” Stankey said Thursday on CNBC.
Stankey also predicts a “cooler economic environment going forward” but said the investments the company is making “create a franchise for decades to come.”