Updated at 7:17 am EST
AT&T (t) – Get a free report On Wednesday, it posted weaker-than-expected fourth-quarter earnings and forecast moderate earnings through 2024 tied to a writedown of some of its legacy telecommunications equipment as it moves toward new, profitable technology.
AT&T said adjusted earnings for the three months ended in December were 54 cents per share, down 11.5% from the same period in 2022 and just below the Wall Street consensus forecast of 56 cents per share.
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Revenue, the company said, rose 2.2% from 2022 levels to $32.02 billion, beating Wall Street forecasts of $31.48 billion. Group free cash flow was pegged at $6.4 billion, firmly above forecasts, and a quarter-on-quarter profit of $1.2 billion as AT&T continues to cut costs.
About 526,000 postpaid wireless subscribers were added during the quarter, the company said, beating the Wall Street consensus estimate of about 496,000, with about 273,000 net new fiber subscribers.
Looking ahead to the current year, AT&T said it sees earnings in the region of $2.15 to $2.25 per share, below LSEG's estimate of $2.46 per share. It estimates free cash flow of between $17 billion and $18 billion, up 4.2% from the year-earlier level at the midpoint of the range.
AT&T: Charge to profits for new equipment
AT&T said its 2024 earnings outlook includes a charge of 7 cents per share tied to the amortization of telecommunications equipment purchased from Nokia. The cost is tied to its transition to Ericsson's open radio access network (Open RAN) technology.
AT&T has said the new, cheaper telecommunications network will cover 70% of its US traffic by 2026.
“We achieved exactly what we said we would do in 2023, delivering sustainable growth and consistent business performance, resulting in full-year free cash flow of $16.8 billion, ahead of our elevated guidance,” he said. CEO John Stankey.
“As we advance our leadership in converged connectivity, we will continue to expand our best-in-class 5G and fiber networks to meet growing customer demand for seamless, ubiquitous broadband and drive lasting growth for shareholders,” he added.
AT&T shares fell 3.4% in premarket trading immediately after the earnings release, indicating an opening price of $16.60 each.
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