Shares of AT&T (T) fell 10% after the telecommunications company issued quarterly earnings that missed the consensus expectations of Wall Street analysts.
It was the biggest one-day drop in AT&T stock since December 2000 and came after the third largest wireless carrier in America missed analysts’ estimates for free cash flow in this year’s first quarter.
Free cash flow at AT&T totaled $1 billion U.S. in Q1, which was well below the $3.02 billion U.S. that Wall Street had anticipated.
The company said that it expects higher free cash flow levels in the second half of this year and that it is on track to meet or exceed its annual target.
However, AT&T also added fewer subscribers in Q1 than a year earlier, which also disappointed analysts and investors.
AT&T added 424,000 regular monthly phone subscribers in Q1, which was nearly 40% fewer than the company added a year ago.
For its part, AT&T blamed the lower subscriber numbers on high inflation and rising interest rates, which have made consumers reluctant to spend money on 5G wireless service.
Heavy spending to expand its 5G wireless and fibre optic networks in the U.S. caused the drop in free cash flow, the company added.
AT&T reiterated that it is on track to surpass 30 million homes and businesses with fibre optic internet service by the end of 2025.
AT&T reported earnings of $0.60 U.S. per share on $30.1 billion U.S. of revenue. Wall Street had been looking for earnings of $0.59 U.S. a share on revenue of $30.3 billion U.S.
The stock of AT&T has declined 13% over the last 12 months to trade at $17.65 U.S. per share.
