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ATT Inc.
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AT&T Adds Wireless Customers, Plans to Keep Spending Big on 5G AT&T Adds Wireless Customers, Plans to Keep Spending Big on 5G By Will Feuer Dow Jones AT&T Inc. added subscribers for its core wireless business in its latest quarter, and the company said it plans to keep spending this year on the build-out of 5G infrastructure and the fiber network. The telecommunications company recorded a large fourth-quarter loss after it booked a $25 billion accounting charge largely tied to its legacy landline businesses. AT&T shares gained about 6% in early Wednesday trading. The latest results, excluding the charge, were largely in line with Wall Street's expectations but executives forecast adjusted earnings for 2023 that were below analysts' estimates, hurt by pension accounting. "I see the economy being relatively stable right now," Chief Executive John Stankey said on a conference call. "We're not seeing anything that's causing us to be extremely concerned about it, but what happens later in the year -- who knows." The company is still grappling with some inflationary pressures, including on energy and wages, which are baked into the company's 2023 guidance, Mr. Stankey said. "I've been fairly vocal that I think inflation is a tough thing to have a healthy economic environment in," Mr. Stankey said. "The good news is I think we're through the worst of it." The Dallas company said it added 656,000 postpaid phone connections in the December quarter, a metric investors use to gauge the strength of a cellphone carrier's main profit center. Analysts were expecting 644,800 connections for the period. AT&T outpaced rival Verizon Communications Inc. which said it added 217,000 phone connections under postpaid billing plans during the December quarter. T-Mobile US Inc. gained 927,000 postpaid phone customers during the same period, the company said earlier this month when it released preliminary results. AT&T has refocused on its wireless and broadband internet services since it scrapped plans to build a media conglomerate. It slashed its dividend last year and has been paying down debt left from its takeovers of DirecTV and Time Warner. "I think the customer is solid," Pascal Desroches, AT&T's finance chief, said in an interview. "Last year, we saw the normalization of the payment cycles back to prepandemic levels in terms of how quickly we collect. That hasn't gotten any worse." Last summer, the company said more of its customers were beginning to fall behind on bills. Mr. Desroches said bad debt -- receivables the company doesn't expect to get at all -- are "slightly worse" than prepandemic levels. AT&T generated about $14 billion in cash flow in 2022 and is predicting about $16 billion in 2023. The company projects 2023 capital spending of about $24 billion, in line with 2022. Mr. Desroches said capital investments should decline beyond 2023. Adjusted per-share earnings for the full year are expected to be between $2.35 and $2.45, below the $2.53 a share that analysts surveyed by FactSet expected. The company said noncash pension charges tied to higher interest rates as well as a higher tax rate weighed on its 2023 adjusted earnings guidance. AT&T lost 43,000 total broadband connections in the latest quarter, despite adding 280,000 fiber connections as the company continues to build out that network. The company's roughly $25 billion goodwill impairment charge, which reflects write downs for its wireline and Mexico businesses, pushed operating costs to $52.4 billion, up from $26.2 billion a year earlier. AT&T also took a $1.4 billion asset abandonment charge tied to wireline conduits no longer needed. The company said higher bad debt expenses and increased depreciation also pushed operating costs higher. Stripping out the company's $25 billion charge and other one-time items, adjusted earnings came to 61 cents a share in the fourth quarter, topping estimates from Wall Street analysts for 57 cents a share. Quarterly revenue from continuing operations rose 0.8% to $31.34 billion. AT&T's wireless-service revenue climbed 5.2% in the recent quarter. For 2023, the company said it expects wireless-service revenue of at least 4%. |
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