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AT&T shares fall after the company says later payments, higher spending are affecting cash flow


A man holding an umbrella walks outside AT&T corporate headquarters on March 13, 2020 in Dallas, Texas.

Ronald Martinez | beautiful pictures

AT&T Shares fell on Thursday after the company said its cash flow was affected by customers’ subsequent phone payments as it invested in setting up 5G infrastructure.

The company said customers paid their bills about two days later than at the same time last year. That impacted cash flow by about $1 billion for the quarter, the company said.

“There’s clearly some momentum in the economy. We have customers who are expanding their payments a little bit,” AT&T CEO John Stankey told CNBC. “We expect that they will continue to pay their bills, but it will take them longer to do so. That’s not typical in an economic cycle.”

At its expense, including investments in subscriber growth, AT&T reduced its full-year free cash flow guidance from the $16 billion range to $14 billion.

Shares of AT&T closed down nearly 8% at $18.92.

For the second quarter, AT&T reported revenue of $29.64 billion, down from $35.7 billion a year earlier. Excluding the impact of divestment, operating revenue increased by about 2%.

According to Refinitiv, analysts expect average revenue of $29.55 billion.

The company said its adjusted earnings were 65 cents per share, well above the 61 cents per share analysts expected.

As part of a plan to combat cash flow problems and an inflationary environment, AT&T said in May that it would begin raising prices on older wireless plans, according to Bloomberg. It has increased the monthly fee to $6 a month for the single-line plan and up to $12 a month for the family plan.

“We went there and said we were going to have to raise some prices on these age-old plans,” Stankey said on CNBC on Thursday.

Stankey also forecasted “a more subdued economic environment going forward,” but said the investments the company is making will “build the franchise for decades to come.”



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