AT&T's equipment writedown hurts annual profit view, shares slip
Reuters
Published Jan 24, 2024 06:33AM ET
Updated Jan 24, 2024 09:51AM ET
(Reuters) -U.S. carrier AT&T (NYSE:T) forecast annual profit below market estimates on Wednesday as it lowers the value of its old equipment and grapples with competition from cable operators, sending its shares down more than 2%.
The writedown of Nokia (HE:NOKIA) equipment will reduce annual earnings per share by nearly 17 cents and comes as AT&T shifts to new lower-cost ORAN technology, or open radio access network.
It chose Ericsson (BS:ERICAs) in December to build a telecom network using ORAN that would cover 70% of its wireless traffic in the U.S. by late 2026 and could cost as much as $14 billion.
AT&T said it expected adjusted profit to be between $2.15 and $2.25 per share in 2024, falling short of estimates of $2.46, according to LSEG data.
The profit expectation was also lower than last year's figure of $2.57 and stood in contrast to the market-beating forecast from Verizon (NYSE:VZ) on Tuesday.
Analysts said the race with cable operators could also hurt the growth of the carriers as companies such as Charter Communications (NASDAQ:CHTR) look to take market share with a competitive network and pricing.
Despite the pressure, AT&T's subscriber base grew in the fourth quarter. It added 526,000 net monthly bill-paying wireless phone subscribers, higher than expectations for 495,830 additions, according to Visible Alpha.
Recent price hikes and a move by consumers to higher-priced plans helped its average revenue per user rise 1.4% in the period.
Total revenue rose 2.2% to $32 billion, beating analysts' average estimate of $31.48 billion, according to LSEG data.
But its adjusted profit of 54 cents was below Wall Street expectations of 56 cents.
AT&T said it expects to return to profit growth in 2025.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.