A man walks past the AT&T corporate headquarters with an umbrella on March 13, 2020 in Dallas, Texas.
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AT&T Shares tumbled after the company said on Thursday that its cash flow was hurt by late phone payments from customers and unforeseen expenses in setting up 5G infrastructure.
The company said that customers are paying their bills almost two days later than last year. The company said it impacted about $1 billion in cash flow for the quarter.
“There’s clearly some dynamism in the economy. We have customers that are increasing their payouts a little bit,” AT&T CEO John Stankey told CNBC. “We expect that they will continue to pay their bills, but they are taking longer to do so. This is not unusual in an economic cycle.”
Given those factors, AT&T lowered its full-year free cash flow guidance from a range of $16 billion to a range of $14 billion.
AT&T shares were down 8% at $18.91 in afternoon trading.
For its second quarter, AT&T reported revenue of $29.64 billion, down from $35.7 billion in the year-ago period. Analysts were expecting an average of $29.55 billion in revenue, according to Refinitiv.
The company said its adjusted earnings were 65 cents per share, which was higher than analysts’ expectation of 61 cents per share.
As part of its plan to tackle cash flow issues and an inflationary environment, AT&T said in May that it would begin raising prices on older wireless plans. bloomberg, This increased the monthly fee to $6 per month on single-line plans and to $12 per month on family plans.
“We went out there and said we had to raise some prices on these long-standing plans,” Stankey said Thursday on CNBC.
Stankey also foresaw “an even more economic environment going forward,” but said the investments the company is making will “build the franchise for decades to come.”