AT&T Q2 earnings report 2023

A pedestrian walks by a sign posted in front of an AT&T store on June 20, 2023 in San Francisco, California.

Justin Sullivan | Getty Images

AT&T on Wednesday handily beat estimates for second-quarter free cash flow as efforts to lower costs and attract wireless monthly paying subscribers with cheaper plans paid off.

The telecom firm posted free cash flow of $4.2 billion in the three months ended June, compared with analysts’ estimates of $3.60 billion, according to Visible Alpha.

The results marked an improvement from the first quarter and showed the benefits of a cost-cutting plan that helped shave off more than $1 billion in operating expenses during the reported period through measures such as a reduction in office locations.

The company said on Wednesday it had achieved its $6 billion cost-cutting goal ahead of schedule and was now targeting another $2 billion-plus over the next 3 years.

A lower cost bill is crucial for AT&T as it needs a steady flow of cash to service its net debt of $132 billion and support a dividend that is among the highest for U.S. stocks.

Meanwhile, AT&T did not comment on the lead-clad cables in its statement. Its shares had come under pressure after the Wall Street Journal reported on July 9 that AT&T and Verizon were among telecom operators that abandoned a sprawling network of lead-clad cables, which might have contaminated water and soil.

The company added 326,000 postpaid phone subscribers in the second quarter, in line with the low 300,000s prediction provided by finance chief Pascal Desroches at a conference in June. That figure was nearly 60% lower than a year earlier.

Growth in the highly competitive U.S. telecom market has slowed dramatically after the pandemic, forcing companies to offer cheaper plans to attract customers in an uncertain economy.

AT&T said revenue rose 0.9% to $29.9 billion, in line with estimates of $29.94 billion, according to Refinitiv data.

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