AT&T's equipment writedown hurts annual profit view, shares slip
(Reuters) -U.S. carrier AT&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 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 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 on Tuesday.
Analysts said the race with cable operators could also hurt the growth of the carriers as companies such as Charter Communications 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.
(Reporting by Samrhitha Arunasalam and Harshita Mary Varghese in Bengaluru; Editing by Arun Koyyur)
