By Arriana McLymore, Sheila Dang
(Reuters) – AT&T Inc’s first-quarter revenue fell short of Wall Street expectations and the company pulled its financial forecast on Wednesday, as the impact of the coronavirus outbreak overshadowed strong growth in monthly phone subscribers.
The Dallas-based phone giant is the first of the big U.S. communications companies to report quarterly results, providing a glimpse into the resiliency of the telecoms sector.
Shares of AT&T were up 1% at $30.15 in premarket trading.
AT&T said the pandemic reduced earnings by 5 cents per share. Advertising sales, which were severely hit by the postponement of live sports such as college basketball’s March Madness and lower wireless equipment sales, led to a $600 million decline in revenue.
The company said it had limited visibility for the rest of the year but added that it had enough free cash flow to pay dividends and make debt payments.
The coronavirus pandemic has battered stock markets and forced companies to withdraw financial guidance amid spending cuts and massive layoffs.
To increase liquidity, the company entered into a $5.5 billion loan agreement, adding to debt that has been a point of contention for its investors. The company reported $154.3 billion in net debt as of the end of March.
In the first three months of the year, AT&T added 163,000 net new monthly phone subscribers, beating the average Wall Street estimate of 90,700. The company said that the first quarter only included two weeks of the nationwide stay-at-home mandates and suggested that the second quarter would be the toughest from a profit-and-loss perspective.
AT&T was able to sign up more customers despite shutting down more than 40% of its retail stores and reported 0.86% in postpaid phone churn, an improvement over last year’s churn of 1.07%.
The company said that the coronavirus pandemic had a $435 million impact on EBITDA.
AT&T lost 897,000 so-called premium TV subscribers, which includes its satellite TV provider DirecTV and a small number of U-Verse users, as more consumers cut cords amid the pandemic.
WarnerMedia, which suffered the brunt of the impact from the pandemic, reported $7.4 billion in revenue, down from $8.4 billion from a year earlier. AT&T is set to launch HBO Max on May 27.
The company reported total revenue of $42.8 billion, missing Wall Street expectations of $44.2 billion, according to Refinitiv data.
Excluding items, AT&T reported earnings per share of 84 cents, missing analysts estimates of 85 cents, according to Refinitiv.
Reporting by Supantha Mukherjee in Bengaluru and Arriana McLymore in Raleigh, North Carolina; Editing by Bernadette Baum and Steve Orlofsky.