(Bloomberg) — AT&T Inc. fell the most in almost two years after telling investors it doesn’t expect another blowout performance for new mobile phone sign-ups.
The third-largest U.S. wireless carrier said on an earnings call Wednesday that it sees the mobile business “normalizing” lower in 2022. The company added 3.2 million mobile phone subscribers last year, its fastest growth in a decade, thanks in part to iPhone giveaways.
While AT&T didn’t provide a specific outlook for its wireless business, New Street Research analyst Jonathan Chaplin said the company’s commentary suggests “they are expecting less than 2 million” new phone subscribers this year.
A slower-growth market means AT&T may need more lavish promotions to lure customers away from larger rivals Verizon Communications Inc. and T-Mobile US Inc. That could erode AT&T’s bottom line on top of mounting costs for 5G and fiber network expansion.
AT&T shares fell as much as 9.1% in New York, their biggest intraday decline since March 2020. As of Tuesday, the stock had fallen 9% over the past 12 months, compared with a 9.5% drop in Verizon and a 19% slump in T-Mobile.
Mantle, Dismantle
Sluggish growth in wireless a decade ago prompted previous AT&T management to expand into the TV and media industries. That strategy is now being unraveled. AT&T said Wednesday that it expects to close its WarnerMedia merger with Discovery Inc. in the second quarter, slightly ahead of the previous “midyear” estimate.
Chief Executive Officer John Stankey also said the board is close to a decision on how to structure the divestiture of the merged business.
“We need to make sure it’s transparent and clean for everybody involved,” Stankey said. The company may share more details at an investor day in March.
When pressed about potential transactions for DirecTV, Stankey told analysts that TPG runs the business independently and would have control of the dealmaking process. DirecTV isn’t “frozen in time,” he said.
AT&T expects 2022 adjusted earnings in the range of $3.10 to $3.15 a share with revenue rising in the low-single-digits. Analysts had projected earnings would be $3.13 a share on sales of $155.2 billion.
(Adds CEO comments from call, updates shares.)
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