AT&T forecasts annual profit below estimates

(Reuters) – AT&T Inc (T.N) forecast annual profit below Wall Street expectations on Wednesday, joining rival Verizon in bracing for a slowdown in wireless customer growth amid rising competition.

Signs of an economic recession are prompting U.S. companies to streamline their operations and issue cautious forecasts as they anticipate a drop in demand from customers cutting back on spending.

AT&T said it was expecting earnings for 2023 in the range of $2.35 and $2.45 per share, compared with analysts’ estimates of $2.56 per share, according to Refinitiv data.

However, its renewed focus on the telecoms business after shedding media assets last year, helped boost its subscriber numbers.

The U.S. carrier added 656,000 postpaid phone subscribers in the latest quarter, above Factset estimates of 644,800 additions. Analysts and investors closely watch postpaid numbers as customers opting for those plans pay a recurring monthly bill, making them valuable to the carriers.

AT&T has also ramped up competition with Verizon and T-Mobile (TMUS.O) for subscribers through aggressive promotions on plans and trade-in deals for handsets.

It posted a loss from continuing operations of $23.1 billion, or $3.20 per share, in the fourth quarter, after taking a $25 billion impairment charge primarily due to rising interest rates and asset impairments.

Excluding items, the company earned 61 cents per share, above expectations of 57 cents per share profit.

Wireless service revenue growth for the year is expected to be 4% or higher, AT&T said.

Shares of the U.S. wireless carrier were up nearly 2% in premarket trading.

Larger rival Verizon forecast annual profit below expectations on Tuesday, and said it was expecting wireless service revenue to grow between 2.5% and 4.5% in 2023.

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