AT&T misses revenue estimates as coronavirus weighs on business

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(Reuters) – AT&T Inc’s (N:T) first-quarter revenue fell short of Wall Street expectations and the company pulled its annual 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 was severely hit due to the postponement of live sports such as 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 its debt that has already 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. AT&T was able to earn 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.

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.

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