AT&T Inc. said some subscribers are taking more time to pay for their bills, causing the U.S. wireless carrier to cut its annual free cash flow forecast by about $2 billion.
That sent its shares down by as much as 11 percent on Thursday. By 2 p.m. ET, AT&T’s stock was down by about 7.9 percent.
The conservative forecast comes as AT&T joins other companies to prepare for a potential slowdown in consumer spending in the second half of the year against the backdrop of four-decades high inflation in the United States.
CEO John Stankey stated Thursday that some customers are struggling to pay their phone bills.
“There’s clearly some dynamics in the economy. We have customers that are stretching out their payments a little bit,” he told CNBC. “We expect that they’re going to continue to pay their bills, but they’re taking longer to do it. That’s not atypical in an economic cycle.”
In May, the company said it would start to raise prices on some of its older wireless plans. According to a Bloomberg News report, AT&T, which also owns Cricket Wireless, raised its monthly fees by up to $6 a month on some single-line plans and $12 on family plans.
“We went in there and said that we’re going to have to raise some prices on these long-standing plans,” Stankey said on CNBC Thursday before adding that he believes there’s “a more tepid economic environment moving forward.”
It comes more than a week after the U.S. Bureau of Labor Statistics released its monthly Consumer Price Index report that showed a key inflation metric rose 9.1 percent year-over-year, hitting highs not seen since November 1981. Gas prices also remain elevated, and as of Thursday, the average price nationwide stood at $4.40 per gallon, according to AAA data.
By Jack Phillips
