AT&T still sees FY FCF $16B or better, Q2 FCF $3.5B-$4B

Pascal Desroches, CFO of AT&T, spoke at the Bank of America C-Suite Technology, Media and Telecommunications Conference where he provided an update to shareholders. Desroches made the following key points: Desroches reiterated the company’s guidance for full-year free cash flow of $16 billion or better and stated that second quarter free cash flow is expected to be in the $3.5 to $4.0 billion range. As the company has previously discussed, the primary factors supporting its annual outlook are expectations for 2023 adjusted EBITDA growth of 3%+, largely in-line capital investment and lower handset payments for full-year 2023 compared to 2022. AT&T continues to focus on growing its high-value customer base for both 5G and fiber. In wireless, Desroches said the company is tracking to slightly above 300,000 second-quarter postpaid phone net additions. Following a brief, limited impact from these short-term items, the company’s subscriber porting trends have normalized. Overall, the company has not seen a material change in its porting ratios, including to cable. AT&T expects second-quarter fiber net additions to be in the mid-200,000 range in part due to significantly lower household move activity along with the expected impact from seasonality. The company also continues to feel confident in the return case for AT&T’s fiber investments given better than-expected initial penetration rates and higher average revenues per user levels.