AT&T Inc. experienced a decline in premarket trading on Thursday, with shares trading at $22.37 ahead of the New York opening bell, down from Wednesday's closing price of $22.44. The dip comes as investors digest the announcement of a chief financial officer transition and ongoing concerns over the company's substantial capital expenditures on fiber optic and 5G network infrastructure.
Pascal Desroches, who has served as AT&T's CFO, plans to retire at the end of this year. The company has named Jennifer Biry as his successor, with her appointment effective January 1, 2027. Biry, a former CFO at McAfee and a long-time AT&T executive, will assume the role of deputy CFO on July 6 before taking the top finance position. CEO John Stankey praised Desroches as an exceptional partner and welcomed Biry back, calling her return a full-circle moment.
This leadership change comes at a critical time for AT&T, which is heavily investing in fiber broadband and 5G to drive growth. In its first-quarter earnings report released in April, the company posted revenue of $31.5 billion, free cash flow of $2.5 billion, and capital spending of $5.1 billion. AT&T has maintained its full-year free cash flow target above $18 billion, signaling confidence in its financial strategy despite the heavy spending.
The broader market also contributed to the stock's weakness. U.S. indexes fell on Wednesday after the Federal Reserve's rate outlook led traders to increase the probability of a rate hike this year. The S&P 500 dropped 1.2% to 7,420.10, while the Dow Jones Industrial Average lost 1% and the Nasdaq Composite declined 1.3%. The NYSE will be closed on Friday for Juneteenth, making Thursday the last full trading day of the week.
AT&T's strategy hinges on bundling fiber broadband with wireless services to reduce customer churn and increase revenue per household. However, analysts warn that intense competition from Verizon and T-Mobile could pressure the company to increase spending to retain subscribers. Verizon recently announced it would eliminate activation and upgrade fees, simplify its wireless plans, and launch a loyalty program, moves aimed at improving retention in a crowded market.
Another looming threat comes from SpaceX's Starlink, which operates a low Earth orbit satellite network. Oppenheimer analysts have warned that Starlink could disrupt the $1.6 trillion U.S. communications market by offering lower latency internet services, potentially putting pressure on broadband subscriber growth for traditional players like AT&T if capacity increases and prices drop faster than expected.
Investors will get a clearer picture of AT&T's performance when the company reports its second-quarter earnings on July 22, before the NYSE opens, followed by an earnings call at 8:30 a.m. ET. The results will be closely watched for updates on subscriber growth, free cash flow, and the impact of competitive pressures.
