(Reuters) -U.S. carrier AT&T (NYSE:T) forecast annual profit below market estimates on Wednesday as it lowers the value of its old equipment and grapples with competition from cable operators, sending its shares down more than 2%.
The writedown of Nokia (HE:NOKIA) equipment will reduce annual earnings per share by nearly 17 cents and comes as AT&T shifts to new lower-cost ORAN technology, or open radio access network.
It chose Ericsson (BS:ERICAs) in December to build a telecom network using ORAN that would cover 70% of its wireless traffic in the U.S. by late 2026 and could cost as much as $14 billion.
AT&T said it expected adjusted profit to be between $2.15 and $2.25 per share in 2024, falling short of estimates of $2.46, according to LSEG data.
The profit expectation was also lower than last year's figure of $2.57 and stood in contrast to the market-beating forecast from Verizon (NYSE:VZ) on Tuesday.
Analysts said the race with cable operators could also hurt the growth of the carriers as companies such as Charter Communications (NASDAQ:CHTR) look to take market share with a competitive network and pricing.
Despite the pressure, AT&T's subscriber base grew in the fourth quarter. It added 526,000 net monthly bill-paying wireless phone subscribers, higher than expectations for 495,830 additions, according to Visible Alpha.
Recent price hikes and a move by consumers to higher-priced plans helped its average revenue per user rise 1.4% in the period.
Total revenue rose 2.2% to $32 billion, beating analysts' average estimate of $31.48 billion, according to LSEG data.
But its adjusted profit of 54 cents was below Wall Street expectations of 56 cents.
AT&T said it expects to return to profit growth in 2025.