FILE PHOTO: The AT&T logo is pictured during the Forbes Forum 2017 in Mexico City, Mexico, September 18, 2017. REUTERS/Edgard Garrido/File Photo
(Reuters) -AT&T on Wednesday handily beat estimates for second-quarter free cash flow as efforts to lower costs and attract wireless monthly paying subscribers with cheaper plans paid off.
The company also said it had achieved its $6 billion cost-cutting goal ahead of schedule and was now targeting another $2 billion-plus over the next three years.
AT&T's shares climbed nearly 3% higher in premarket trading after the company also beat analysts' estimates for quarterly profit.
Meanwhile, the company did not provide any additional comment on the lead-clad cables in its earnings statement.
Shares were hammered after the Wall Street Journal reported on July 9 that AT&T and Verizon were among telecom operators that abandoned a sprawling network of lead-clad cables, which might have contaminated water and soil.
AT&T's free cash flow (FCF) of $4.2 billion in the three months ended June topped estimates of $3.60 billion, according to Visible Alpha.
That marked a big improvement from the first quarter when FCF fell short of estimates by more than $1.5 billion.
The second-quarter FCF was fueled by a cost-cutting program that helped shave off more than $1 billion in operating expenses during the period through measures such as a reduction in office locations.
A lower cost bill is crucial as AT&T needs a steady flow of cash to service its net debt of $132 billion and support a dividend that is among the highest for U.S stocks.
The company added 326,000 postpaid phone subscribers in the second quarter, in line with the low 300,000s prediction provided by finance chief Pascal Desroches at a conference in June. That figure was nearly 60% lower than a year earlier.
Growth in the highly competitive U.S. telecom market has slowed dramatically after the pandemic, forcing companies to offer cheaper plans to attract customers in an uncertain economy.
AT&T said revenue rose 0.9% to $29.9 billion, in line with estimates of $29.94 billion, according to Refinitiv data.
Excluding items, the company earned 63 cents per share, beating estimates of 60 cents.
(Reporting by Samrhitha Arunasalam in Bengaluru; Editing by Sriraj Kalluvila)
