A startling 44.44% of all companies in the telecommunications sector missed on earnings during the second quarter of 2022, according to Benzinga's exclusive earnings data.
50% of Cable & Other Pay Television Services companies beat, while 50% missed analyst consensus estimates.
57.14% of Telecommunications Equipment companies beat, and 42.86% missed estimates.
The sector is being negatively impacted by rampant inflation, which is changing consumer habits and, in some circumstances, impacting big telecom companies' free cash flow.
AT&T Inc (NYSE: T) chief John Stankley told CNBC in July that customers are paying their bills about two days later than they normally would. While this is not atypical in the current stage of the economic cycle, it affected about $1 billion of the company’s quarterly free cash flow.
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“There’s clearly some dynamics in the economy. We have customers that are stretching out their payments a little bit,” Stankey said. “We expect that they’re going to continue to pay their bills, but they’re taking longer to do it.”
Numerous telecom companies are cutting their forecasts as they cope with unusually high inflation and supply chain issues.
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Verizon Communications Inc. (NYSE: NYSE:VZ) experienced a difficult second quarter, suffering from rife inflation. The company's wireless unit attracted only 12,000 new customers during the second quarter of 2022, far short of the expected 167,000 net subscriber additions.
“The inflationary environment is clearly impacting consumer behavior, and we also saw intensified competition for consumer attention,” Verizon CEO Hans Vestberg said.
Verizon CFO Matt Ellis added, “Regarding inflation, we are seeing the pressures within our cost structure, most notably on labor costs, utilities, and transportation and logistics expenses. We expect these pressures to accelerate in the second half of the year and have an impact on profitability and earnings.”
Here are some of the earnings reported so far in the telecommunication sector:
AT&T: Beat
EPS Est. $0.61
EPS: $.065
T-Mobile Us Inc (NASDAQ: TMUS): Beat
EPS est: $0.28
EPS: $0.43
Extreme Networks, Inc (NASDAQ: EXTR): Beat
EPS est: $0.14
EPS: $0.15
ATN International Inc (NASDAQ: ATNI): Miss
EPS est: $-0.02
EPS: $-0.11
Comcast Corporation (NASDAQ: NASDAQ:CMCSA): Beat
EPS est: $0.92
EPS: $1.01
Roku Inc (NASDAQ: ROKU)
EPS est: $-0.68
EPS: $-0.82
Liberty Global (NASDAQ:LBTYA) PLC Class A (NASDAQ: LBTYA): Beat
EPS est: $0.01
ESP: $1.67
Charter Communications Inc (NASDAQ: NASDAQ:CHTR): Beat
EPS est: $6.84
EPS: $8.80
DZS Inc (NASDAQ: DZSI): Miss
EPS est: $0.07
EPS: $-0.02
Consolidated Communications Holdings Inc (NASDAQ: CNSL): Beat
EPS est: $-0.02
EPS: $0.01
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