(Bloomberg) -- AT&T Inc. shares slid after the telecommunications giant projected 2024 earnings that fell far below analysts’ estimates.

The company said Wednesday it expects adjusted earnings per share of as much as $2.25 this year, missing Wall Street’s expectations of $2.44. That’s despite the No. 3 US wireless provider posting a larger-than-expected gain of mobile-phone subscribers in the fourth quarter.

The shares fall as much as 4.3% to $16.46 before paring losses on Wednesday morning. The carrier is dealing with a heavy debt load and the potentially high costs of cleaning lead out of its old copper phone network.

Under Chief Executive Officer John Stankey, AT&T has embarked on a ruthless cost-cutting campaign as it turns away from what was widely seen as overspending on initiatives like media and television, and slow investment into 5G and home internet. The company slashed employment, closed offices, and has sought to offload assets it adopted during years of acquisitions.

Fourth-quarter adjusted earnings totaled 54 cents a share, the company said, lower than the 56-cent average of analysts’ estimates. Revenue rose 2.2% from the year prior to $32 billion, narrowly beating expectations of $31.5 billion. 

Increased costs for the coming year include accelerated depreciation of gear from Nokia Oyj as AT&T transitions to an open network buildout by Ericsson AB, Chief Financial Officer Pascal Desroches said on a call with analysts. Those costs are expected to continue until 2026, he said.

Read More: AT&T’s $14 Billion Ericsson Deal Heralds Open Phone Networks

The mixed results suggest AT&T may be grappling with persistent capital challenges even as it more quickly gains mobile and broadband customers. The subscriber gains, in part buoyed by holiday sales and generous promotions for Apple Inc.’s iPhone 15, follow a year of declining growth in wireless users.

The company added 526,000 mobile-phone subscribers in the fourth quarter, beating the 490,500 average estimate of analysts. About 273,000 new customers signed up for AT&T’s fast fiber service, compared with expectations of 259,500. 

“AT&T 4Q results met or exceeded estimates on most key metrics, but its 2024 outlook for wireless service growth of 3% is below consensus of 3.4% and suggests a possible slowdown this year,” Bloomberg Intelligence analysts led by John Butler said in a note. Average revenue per user also missed, “implying further gains in pricing may be difficult to achieve as subscriber growth slows,” he said.

The Dallas-based company had fallen behind peers T-Mobile US Inc. and Verizon Communications Inc. on the development and rollout of 5G and next-generation networks. AT&T spent $23.6 billion on investments including 5G and fiber broadband infrastructure in 2023 as it attempted to catch up to its rivals.

On Tuesday, Verizon said it had added more retail mobile customers in the fourth quarter than it has in any period since 2021. T-Mobile is set to report its results Thursday.

“No major carrier is losing customers, but the market overall continues to grow at a solid pace,” Morningstar Inc. analyst Michael Hodel said in an email. “I think there is some question about how sustainable the current level of industrywide growth is, but consumer demand remains healthy.”

In August, AT&T announced a wireless home internet service it calls Internet Air, a competitive offering in an area where mobile carriers are putting expensive, high-capacity 5G networks to use.

The company finished 2023 with $16.8 billion in free cash flow, above its previous guidance of $16.5 billion. It said it expects free cash flow for 2024 to be in the range of $17 billion to $18 billion.

(Updates shares in third paragraph, adds CFO and analyst comments from fifth paragraph. An earlier version corrected revenue growth percentage.)

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