What happened 

Shares of AT&T (T -0.89%) fell 7.6% on Thursday after the telecom giant slashed its full-year cash flow forecast.  

So what

AT&T added a better-than-expected 813,000 net postpaid phone customers in the second quarter. These people pay monthly bills and are generally the most sought-after accounts for wireless companies. AT&T also added 196,000 prepaid phone customers.

AT&T's broadband internet business was another bright spot. AT&T Fiber gained 316,000 net subscribers during the quarter.

"We're expanding our customer base at an accelerated pace across our twin engines of growth -- 5G and fiber," CEO John Stankey said in a press release. "We're rapidly building out our best-in-class networks on the heels of record-level connectivity investment."

In turn, AT&T's revenue -- adjusted to exclude recently divested businesses such as WarnerMedia -- increased 2.2% to $29.6 billion.

However, AT&T's free cash flow from continuing operations fell to $1.4 billion from $5.2 billion in the prior-year period. The company said the shortfall was due to multiple factors, including higher growth investments, customers taking longer to pay their bills, and costs related to its higher-than-expected subscriber gains. 

Now what 

These trends prompted AT&T to cut its full-year free cash flow projection from $16 billion to $14 billion. Still, Stankey said the expected decline won't impact the company's plans to return cash to shareholders. He added:

Our results the last eight quarters demonstrate that our deliberate strategy of focusing on growth is helping us gain valuable customer relationships, and we're confident in our ability to maintain this momentum while also continuing to reduce debt and deliver an attractive dividend.