Following the dour results, shares of AT&T were on track for their worst day in nine months after a 7% slump while Verizon Communications Inc and T-Mobile US Inc lost between 2% and 3%.
Like other sectors, telecom firms this year have felt the pinch from a slowdown in consumer spending, which has dampened their push for 5G adoption and more broadband connections.
AT&T Chief Executive John Stankey said lower-income consumers were making "the kind of decisions that people make when money is a little bit tighter."
"It's not an issue of them not wanting the service, they're just making a decision to stick with their earned handset a little bit longer and maybe pushing that discretionary decision to move up," he said on a post-earnings call.
In the first three months of the year, AT&T added 424,000 postpaid phone subscribers, almost in line with a Factset estimate of 422,800 additions. But the additions were the lowest marked in more than two years.
The metric is closely watched by Wall Street as postpaid customers pay a recurring monthly bill, making them valuable to the carriers.
"It was not all bad news, and some aspects of AT&T's operations came in above estimates, but it is the free cash flow figure that seems to have caused all the damage, given that it points to likely lower dividend payouts going forward," said Stuart Cole, head macro economist at Equiti Capital.
AT&T's free cash flow came in at $1 billion, compared with the $2.61 billion estimated by 18 analysts polled by Visible Alpha. The company's revenue of $30.1 billion also missed expectations.
Excluding items, AT&T earned 60 cents per share, above analysts' estimate of 59 cents apiece.