By Samrhitha A and David Shepardson

AT&T investors will watch out on Wednesday for comments from top management on the telecom firm's financial and legal liability for the lead-clad cables it abandoned decades ago that may have contaminated soil and water sources across the United States.

The $100-billion company last week said lead-clad cables made up only a "small part of its network" as it sought to allay investor apprehensions.

Still, shares have yet to fully recover from a tumble to a three-decade low following a Wall Street Journal report that several U.S. telecom giants including Verizon have left behind a network of underground toxic lead cables.

Meanwhile, New York Governor Kathy Hochul has ordered an investigation into the health risks associated with old lead-clad cables.

In a memo to employees dated July 18 and reviewed by Reuters, AT&T boss John Stankey admitted that "speculation around the potential need to manage these cables differently has created uncertainty in the financial markets to the detriment of our company and our shareholders."

The company said last week it has "previously tested lead-clad cables and continue to believe that they pose no public health risk" and "are conducting additional testing ... including locations identified in The Journal's stories."

The costs for cleaning up the lead-clad cables could "range from near-zero to tens-of-billions of dollars in liability," analysts at TD Cowen said in a July 16 note.

"We very much expect a long-drawn-out process, self-auditing, and plenty of political squabbling with potential class action lawsuits and attorney general lawsuits."

At least six brokerages have downgraded the stock since the WSJ report, saying the uncertainty adds to other challenges such as a debt load of $137.5 billion at the end of March, dwindling cash flow and slowing revenue growth.

In the April-June quarter, AT&T's postpaid phone subscriber net additions could hit their lowest in three years after finance chief Pascal Desroches said at a conference in June that the company expected a number in the low 300,000s.

Competition from T-Mobile - which offers cheaper plans and is expected to post the biggest subscriber gain in the quarter - has squeezed AT&T and market leader Verizon.

"Investors are going to be laser focused on free cash flow and looking for signs that it is getting on that pace to hit the $16 billion (annual) number that management has out there," said Morningstar analyst Michael Hodel.

Free cash flow is expected to be between $3.5 billion and $4 billion in the second quarter, after falling short of estimates by more than $1.5 billion in the first.

Cash flow is key as it helps investors determine payouts as AT&T is one of the highest dividend paying U.S. stocks.

Revenue likely inched up 1% to $29.94 billion, according to data from Refinitiv, in what will be the first increase in eight quarters.

(Reporting by Samrhitha Arunasalam in Bengaluru and David Shepardson in Washington; Editing by Sriraj Kalluvila)