AT&T Eyes Significant Growth with 5G and Fiber Expansion
The telecommunications giant, AT&T, is poised for substantial earnings growth over the next three years, driven by the momentum of its 5G and fiber services. This optimistic outlook is expected to support a whopping $40 billion in shareholder returns through dividends and stock buybacks.
A Strong Track Record
According to AT&T CEO John Stankey, the company has achieved significant milestones over the past four years, including durable and profitable subscriber growth, attractive returns on network investment, and a strengthened balance sheet. This confidence in its performance was reflected in a 3% surge in AT&T’s shares before the market open.
Fiber Broadband Expansion
AT&T is committed to expanding its fiber broadband network to over 50 million locations by the end of 2029. Concurrently, the company is actively working to exit its legacy copper network operations across the majority of its wireline footprint by the same year.
5G Wireless Network Modernization
By 2027, AT&T expects to have largely completed the modernization of its 5G wireless network using open technology. This will enable deep mid-band 5G spectrum coverage for over 300 million people by the end of 2026, supporting super-fast download speeds and paving the way for new product and GenAI innovation.
Earnings Outlook
AT&T has revised its 2024 adjusted earnings outlook to a range of $2.20 to $2.25 per share, exceeding analysts’ expectations of $2.21 per share. For 2025, the company anticipates adjusted earnings of $1.97 to $2.07 per share, excluding DirecTV. Moreover, AT&T forecasts double-digit percentage growth in adjusted earnings per share in 2027.
Free Cash Flow Projections
The company expects free cash flow to total more than $16 billion next year, excluding DirecTV. This is projected to grow by approximately $1 billion annually, resulting in free cash flow of over $18 billion in 2027.
DirecTV Stake Sale
AT&T is in the process of selling its remaining 70% stake in DirecTV to private equity firm TPG for about $7.6 billion, expected to close next year. This follows the sale of a 30% stake in DirecTV to TPG in 2021 for $16.25 billion.
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