AT&T (T) has set an ambitious target for its free cash flow, expecting it to exceed $18 billion by 2027. The company laid out a strategic vision that focuses on expanding its 5G and fiber services across the U.S., aiming to double its fiber internet availability. This expansion is not just about infrastructure; it’s about meeting the increasing demand for high-speed internet, aligning with industry trends that see fiber and 5G as pivotal for future connectivity.
The company’s strategy includes offering bundled discounts on both high-speed fiber data and wireless phone services, which has already shown positive outcomes with significant customer gains. AT&T’s unlimited plans, with added benefits like increased hotspot data, have been particularly successful, driving higher-than-expected wireless subscriber growth in the third quarter.
Looking ahead, AT&T plans to extend its fiber network to more than 50 million locations by 2029, having already achieved 28.3 million fiber passings. This move is part of a broader initiative to enhance its service offerings and maintain competitive edge in a rapidly evolving market.
Financially, AT&T is not only focusing on growth but also on rewarding its shareholders, planning to return over $40 billion through dividends and share repurchases over the next three years. The company expects to keep its annual capital investment steady at around $22 billion during this period. AT&T has also revised its 2024 earnings forecast, increasing the lower end of the range to between $2.20 and $2.25 per share. This adjustment reflects both an upward revision from the previously projected $2.15 to $2.25 range and growing confidence in the company’s financial strategy.
The growth projections for 2025-2027 exclude AT&T’s 70% stake in DirecTV, which is set to be sold to TPG for $7.6 billion, with the deal expected to close by mid-2025. This divestiture allows AT&T to streamline its focus on core telecommunications services.
In terms of revenue, AT&T forecasts low-single-digit annual service revenue growth from 2025 to 2027, which indicates a steady but cautious approach to expansion. This outlook comes at a time when competitors like T-Mobile (TMUS) are also setting high expectations for their cash flows, with T-Mobile predicting between $18 billion and $19 billion in adjusted free cash flow by 2027. This forecast was announced during T-Mobile’s Capital Markets Day event, where the company projected a robust compound annual growth rate (CAGR) of approximately 8% for its free cash flow metric from 2023 to 2027.
AT&T’s strategy, therefore, seems to be a blend of aggressive expansion in key technology areas while maintaining financial discipline to ensure shareholder returns. This balanced approach could position AT&T well in the competitive landscape of telecommunications, where both service quality and financial health are critical for long-term success.
Price Action: AT&T shares are currently trading at $23.37 in pre-market, reflecting a 3% increase from the previous close. Today’s trading range remains within the 52-week low of $15.94 and the 52-week high of $23.38. The stock has experienced significant growth year-to-date, up more than 35%, and year-over-year, increasing 32%.
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