AT&T is optimistic about its earnings growth trajectory over the next three years, primarily fueled by the ongoing advancements in 5G and fiber services.
The telecommunications giant revealed on Tuesday that it foresees a robust financial performance that could facilitate over $40 billion in shareholder returns, primarily through dividends and stock buybacks, during this period. This initiative includes an initial commitment to a $10 billion stock repurchase program, which is projected to be finalized by the end of 2026.
In a statement, AT&T’s CEO John Stankey highlighted the company’s progress over the past four years, noting consistent and profitable growth in subscriber numbers, commendable returns on their network investments, and an enhanced balance sheet.
Following this announcement, AT&T’s stock saw an approximate increase of 3% prior to market opening.
The company has ambitious plans to extend its fiber broadband network to over 50 million locations by the end of 2029, while simultaneously aiming to phase out its traditional copper network operations across most of its wireline presence by that deadline.
In terms of its 5G wireless network, AT&T aims to complete the modernization process utilizing open technology by 2027. The company anticipates that by the end of 2026, its expansive mid-band 5G spectrum will be available to over 300 million individuals, providing faster download speeds and serving as an infrastructure for innovative products and generative AI technology.
For 2024, AT&T now projects adjusted earnings to fall between $2.20 and $2.25 per share, improving upon its previous estimate of $2.15 to $2.25 per share.
Analysts surveyed by FactSet expect the company to achieve full-year earnings of approximately $2.21 per share.
Looking ahead to 2025, AT&T forecasts adjusted earnings ranging from $1.97 to $2.07 per share, excluding DirecTV, with expectations of double-digit percentage growth in earnings per share by 2027.
The company also anticipates free cash flow exceeding $16 billion next year, again excluding DirecTV, with predictions of annual increases around $1 billion, leading to free cash flow projections of over $18 billion by 2027.
In 2021, AT&T sold a 30% interest in DirecTV to private equity firm TPG for $16.25 billion and is currently moving forward to divest its remaining 70% stake in DirecTV to TPG for approximately $7.6 billion, with the transaction expected to wrap up next year.