As reported by CNBC, AT&T has set an ambitious target for its free cash flow, projecting it will exceed $18 billion by 2027. The announcement came on December 3rd as the telecommunications giant unveiled a comprehensive three-year plan aimed at expanding its 5G and fiber services across the United States, a move that significantly bolsters its competitive edge in the ever-evolving telecom landscape.
In response to the positive news, AT&T's shares surged by 4.3%, reaching their highest levels in over three years, reflecting strong investor confidence in the company's future direction.
The Dallas-based company is focused on doubling its fiber internet availability while simultaneously enhancing its 5G network infrastructure. This strategic initiative will enable AT&T to offer customers attractive bundled discounts on high-speed fiber data and wireless phone services, a noteworthy effort in enhancing customer value.
AT&T’s vision aligns closely with the current industry trends prioritizing high-speed internet connectivity, which have already begun to yield impressive customer acquisition results. The company aims to extend its fiber reach to over 50 million locations by 2029, a significant leap from its previous report of 28.3 million fiber passings—indicative of the number of locations where its fiber network is accessible.
The introduction of unlimited plans with features such as increased hotspot data has contributed to an unexpected surge in wireless subscriber growth during the third quarter. This development underscores AT&T's potential for capturing market share in a competitive landscape.
Furthermore, AT&T is committed to returning more than $40 billion to its shareholders over the next three years through dividends and share repurchases, signaling confidence in its financial health. The company anticipates maintaining an annual capital investment of approximately $22 billion during this period, emphasizing its commitment to growth.
Jonathan Chaplin, an analyst with New Street Research, remarked on AT&T’s forecast and strategic direction, suggesting that the company is “continuing its new course, and perhaps at a slightly faster clip than we anticipated.”
Additionally, AT&T has raised the lower end of its 2024 adjusted earnings per share forecast to between $2.20 and $2.25, a figure that slightly surpasses analysts’ consensus estimate of $2.21 per share, according to data compiled by LSEG.
In outlining its growth expectations for 2025 to 2027, the company notably excluded its 70% stake in DirecTV, which is in the process of being sold to TPG for $7.6 billion, with the transaction expected to finalize by mid-2025.
In contrast, competitor T-Mobile has projected an adjusted free cash flow between $18 billion and $19 billion for the same year, further intensifying the competitive landscape. From 2025 to 2027, AT&T forecasts annual service revenue growth limited to the low-single-digit range, indicating a cautious but steady approach to its financial outlook.
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