Ahead of its 2024 Analyst & Investor Day presentation, AT&T Inc. (NYSE: T) unveiled a bold, multi-year strategic plan highlighted by continued profitable 5G and fiber subscriber growth. This growth is expected to fuel enhanced shareholder returns on network investments through a robust and balanced capital allocation program.
“Over the last four years, we’ve achieved durable and profitable subscriber growth, generated attractive returns on network investment, and strengthened our balance sheet,” said John Stankey, AT&T CEO. “We’re putting customers first to become the best connectivity provider in America. Our plan expands the country’s largest fiber network to more than 50 million total locations, modernizes our wireless network and rewards our shareholders. As we grow, we expect to return more than $40 billion to shareholders over the next three years through dividends and share repurchases. With this bold strategy, we are entering a new era of sustained growth at AT&T.”
Momentum to Continue with Investment-Led Strategy and Customer-Centric Approach
AT&T is making progress on its journey to become the best connectivity provider in America. Over the past four-plus years, the Company has streamlined its operations and centered its business around the customer as it enhanced and simplified their experiences with AT&T. The Company has also greatly expanded its 5G and fiber services to more people and places and is the largest capital investor in U.S. connectivity infrastructure since 2019.
With the plans announced today, the Company will unlock new capabilities that further its momentum while investing in future growth – ultimately enabling more robust shareholder returns. As a result of continued investment, the Company expects to be in a differentiated position within the connectivity industry by the end of the decade.
In Mobility, the Company is building a more efficient, high-capacity, programmable and open network. By 2027, it expects to have largely completed the modernization of its 5G wireless network with open technology, with deep mid-band 5G spectrum covering 300 million+ people by the end of 2026. This network will support super-fast download speeds and serve as a platform for new product and GenAI innovation.
In broadband, the Company is creating even more distance between itself and the competition on what is already the largest fiber broadband network in America. By the end of 2029, it expects to reach 50 million+ total locations with fiber. This includes expectations to pass about 45 million locations through its organic fiber deployment and serve 5 million+ fiber locations through Gigapower, its joint venture with Blackrock, as well as through agreements with commercial open-access providers.
The Company’s fiber expansion will greatly increase its opportunity to serve customers how they want to be served, by one provider in a converged manner. While building the network of the future, the Company is actively working to exit its legacy copper network operations across the large majority of its wireline footprint by the end of 2029.
The Company believes sustaining industry-leading levels of network investment and pursuing these strategic objectives will ultimately allow it to offer the best value, greater personalization and security and more customer-centric products and services on the largest, highest-capacity, lowest-marginal cost network in America.
Long-Term Outlook
AT&T expects to achieve the following 2025 and long-term financial targets through 2027. Beginning in the first quarter of 2025, and as a result of the pending disposition of our DIRECTV equity method investment, the Company plans to report adjusted EPS and free cash flow excluding earnings and cash flows related to DIRECTV. The Company continues to expect the sale of its entire 70% stake in DIRECTV to TPG to close in mid-2025. For comparability to these targets, the Company has provided a recast of historical results for these two financial measures in its Form 8-K dated December 3, 2024.
Consolidated service revenue growth in the low-single-digit range annually from 2025-2027.
Mobility service revenue growth in the 2% to 3% range annually.
Consumer fiber broadband revenue growth in the mid-teens annually.
Adjusted EBITDA* growth of 3% or better annually from 2025-2027.
Mobility EBITDA* growth in the 3% to 4% range annually.
Consumer Wireline EBITDA* grows at a double-digit compounded annual growth rate (CAGR) through 2027.
Business Wireline EBITDA* declines at a low-double-digit CAGR through 2027; Business Solutions EBITDA* approaching stabilization by the end of 2027.
Capital investment* in the $22 billion range annually from 2025-2027.
Free cash flow*, excluding DIRECTV, of $16 billion+ in 2025, with annual growth of approximately $1 billion, resulting in free cash flow* of $18 billion+ in 2027.
In addition, AT&T expects to receive $5.4 billion of after-tax cash payments in 2025 and $0.5 billion in 2029 related to the sale of the DIRECTV investment.
Adjusted EPS*, excluding DIRECTV, of $1.97 to $2.07 in 2025, accelerating to double-digit percentage growth in 2027.
$3 billion+ in run-rate cost savings by the end of 2027, inclusive of the Company’s target of achieving $2 billion+ in run-rate cost savings by mid-2026.
Long-Term Capital Allocation Plan: $50 Billion+ of Financial Capacity Supports $40 Billion+ of Dividends and Share Repurchases
AT&T expects this plan to provide $50 billion+ of financial capacity* over the next three years, largely through organic growth. Financial capacity represents anticipated free cash flow after distributions to noncontrolling interests, plus expected cash payments from the announced agreement to sell AT&T’s stake in DIRECTV to TPG, as well as net borrowing capacity after the Company achieves its net leverage target. The Company continues to expect to achieve its net leverage target of net-debt-to-adjusted EBITDA* in the 2.5x range in the first half of 2025, and maintain leverage within this range through 2027.
The Company expects to return $40 billion+ of this financial capacity to shareholders through dividends and share repurchases. Under this capital return plan, the Company expects to maintain its current annualized common stock dividend of $1.11 per share. This plan would result in $20 billion+ in total dividend payments, with capacity for about $20 billion in share repurchases, from 2025-2027.
Under this plan, the Company also expects approximately $10 billion in incremental financial flexibility* for items such as potential organic or inorganic strategic growth investments, debt repayment, redemptions of noncontrolling interests, or additional dividends or share repurchases.
Of the $20 billion share repurchase capacity, AT&T’s Board has authorized an initial tranche of approximately $10 billion in common stock repurchases. Management expects share repurchases under this authorization to commence when the Company reaches its net leverage target range and expects to conclude by the end of 2026. Additionally, the Company expects approximately $10 billion of share repurchases in 2027, pending Board authorization.
2024 Outlook
For the full-year, AT&T expects:
Wireless service revenue growth in the 3% range.
Broadband revenue growth of 7%+.
Adjusted EBITDA* growth in the 3% range.
Capital investment* at the high-end of the $21 to $22 billion range.
Free cash flow* in the $17 to $18 billion range, tracking toward the midpoint of this range; excluding approximately $2.5 billion of after-tax cash payments from DIRECTV, free cash flow in the $15 billion range.
Adjusted EPS* of $2.20 to $2.25, reflecting an increase from the previously provided $2.15 to $2.25 range. This includes an expected adjusted equity in net income from DIRECTV of approximately $0.30 per share post-tax. When excluding this, the Company expects adjusted EPS in the $1.90 to $1.95 range.
Tune Into AT&T’s Analyst & Investor Day Presentation
The Company will provide more details around its strategy and plans to drive strong returns to shareholders today at 2 p.m. ET. AT&T’s 2024 Analyst & Investor Day presentation webcast, replay and related materials will be available at investors.att.com.
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Source: https://about.att.com/story/2024/analyst-and-investor-day-2024.html