AT&T targets billions in free cash flow and relies on 5G expansion

AT&T has unveiled ambitious plans for the coming years. By 2027, the company expects a free cash flow of more than 18 billion US dollars. A central component of this strategy is the strengthening of 5G and fiber optic services in the USA. This announcement caused the telecommunications giant's shares to rise by over 4%, reaching their highest level since May 2021. The mobile service provider plans to double the availability of its fiber internet and expand its 5G network. Customers can look forward to bundle discounts for high-speed fiber and mobile services. These measures align with the industry trend towards fast internet and have already led to a remarkable increase in customer numbers. In the next three years, AT&T intends to return over 40 billion US dollars to shareholders through dividends and share buybacks. Meanwhile, annual investments in infrastructure are expected to remain around 22 billion US dollars. CEO John Stankey emphasized that the company's focus is on building the largest and most capacity-rich converged broadband network in the USA, with the lowest marginal costs. Aiming to provide fiber to more than 50 million locations by 2029, AT&T has already reached over 28 million potential customers. The company's unlimited plans, enriched with additional features such as increased hotspot data volume, are driving wireless subscriber growth stronger than expected. Jonathan Chaplin, an analyst at New Street Research, sees AT&T's forecast and strategy as a continuation of the course set, with a faster pace than anticipated. The lower end of the adjusted earnings per share forecast for 2024 has been raised, exceeding some analysts' expectations. Excluded from the growth forecasts up to 2027 is the sale of 70% of DirecTV shares to TPG for 7.6 billion US dollars, which is expected to be completed by mid-2025. AT&T reported a free cash flow of 16.77 billion US dollars for the fiscal year 2023 and is working towards exiting the outdated copper network operations in most of its wireline service areas by 2029.