AT&T's Future Cash Flow and Business Strategy

By Harshita Mary Varghese
(Reuters) – AT&T expects its free cash flow to exceed $18 billion in 2027 as it unveiled a three-year plan to expand its 5G and fiber services across the United States.

Shares of AT&T rose 4.3%, reaching their highest point in over three years.

The wireless carrier intends to double its fiber internet availability and enhance its 5G network. This includes bundled discounts for customers on high-speed fiber data and wireless services.

Based in Dallas, Texas, AT&T's initiatives align with industry trends favoring high-speed internet, resulting in significant customer acquisitions.

The company anticipates reaching over 50 million locations with fiber by 2029, up from the 28.3 million fiber passings it previously reported.

AT&T's unlimited plans, which feature perks such as increased hotspot data, have led to higher-than-expected growth in wireless subscribers during the third quarter.

AT&T (NYSE:T) is also planning to return more than $40 billion to shareholders over the next three years through dividends and share repurchases. Its annual capital investment is expected to remain around $22 billion.

New Street Research analyst Jonathan Chaplin commented that AT&T's outlook and strategy indicate a commitment to its new direction, possibly at a faster pace than previously anticipated.

The company has raised its lower end of the 2024 adjusted earnings per share forecast to between $2.20 and $2.25, slightly above analysts' estimate of $2.21 per share, according to data from LSEG.

AT&T shared its growth expectations for the period between 2025 to 2027 while excluding its 70% stake in DirecTV, which is being sold to TPG for $7.6 billion, with the deal expected to close by mid-2025.

In September, rival T-Mobile projected adjusted free cash flow between $18 billion and $19 billion in 2027. From 2025 to 2027, AT&T forecasts annual service revenue growth in the low-single-digit range.