(Bloomberg) — AT&T Inc. forecast sustainable earnings growth over the next three years, including double-digit gains by 2027, a result of its investments in mobile phone and fiber networks.
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Earnings in 2025 will be $1.97 to $2.07 per share, excluding some items, Dallas-based AT&T said in a statement ahead of a Tuesday meeting with Wall Street analysts at its namesake football stadium. Two years later, the company sees profits “accelerating to double-digit percentage growth.”
The new forecast excludes AT&T’s ownership of DirecTV, the pay-TV service. The company expects to complete the sale of DirecTV in the first half of 2025 and finally return to its roots as a telecom provider after years of restructuring and a focus on reducing debt.
The faster earnings growth will allow AT&T to deliver more money to shareholders. In addition to maintaining its annual cash dividend of $1.11 per share, AT&T is authorizing a $20 billion share buyback, expected to be completed by the end of 2027. In total, the company plans to return more than $40 billion to shareholders through dividends and share repurchases. during the three years.
Management led by Chief Executive Officer John Stankey also expects to achieve its goal of reducing net debt to 2.5 times adjusted earnings in the first half of 2025, a ratio the company plans to maintain through 2027.
AT&T has changed since Stankey took over in 2020, when the company was struggling with debt from media acquisitions and under pressure to expand its wireless services and broadband capabilities. Since then, Stankey has moved to pare down AT&T’s media business, spinning off its Warner Bros. unit in 2022 and divesting its stake in DirecTV earlier this year. These moves allowed management to focus on being a 5G wireless and fiber connectivity company and strengthen AT&T’s balance sheet.
“With this bold strategy, we are entering a new era of sustainable growth at AT&T,” Stankey said in a statement.
AT&T shares rose 3.5% in premarket trading in New York. They’re up 35% this year, on track for their best annual gain since a 37% gain in 2019.
Capital expenditure will reach $22 billion annually over the next three years, with the company aiming to reach more than 50 million locations with its fiber service by 2029. As of last quarter, AT&T had expanded fiber to more than 28 million locations. Free cash flow will total $16 billion by 2025, and increase by $1 billion per year over the next two years.
