Key Takeaways:
- AT&T continues to execute its sustainable long-term growth strategy. The company remains on track to generate full-year free cash flow of about $16.5 billion, grow adjusted EBITDA by 4%-plus and achieve an adjusted EPS at the higher end of the previously shared $2.35-to-$2.45 range or in the low $2.40’s range. It also remains on track to achieving its goal of 2.5x net-debt to adjusted EBITDA in the first half of 2025.
- As one of the largest investors in the United States, the company remains focused on building vital digital infrastructure for both mobile and fiber networks. To support these efforts, the company expects 2024 capital investment in the $21-22 billion range. The company also continues to expect to pass 30 million-plus consumer and business fiber locations by the end of 2025. Based on returns from fiber coming in better than initial assumptions, AT&T sees an opportunity to potentially pass an incremental 10 to 15 million consumer and business fiber locations within its existing footprint – assuming similar build parameters and a regulatory environment that remains attractive to building infrastructure.
- AT&T expects to deliver continued profitable 5G and fiber customers in the fourth quarter. Fourth quarter postpaid phone net adds are expected to grow sequentially and tracking to around 500,000. The company also expects fiber net adds in the 250,000 range for the fourth quarter which is reflective of normal seasonality.
Pascal Desroches, chief financial officer, AT&T* (NYSE:T) Inc., spoke today at the Oppenheimer 4th Annual 5G Summit where he provided an update to shareholders. Desroches made the following key points:
The company’s focus on leading in connectivity is working and it remains on track for 2023 full-year free cash flow of about $16.5 billion.
- The company remains confident in its ability to deliver free cash flow of about $16.5 billion this year, and expects free cash flow to improve in 2024 thanks to continued, profitable wireless and fiber customer additions, adjusted EBITDA growth, and lower capital investment in the $21-22 billion-dollar range. These benefits are expected to be partially offset by lower DIRECTV contributions and higher cash taxes in 2024. In line with its strategy to appropriately manage total liabilities, the company also continues to focus on reducing net debt and its short-term financing obligations.
- Desroches reiterated that AT&T remains on track to reduce net debt and to achieve a leverage target of 2.5x net-debt to adjusted EBITDA in the first half of 2025. Additionally, AT&T remains in a strong position to pay for the next two years of debt maturity towers as they come due with cash on hand, given 95% plus of its debt is fixed at an average rate of 4.2% with a weighted average maturity of 16 years.
- The company expects 2024 adjusted EPS to reflect impacts of accelerated depreciation resulting from the company’s recently announced plans to lead the United States in commercial scale Open Radio Access Network deployment, in collaboration with Ericsson.
AT&T remains focused on growing durable relationships with high-quality 5G & fiber customers.
- Desroches highlighted that AT&T is uniquely positioned to take advantage of its owned and operated scaled wireless and fiber networks. Unlike others in the industry, the company realizes economic benefit from both wireless and fiber when it adds converged subscribers.
- Desroches shared that connectivity demand remains healthy. Accordingly, fourth quarter postpaid phone net adds are expected to grow sequentially and tracking to around 500,000. The company also expects fiber net adds in the 250,000 range for the fourth quarter which is reflective of normal seasonality.
- AT&T’s connectivity toolkit includes multiple technologies, including 5G, fiber and the company’s fixed wireless access (FWA) product – AT&T Internet Air – which is now available in parts of 34 locations. The company remains measured in where and how it offers AT&T Internet Air, and as a result, it expects FWA subscriber growth to vary from quarter to quarter.
The webcast of Desroches’ conversation is available for replay at AT&T Investor Relations.
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