AT&T Inc. is projecting further growth in free cash flow for the upcoming year, fueled by the expansion of its wireless and fiber businesses.
In 2023, the telecom company reported a remarkable $16.8 billion in free cash flow, surpassing its previously increased forecast of approximately $16.5 billion. Looking ahead to 2024, AT&T models predict a range of $17 billion to $18 billion on this metric, exceeding analysts’ expectations of $17.35 billion.
Free cash flow is a crucial indicator for AT&T investors since it supports the company’s dividend, which has a notable yield of 6.5%. Achieving last year’s target was not guaranteed, as AT&T faced initial challenges in 2023 and had previously disappointed investors with cuts to its free cash flow goals.
Furthermore, AT&T highlights that the 2024 free cash flow target is more than double its current annualized dividend obligations.
For the upcoming year, AT&T anticipates the growth of mobility wireless-service revenue to fall within the 3% range, while consumer-broadband revenue is expected to increase by around 7%. The FactSet consensus also predicts around 3% growth in mobility wireless-service revenue.
Despite these positive projections, shares dipped by 3% during premarket trading on Wednesday.
Key Takeaways:
- AT&T expects further improvements to free cash flow in the year ahead.
- The telecom company reported $16.8 billion in free cash flow for last year.
- In 2024, AT&T projects a range of $17 billion to $18 billion in free cash flow.
- Free cash flow supports AT&T’s dividend yield of 6.5%.
- Mobility wireless-service and consumer-broadband revenues are expected to grow in 2024.
- Shares were down 3% in premarket trading.
Company Outlook
The company’s outlook on adjusted earnings per share is projected to be between $2.15 and $2.25, taking into account around 24 cents of headwinds from non-cash items. This target reflects the additional depreciation costs associated with the recent deal with Ericsson.
Strong Performance
In the latest quarter, the company witnessed impressive results, including 526,000 quarterly postpaid phone net additions, surpassing the FactSet consensus of 480,000. Additionally, there were 273,000 net fiber additions, exceeding the analysts’ projected figure of 258,000.
Positive Trend continued
Verizon Communications Inc. also experienced an increase in consumer postpaid phone additions, as reported in its earnings report.
Financial Results
During the fourth quarter, AT&T achieved earnings per share of 30 cents, improving significantly from a loss of $3.20 recorded in the same period the previous year. However, the adjusted EPS stood at 54 cents, lower than both the 61 cents reported in the year-earlier period and the FactSet consensus of 56 cents.
Revenue Increase
The company’s revenue for the quarter saw a slight increase from $31.3 billion to $32.0 billion, surpassing analysts’ expectations of $31.5 billion.