DALLAS - AT&T Inc. (NYSE:T) is poised to maintain its strategic growth plan, with a focus on customer-centric service and continued network investment. The telecom giant’s chief financial officer, Pascal Desroches, will elaborate on these strategies during a fireside chat at the Deutsche Bank Media, Internet & Telecom Conference tomorrow.
The company has confirmed its commitment to meeting the financial and operational guidance outlined in its Q4 2024 earnings call and 2024 Analyst & Investor Day. This includes achieving a net leverage target of net-debt-to-adjusted EBITDA in the 2.5x range in the first half of 2025 and maintaining this leverage through 2027.
AT&T expects a robust free cash flow for Q1 2025, projecting approximately $2.8 billion or higher. This figure is consistent with or surpasses the free cash flow from the same quarter in 2024, after adjusting for the exclusion of DIRECTV. Similarly, the expected adjusted EPS for Q1 is approximately $0.48 or higher, aligning with or exceeding the previous year’s results, excluding DIRECTV.
The company is also on track to receive significant cash proceeds from its divestitures. In the first quarter of 2025, AT&T anticipates cash payments between $1.4 to $1.5 billion from DIRECTV as part of the agreement to sell its 70% stake to TPG, with the sale expected to close by mid-2025. Additionally, it has already received over $850 million from the sale-leaseback of real estate to Reign Capital.
These transactions, however, are not included in the company’s free cash flow calculations. AT&T’s full-year adjusted EPS is projected to be between $1.97 to $2.07, and the company remains on track to achieve its 2025 consolidated financial guidance.
Investors interested in more details can find a replay of the webcast and further conference information on the AT&T Investor Relations website. This news article is based on a press release statement from AT&T.
In other recent news, AT&T has been in the spotlight with several key developments. S&P Global Ratings revised its outlook on AT&T to positive from stable, citing solid earnings growth and improved credit metrics. The company has been successful in reducing its leverage and improving free operating cash flow since acquiring spectrum licenses. This positive outlook reflects S&P’s expectation of continued earnings growth and leverage reduction. Additionally, AT&T’s strategic growth plan aims to generate over $50 billion in financial capacity over the next three years, with a significant portion allocated to shareholder returns through dividends and share repurchases.
Meanwhile, KeyBanc Capital Markets maintained its Sector Weight rating on AT&T, highlighting the company’s strategic initiatives like expanding its Fiber network and decommissioning Copper infrastructure. Despite a favorable outlook on AT&T’s growth prospects, KeyBanc expressed concerns over potential capital demands and increased competition in the wireless sector. Separately, the FCC’s decision to allow Starlink, a SpaceX subsidiary, to operate direct-to-cell service with T-Mobile at increased power levels faced opposition from AT&T, citing potential interference concerns.
AT&T’s CEO recently discussed customer growth and revenue expectations at a conference, noting January’s typically lower net additions but expressing optimism about ARPU improvements. The company’s focus on enhancing connectivity services and maintaining financial flexibility for strategic investments remains a priority. Investors will be closely monitoring AT&T’s financial reports and operational updates to assess the effectiveness of its growth strategies.
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