AT&T CEO, in a letter to shareholders, today reiterated the company’s confidence in achieving its 2025 financial guidance and long-term strategic objectives. The letter detailed AT&T’s progress towards becoming the premier connectivity provider in America, alongside plans for significant shareholder returns. With this, AT&T believes selling DIRECTV will help it reach its goals in 2025.
The company confirmed it is on track to meet all financial and operational targets outlined during its Q4 2024 earnings call and 2024 Analyst & Investor Day. Notably, future financial reporting will exclude DIRECTV, following the company’s agreement to sell its stake to TPG. With this AT&T expects to get $7.6 billion to AT&T through 2029 with cash starting in 2025.
Here is a summary of the letter to shareholders:
Financial Strength and Shareholder Returns:
AT&T anticipates generating over $50 billion in financial capacity over the next three years, driven by organic growth, proceeds from the DIRECTV sale, and strategic borrowing. A substantial portion of this, exceeding $40 billion, is earmarked for shareholder returns through dividends and share repurchases.
The company plans to maintain its current annualized dividend of $1.11 per share, resulting in over $20 billion in total dividend payments. An additional $20 billion is allocated for share repurchases, with the initial $10 billion tranche expected to commence upon achieving its net leverage target and concluding by the end of 2026. Another $10 billion in share repurchases is anticipated in 2027, subject to board approval.
Furthermore, AT&T has reserved approximately $10 billion for strategic flexibility, allowing for potential investments, debt reduction, or additional shareholder returns. The company remains committed to achieving its net leverage target of 2.5x net-debt-to-adjusted EBITDA in the first half of 2025 and maintaining this level through 2027.
Focus on Connectivity and Growth:
AT&T’s strategic plan centers on building durable, converged relationships with high-quality 5G and fiber customers. The company aims to differentiate itself in the connectivity industry by the end of the decade through its investment-led strategy.
In Mobility, AT&T maintains its forecast for full-year wireless service revenue growth in the higher end of the 2-3% range and Mobility EBITDA growth in the higher end of the 3-4% range. The company acknowledged the normalization of net adds and seasonal fluctuations in the wireless market, including the impact of device promotion cycles on January’s results. However, they expressed satisfaction with the customer response to recent offers and expect continued solid performance.
Consumer Wireline is projected to see strong growth, with fiber broadband revenue expected to increase in the mid-teens and Consumer Wireline EBITDA in the high-single to low-double-digit range. AT&T’s fiber penetration rates continue to exceed expectations.
Business Wireline is anticipated to experience EBITDA decline in the mid-teens range, primarily due to ongoing industry-wide declines in legacy services.
Looking Ahead:
AT&T’s CEO emphasized the company’s commitment to executing its strategic plan and delivering value to shareholders. The letter reinforces AT&T’s confidence in its financial outlook and its position as a leading connectivity provider.
Please follow us on Facebook and X for more news, tips, and reviews. Need cord cutting tech support? Join our Cord Cutting Tech Support Facebook Group for help. You can find Luke on X HERE.