AT&T earnings bring subscriber beats, and a key part of outlook may have upside
AT&T Inc. expects to see further improvements to free cash flow in the year ahead as its wireless and fiber businesses continue to grow.
The telecom company on Wednesday reported $16.8 billion in free cash flow for last year, above its prior increased forecast of roughly $16.5 billion. Looking at 2024, AT&T
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models $17 billion to $18 billion on the metric, whereas analysts were expecting $17.35 billion.
Free cash flow is a key metric to AT&T investors given that it supports the company’s dividend, which yields 6.5%. AT&T’s ability to hit last year’s target on the metric wasn’t always a given, as the stock started out slow in 2023 and AT&T had burned investors in the past with cuts to its free-cash-flow goals.
The company noted that the free-cash-flow target for 2024 is more than two times its current annualized dividend obligations.
AT&T expects growth in mobility wireless-service revenue for 2024 to fall “in the 3% range,” while it anticipates that consumer-broadband revenue will increase by roughly 7%. The FactSet consensus called for about 3% growth in mobility wireless-service revenue.
Shares were down 3% in premarket trading Wednesday.
The company’s outlook on adjusted earnings per share calls for $2.15 to $2.25, a target that factors in about 24 cents of headwinds from non-cash items. AT&T previously disclosed that it expected to see some incremental depreciation costs related to equipment for a recently announced deal with Ericsson.
The company saw 526,000 quarterly postpaid phone net additions in the latest quarter, above the 480,000 FactSet consensus, along with 273,000 net fiber additions, above the 258,000 that analysts were modeling.
Verizon Communications Inc.
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also posted upside to its consumer postpaid phone additions in its own earnings report a day earlier.
For the fourth quarter, AT&T logged earnings per share of 30 cents, whereas it had lost $3.20 on the metric a year prior. Adjusted EPS came in at 54 cents, below the 61 cents that AT&T posted in the year-earlier period and also below the 56-cent FactSet consensus.
Revenue for the quarter inched up to $32.0 billion from $31.3 billion, while analysts were looking for $31.5 billion.