AT&T narrows its profit forecast, expects over $18bn in free cash flow in 2027

Investing.com -- AT&T (NYSE:T) shared its outlook for 2027 on Tuesday, projecting free cash flow (FCF) exceeding $18 billion as part of its three-year plan to expand 5G and fiber services across the US.

The company aims to double the reach of its fiber internet and strengthen its 5G capabilities, with plans to offer bundled deals combining high-speed fiber and wireless phone services.

By 2029, AT&T anticipates its fiber network will cover over 50 million locations, up from the 28.3 million potential customer locations it currently passes.

“Over the last four years, we’ve achieved durable and profitable subscriber growth, generated attractive returns on network investment, and strengthened our balance sheet,” said John Stankey, AT&T CEO.

“We’re putting customers first to become the best connectivity provider in America. Our plan expands the country’s largest fiber network to more than 50 million total locations, modernizes our wireless network and rewards our shareholders.”

AT&T also announced plans to return more than $40 billion to shareholders through dividends and share buybacks over the next three years. The company expects its annual capital expenditures to remain steady at about $22 billion during this period.

For 2024, AT&T raised its lower adjusted earnings per share guidance to a range of $2.20 to $2.25, aligning closely with analysts’ consensus of $2.21 per share, according to LSEG data.

The telecom company’s shares initially declined in premarket trading on Tuesday but later recovered, rising nearly 1%.

Its growth outlook for 2025 through 2027 does not include its 70% stake in DirecTV, which is being sold for $7.6 billion in a deal expected to close by mid-2025. During this period, AT&T forecasts annual service revenue growth in the low-single-digit range.

In comparison, competitor T-Mobile US Inc (NASDAQ:TMUS) recently projected adjusted free cash flow of $18 billion to $19 billion for 2027.