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Can AT&T Stock Ride on Strategic Plan to Drive Sustainable Growth?
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In a concerted effort to become the best connectivity provider in the country, AT&T Inc. (T - Free Report) has embarked on a multi-year strategic plan to drive sustainable growth while continuing industry-leading network investments. At the same time, the company aims to reward shareholders with attractive risk-adjusted returns of $40 billion over the next three years through dividends and share repurchases.
AT&T has also offered a bullish long-term outlook backed by continued profitable 5G and fiber subscriber growth. With an improved cash flow through a robust and balanced capital allocation program, the company strives to unlock new capabilities to propel its growth momentum and help it better serve users as a platform for new products and GenAI (generative artificial intelligence) innovation.
5G, Fiber Focus at Core for AT&T
AT&T continues to enhance its network infrastructure, including 5G and fiber networks, to provide best-in-class coverage and capacity across the nation. The infrastructure investments position it for growth by ensuring widespread access to its services. AT&T's commitment to closing the digital divide underscores its dedication to fostering inclusive connectivity and driving socio-economic progress as the digital landscape evolves.
With a customer-centric business model, AT&T is likely to benefit from the increased deployment of mid-band spectrum and greater fiber densification. An integrated fiber expansion strategy is expected to improve broadband connectivity for enterprise and consumer markets, while steady 5G deployments are likely to boost end-user experience. By 2027, AT&T expects to complete the modernization of its 5G wireless network with open radio access network (Open RAN) technology, with mid-band 5G spectrum covering more than 300 million people by the end of 2026.
By the end of 2029, it expects to reach more than 50 million locations with fiber, including about 45 million through organic fiber deployments and more than 5 million through Gigapower. This will coincide with its proposed plan to exit legacy copper network operations across most of its wireline footprint.
T Offers Bullish Outlook
AT&T expects consolidated service revenue growth in the low single-digit range annually from 2025-2027, including Mobility service revenue improvement of 2% to 3% and Consumer fiber broadband revenue growth in the mid-teens. Adjusted EBITDA is projected to grow more than 3% annually from 2025-2027, with a capital investment in the vicinity of $22 billion each year.
Free cash flow is likely to grow by $1 billion yearly from $16 billion in 2025 to $18 billion in 2027. Adjusted earnings are anticipated to be in the range of $1.97 to $2.07 per share in 2025, accelerating to double-digit percentage growth in 2027.
AT&T expects to return more than $20 billion in dividends and $20 billion through share repurchases through 2025-2027. Net-debt-to-adjusted EBITDA is likely to be in the 2.5x range in the first half of 2025. The company expects to maintain leverage within this range through 2027.
Price Performance of T Stock
T has gained 37.8% over the past year compared with the industry’s rally of 35.4%. It has outperformed peers like Verizon Communications Inc. (VZ - Free Report) but lagged T-Mobile US, Inc. (TMUS - Free Report) .
One-Year AT&T Stock Price Performance
Image Source: Zacks Investment Research
Earnings Estimate Revision Trend of T Shares
Despite solid wireless traction and an ambitious plan, earnings estimates for AT&T for 2024 have moved down 10.8% to $2.22 over the past year, while the same for 2025 has declined 19.5% to $2.02. The negative estimate revision depicts bearish sentiments for the stock.
Image Source: Zacks Investment Research
Margin Woes Dent AT&T’s Growth Prospects
AT&T is facing a steady decline in legacy services. The company’s wireline division is struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies.
High-speed Internet revenues are contracting due to the legacy Digital Subscriber Line decline, simplified pricing and bundle discounts. As AT&T tries to woo customers with healthy discounts, freebies and cash credits, margin pressures tend to escalate, affecting its growth potential.
Image Source: Zacks Investment Research
End Note
By investing steadily in infrastructure and pioneering new technologies, AT&T is well-positioned to bridge the digital divide and enhance the connectivity landscape nationwide. This is likely to translate into solid postpaid subscriber growth and higher average revenue per user in the Mobility Service business. Backed by an ambitious growth plan supported by a customer-centric focus, the company expects to gain a competitive advantage within the connectivity industry by the end of the decade.
However, a saturated wireless market and price wars owing to competitive pressure have eroded its profitability. The downtrend in estimate revisions further portrays skepticism about the stock’s growth potential. With a Zacks Rank #3 (Hold), AT&T appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Can AT&T Stock Ride on Strategic Plan to Drive Sustainable Growth?
In a concerted effort to become the best connectivity provider in the country, AT&T Inc. (T - Free Report) has embarked on a multi-year strategic plan to drive sustainable growth while continuing industry-leading network investments. At the same time, the company aims to reward shareholders with attractive risk-adjusted returns of $40 billion over the next three years through dividends and share repurchases.
AT&T has also offered a bullish long-term outlook backed by continued profitable 5G and fiber subscriber growth. With an improved cash flow through a robust and balanced capital allocation program, the company strives to unlock new capabilities to propel its growth momentum and help it better serve users as a platform for new products and GenAI (generative artificial intelligence) innovation.
5G, Fiber Focus at Core for AT&T
AT&T continues to enhance its network infrastructure, including 5G and fiber networks, to provide best-in-class coverage and capacity across the nation. The infrastructure investments position it for growth by ensuring widespread access to its services. AT&T's commitment to closing the digital divide underscores its dedication to fostering inclusive connectivity and driving socio-economic progress as the digital landscape evolves.
With a customer-centric business model, AT&T is likely to benefit from the increased deployment of mid-band spectrum and greater fiber densification. An integrated fiber expansion strategy is expected to improve broadband connectivity for enterprise and consumer markets, while steady 5G deployments are likely to boost end-user experience. By 2027, AT&T expects to complete the modernization of its 5G wireless network with open radio access network (Open RAN) technology, with mid-band 5G spectrum covering more than 300 million people by the end of 2026.
By the end of 2029, it expects to reach more than 50 million locations with fiber, including about 45 million through organic fiber deployments and more than 5 million through Gigapower. This will coincide with its proposed plan to exit legacy copper network operations across most of its wireline footprint.
T Offers Bullish Outlook
AT&T expects consolidated service revenue growth in the low single-digit range annually from 2025-2027, including Mobility service revenue improvement of 2% to 3% and Consumer fiber broadband revenue growth in the mid-teens. Adjusted EBITDA is projected to grow more than 3% annually from 2025-2027, with a capital investment in the vicinity of $22 billion each year.
Free cash flow is likely to grow by $1 billion yearly from $16 billion in 2025 to $18 billion in 2027. Adjusted earnings are anticipated to be in the range of $1.97 to $2.07 per share in 2025, accelerating to double-digit percentage growth in 2027.
AT&T expects to return more than $20 billion in dividends and $20 billion through share repurchases through 2025-2027. Net-debt-to-adjusted EBITDA is likely to be in the 2.5x range in the first half of 2025. The company expects to maintain leverage within this range through 2027.
Price Performance of T Stock
T has gained 37.8% over the past year compared with the industry’s rally of 35.4%. It has outperformed peers like Verizon Communications Inc. (VZ - Free Report) but lagged T-Mobile US, Inc. (TMUS - Free Report) .
One-Year AT&T Stock Price Performance
Image Source: Zacks Investment Research
Earnings Estimate Revision Trend of T Shares
Despite solid wireless traction and an ambitious plan, earnings estimates for AT&T for 2024 have moved down 10.8% to $2.22 over the past year, while the same for 2025 has declined 19.5% to $2.02. The negative estimate revision depicts bearish sentiments for the stock.
Image Source: Zacks Investment Research
Margin Woes Dent AT&T’s Growth Prospects
AT&T is facing a steady decline in legacy services. The company’s wireline division is struggling with persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol service providers and aggressive triple-play (voice, data, video) offerings by the cable companies.
High-speed Internet revenues are contracting due to the legacy Digital Subscriber Line decline, simplified pricing and bundle discounts. As AT&T tries to woo customers with healthy discounts, freebies and cash credits, margin pressures tend to escalate, affecting its growth potential.
Image Source: Zacks Investment Research
End Note
By investing steadily in infrastructure and pioneering new technologies, AT&T is well-positioned to bridge the digital divide and enhance the connectivity landscape nationwide. This is likely to translate into solid postpaid subscriber growth and higher average revenue per user in the Mobility Service business. Backed by an ambitious growth plan supported by a customer-centric focus, the company expects to gain a competitive advantage within the connectivity industry by the end of the decade.
However, a saturated wireless market and price wars owing to competitive pressure have eroded its profitability. The downtrend in estimate revisions further portrays skepticism about the stock’s growth potential. With a Zacks Rank #3 (Hold), AT&T appears to be treading in the middle of the road, and investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.