(Bloomberg) — AT&T Inc. predicted sustained profit growth over the next three years, including double-digit gains in 2027, a payoff from its investments in mobile-phone and fiber-optic networks.
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Earnings in 2025 will be $1.97 to $2.07 a share, excluding some items, Dallas-based AT&T said in a statement issued ahead of a Tuesday meeting with Wall Street analysts at its namesake football stadium. It sees profit “accelerating to double-digit percentage growth” two years later.
The new forecast excludes AT&T’s ownership of DirecTV, the pay-TV service. The company expects to complete the sale of DirecTV in the first half of 2025, finally returning to its roots as a telecom provider after years of restructuring and a focus on reducing debt.
The faster growth in profit will allow AT&T to deliver more cash to shareholders. In addition to maintaining the $1.11 a share annual cash dividend, AT&T is authorizing $20 billion in share repurchases that it expects to complete by the end of 2027. In all, the company plans to return more than $40 billion to stockholders through dividends and share repurchases over the three years.
Management led by Chief Executive Officer John Stankey also expects to reach its goal of reducing net debt to 2.5 times adjusted earnings in the first half of 2025, a ratio the company aims to maintain through 2027.
AT&T has transformed since Stankey took the helm in 2020, when the company was bloated with debt from media acquisitions and under pressure to expand its wireless service and broadband capabilities. Since then, Stankey has proceed to unwind AT&T’s media business, spinning off its Warner Bros. unit in 2022 and offloading its stake in DirecTV earlier this year. Those moves allowed management to focus on being a wireless 5G and fiber connectivity company and strengthen AT&T’s balance sheet.
“With this bold strategy, we are entering a new era of sustained growth at AT&T,” Stankey said in a statement.
AT&T shares rose 3.5% in premarket trading in New York. They have gained 35% this year, on a path for their best annual increase since a 37% gain in 2019.
Capital spending will be $22 billion annually over the three years, with the company looking to reach more than 50 million locations with its fiber-optic service by 2029. As of last quarter, AT&T had built out fiber to more than 28 million locations. Free cash flow will total $16 billion in 2025, rising by $1 billion annually over the following two years.
