2024-01-26 01:55:28 ET
Summary
- AT&T is delivering its wireless and fiber broadband strategy, but the capex required is slowing free cash flow growth in 2024.
- FCF is still sufficient to pay the dividend and cover all debt due in 2024.
- The company looks able to hit its leverage target in 1H 2025, which, along with lower capex, will finally allow for a dividend raise.
Delivering Fiber Broadband Strategy Takes Time
Watching a stock like AT&T ( T ) go nowhere for several years has tested the patience of many investors. If they would focus on the strategic priorities rather than the share price, they would see that the company is delivering what they set out to do following the spinoffs of non-core businesses. AT&T's capital spending program is also heavier than competitors due to the strategic decision to deliver most broadband services via fiber, rather than fixed wireless internet. While this is a short-term headwind to free cash flow, it will pay off over time as fiber is more scalable to cover future growth in subscribers and data usage. In the mean time, investors are paid to wait with a fully covered 6.7% dividend yield....
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For further details see:
AT&T: The Ultimate Patience Tester