How much will AT&T return to shareholders over the next three years?

Management expects to return more than $40 billion through dividends and share repurchases over 2025-2027. This includes over $20 billion in dividends at the current $1.11 annualized rate and about $20 billion in buybacks, with an initial $10 billion authorization expected to be completed by end-2026.

Why is AT&T changing how it reports adjusted EPS and free cash flow?

Because of the pending sale of its DIRECTV stake to TPG, AT&T will exclude DIRECTV equity income and cash flows from adjusted EPS and free cash flow starting with Q1 2025 reporting. The company says this enhances comparability. Historical figures have been recast in Exhibit 99.2 so investors can compare results on the new basis.

What is the impact of the DIRECTV sale on AT&T's earnings and cash flow?

DIRECTV contributed roughly $0.30 per share of 2024 adjusted EPS (about $2.8 billion pre-tax adjusted equity income), so 2024 adjusted EPS excluding DIRECTV is guided to $1.90-$1.95. The sale is expected to bring $5.4 billion of after-tax cash in 2025 and $0.5 billion in 2029. Ongoing free cash flow will no longer include DIRECTV distributions, so the ex-DIRECTV base is smaller on a reported basis.

What does the fiber and 5G strategy require in investment?

AT&T plans capital investment in the $22 billion range annually from 2025 to 2027, which is consistent with the high end of its 2024 guidance of $21-$22 billion. The plan targets 50 million+ total fiber locations by 2029 (about 45 million organic, plus 5 million+ through Gigapower and open-access agreements), and aims to complete its 5G modernization by 2027.

What are the key risks to the plan?

Key risks include the DIRECTV sale closing timing (guided to mid-2025), execution on net leverage reduction to the 2.5x target before buybacks begin, and achieving the targeted growth in mobility and consumer fiber revenue. Management also flags that the mark-to-market pension benefit adjustment is not reasonably estimable and could be a significant item affecting reported EPS. Forward-looking statements carry the usual disclaimers in the filing.

AT&T INC. 8-K: Regulation FD

01—Abstract

Summary

Summary of the 8-K filed December 3, 2024. Cited figures are marked; the original filing is the authoritative source.

AT&T's December 3, 2024 8-K (Item 7.01) furnishes an investor day press release laying out a three-year strategy through 2027 centered on fiber and 5G expansion.

The company plans to expand its fiber footprint to 50 million+ total locations by end-2029, complete a largely open-technology 5G modernization by 2027, and exit most of its legacy copper network by 2029. Management targets consolidated service revenue growth in the low-single-digit range, adjusted EBITDA growth of 3% or better annually, and roughly $22 billion^a in annual capital investment from 2025 to 2027. The central capital return message is $40 billion+ of dividends and share repurchases over three years, supported by $50 billion+ of financial capacity.

That includes an initial $10 billion^b buyback authorization expected to be completed by end-2026, with repurchases starting once net leverage reaches the 2.5x target range in the first half of 2025, plus an additional roughly $10 billion of repurchases expected in 2027 pending Board approval. The dividend is held at $1.11 per share annualized, implying more than $20 billion in total dividend payments over the period. Investors should note the accounting and definitional changes tied to the pending sale of the 70% DIRECTV stake to TPG, expected to close mid-2025.

Starting with Q1 2025, adjusted EPS and free cash flow will exclude DIRECTV, with 2025 adjusted EPS guided to $1.97 to $2.07^c and free cash flow guided to $16 billion+ (excluding DIRECTV). The 2024 guidance raise to $2.20 to $2.25 adjusted EPS includes roughly $0.30 per share from DIRECTV, so the comparable ex-DIRECTV figure is $1.90 to $1.95.

Management expects about $5.4 billion^d of after-tax cash proceeds from the sale in 2025. The recast historical data in Exhibit 99.2 shows free cash flow of $13.8 billion in 2023 and 9M 2024 results that include a large $4.4 billion Q3 2024 adjusting charge, which is primarily a restructuring and impairment item.

02—Key points

Key Highlights

Three-year capital return plan of $40 billion+ through dividends and buybacks, funded from $50 billion+ of financial capacity for 2025-2027
Initial share repurchase authorization of about $10 billion, expected to commence once net leverage reaches the 2.5x target and to be completed by end-2026; a further ~$10 billion is expected in 2027 pending Board approval
Dividend maintained at $1.11 per share annualized, implying $20 billion+ in total dividends over 2025-2027
Free cash flow excluding DIRECTV guided to $16 billion+ in 2025, growing about $1 billion annually to $18 billion+ in 2027
2025 adjusted EPS excluding DIRECTV guided to $1.97-$2.07, with double-digit growth expected in 2027
Fiber footprint target raised to 50 million+ total locations by end-2029, with copper exit across most of the wireline footprint by 2029
DIRECTV 70% stake sale to TPG expected to close mid-2025, with about $5.4 billion of after-tax cash payments expected in 2025

03—Questions

Frequently Asked Questions

How much will AT&T return to shareholders over the next three years?
Management expects to return more than $40 billion through dividends and share repurchases over 2025-2027. This includes over $20 billion in dividends at the current $1.11 annualized rate and about $20 billion in buybacks, with an initial $10 billion authorization expected to be completed by end-2026.
Why is AT&T changing how it reports adjusted EPS and free cash flow?
Because of the pending sale of its DIRECTV stake to TPG, AT&T will exclude DIRECTV equity income and cash flows from adjusted EPS and free cash flow starting with Q1 2025 reporting. The company says this enhances comparability. Historical figures have been recast in Exhibit 99.2 so investors can compare results on the new basis.
What is the impact of the DIRECTV sale on AT&T's earnings and cash flow?
DIRECTV contributed roughly $0.30 per share of 2024 adjusted EPS (about $2.8 billion pre-tax adjusted equity income), so 2024 adjusted EPS excluding DIRECTV is guided to $1.90-$1.95. The sale is expected to bring $5.4 billion of after-tax cash in 2025 and $0.5 billion in 2029. Ongoing free cash flow will no longer include DIRECTV distributions, so the ex-DIRECTV base is smaller on a reported basis.
What does the fiber and 5G strategy require in investment?
AT&T plans capital investment in the $22 billion range annually from 2025 to 2027, which is consistent with the high end of its 2024 guidance of $21-$22 billion. The plan targets 50 million+ total fiber locations by 2029 (about 45 million organic, plus 5 million+ through Gigapower and open-access agreements), and aims to complete its 5G modernization by 2027.
What are the key risks to the plan?
Key risks include the DIRECTV sale closing timing (guided to mid-2025), execution on net leverage reduction to the 2.5x target before buybacks begin, and achieving the targeted growth in mobility and consumer fiber revenue. Management also flags that the mark-to-market pension benefit adjustment is not reasonably estimable and could be a significant item affecting reported EPS. Forward-looking statements carry the usual disclaimers in the filing.

04—Continue

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