AT&T confirms free cash flow forecast for 2021

AT&T confirms free cash flow forecast for 2021

John Stephens - AT&T.jpg

AT&T has confirmed it is expecting to generate free cash flow in the range of US$26 billion this year, exclusive of proceeds from potential asset divestitures, with gross capital investment "in the $21 billion range".

The plans were set out by senior executive vice president and chief financial officer John Stephens (pictured), as he addressed shareholders on 5 January at the Citi Global TMT West Virtual Conference.

According to the company's statement, AT&T's financial focus areas for 2021 will cover continued investments in growth areas, preserving the dividend at its current level and reducing debt.

Stephens reiterated that this year the company expects to generate free cash flow – cash from operating activities minus capital expenditures – in the $26 billion range (exclusive of proceeds from potential asset divestitures), with gross capital investment in the $21 billion range.

The figures echoed those shared by Stephens when he last addressed shareholders in late November. Then he spoke at the Morgan Stanley European Tech, Media and Telecommunications Conference, during which he said strong cash generation and "disciplined capital allocation" gave AT&T the "financial strength and flexibility to invest in growth in its market-based priorities of fibre, 5G and HBO Max while simultaneously meeting its existing financial commitments".

At the time AT&T expected 2020 full-year free cash flow of $26 billion or higher with a full year dividend pay-out ratio percentage in the "high 50 percent" bracket.

In addition to the financials, Stephens yesterday set out AT&T's "customer-centric approach", explaining that "significant investment" had been made in network performance, "combined with attractive wireless device pricing for both new and existing customers".

He said these developments are expected to drive demand for unlimited plans and wireless services.

On content, Stephens said he expected activations of HBO Max will continue to increase, driven by "the introduction of a hybrid distribution model for the Warner Bros. 2021 slate of movies, combined with new distribution deals with Xfinity and Roku".

AT&T has refinanced more than $60 billion of debt at what it described as historically low rates, and as of November had approximately $30 billion of debt due through 2025.

AT&T will provide its 2021 financial outlook and capital allocation guidance when it reports fourth-quarter and full-year 2020 results on Wednesday, January 27, 2021.



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