AT&T's Strategic Pivot Pays Off: Shares Soar on Strong Cash Flow and Aggressive Shareholder Returns
AT&T Inc. (NYSE: T) shares surged more than 10% over the past week, fueled by a quarterly earnings report that exceeded expectations and a bullish long-term outlook that has Wall Street recalibrating its stance on the legacy telecom.
The company's focus on bundling fiber internet with wireless services is proving to be a winning formula. In Q4, AT&T added a net 421,000 postpaid phone subscribers and 283,000 fiber customers, demonstrating resilience in a competitive market. More critically, CEO John Stankey highlighted a significant convergence trend during an analyst call.
"Our fiber convergence rate increased by 200 basis points year-over-year to 42%—the fastest annual climb since we began tracking this metric," Stankey stated. "This validates our integrated network strategy: where we have fiber, we win with both fiber and 5G."
Investor sentiment was further bolstered by a postpaid phone churn rate remaining below 1%, indicating strong customer retention despite aggressive campaigns from rivals Verizon and T-Mobile. This operational discipline translated into $16.6 billion in free cash flow for 2024, with management projecting growth to over $21 billion by 2028.
The telecom giant plans to return a substantial portion of this capital to shareholders. Alongside a dividend yielding approximately 4.2%, the board authorized a new $10 billion share repurchase program, a clear signal of confidence in its financial trajectory and a move likely to provide ongoing support for the stock price.
Market Voices: Analysts and Investors Weigh In
Michael R. Chen, Portfolio Manager at Horizon Capital: "This isn't just a short-term pop. AT&T is executing a textbook operational turnaround. The rising free cash flow provides a tangible foundation for the dividend and buybacks, making it a compelling total-return story in the telecom sector."
Sarah J. Miller, Independent Retail Investor: "Finally! As a long-term shareholder, it's been frustrating to watch the stock languish. This report shows they're serious about focusing on what works—fiber and wireless together—and rewarding the owners of the business. The buyback is a much-needed vote of confidence."
David K. Ross, Editor at 'The Skeptical Investor' Newsletter: "Let's not get carried away. A one-week surge on buyback news is a sugar high. The core challenges—massive debt, legacy infrastructure costs, and relentless competition—haven't vanished. This feels like financial engineering to distract from structural issues. I'll believe it when the 2028 cash flow target is hit."
Priya Desai, Telecom Analyst at Broadside Research: "The subscriber numbers are the real story here. In this environment, adding postpaid phone customers at that scale while growing fiber rapidly is impressive. It suggests their network investments are finally translating into sustainable market share gains, which is more valuable than any quarterly beat."