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: AT&T issues new guidance as WarnerMedia spin draws nearer

AT&T Inc. took another step toward preparing investors for what its business will look like without WarnerMedia, as the company issued new guidance ahead of its investor day Friday.

The telecommunications company expects to see low single-digit percentage revenue growth in 2023, reflecting projections for low single-digit growth in wireless service revenues and ramping broadband revenue growth that reaches the mid- to high-single-digit range.

AT&T
T,
+1.06%

anticipates adjusted earnings per share of $2.50 to $2.60 for 2023, as well as adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) of $43.5 billion to $44.5 billion. The company estimates it will see about $1.5 billion in “additional cost transformation savings.”

The company further projects that it will see capital investment fall to the $24 billion range during 2023. It plans continued investment in 5G spectrum deployment, which could run in the $5 billion range.

AT&T continues to expect free-cash flow in the $20 billion range for 2023.

The WarnerMedia spinoff is anticipated to occur in the second quarter.

Mega-mashup: Discovery clears $30 billion bond to finance WarnerMedia deal, a bullish sign for a rattled market

The company said it was reiterating its 2022 outlook, which calls for low single-digit revenue growth on a pro forma basis and adjusted Ebitda of $41 billion to $42 billion. Additionally, AT&T continues to expect adjusted EPS of $2.42 to $2.46.

AT&T announced that it was changing the way it reports free-cash flow “in response to investor feedback and to make its financial reporting more consistent with industry peers.” The company will start measuring free-cash flow as its cash from operations less its capital investment, including vendor financing payments, with the exclusion of vendor-financing payments representing a new component of the calculation. Free-cash flow will also include cash distributions from DirecTV.

“This change in methodology has no effect on the company’s GAAP accounting and does not affect comparability to guidance because it has been applied retrospectively to previous period pro forma results as well as to pro forma guidance for 2022 and 2023,” the company said in its release.

In accordance with the new methodology, AT&T now anticipates $16 billion in pro forma free-cash flow for 2022, compared with $20 billion prior, as the new number reflects $4 billion in expected vendor-financing payments that the company previously disclosed.

“We plan to ramp up investment in our key areas of growth — 5G and fiber,” Chief Executive John Stankey said in a release. “And at the same time, we will retain our focus on growing customer relationships, continuously improve our execution to enhance the customer experience and deliver growth and returns for our shareholders.”

AT&T’s investor day presentation kicks off at 10 a.m. ET.

AT&T’s stock, which rose 0.8% in morning trading Friday, has gained 2.4% over the past three months while the S&P 500 index
SPX,
+0.02%

has lost 9.3%.

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