AT&T announces new capital allocation plan

Responding to calls for reform from investor Elliott Management Corporation, AT&T announced its updated 3-year financial outlook and capital allocation plan that targets significant growth in EBITDA margins and EPS, while allowing the company to invest in growth areas, retire shares and continue to pay down debt.

“The strategic investments we’ve made over the last several years have given us the essential elements to meet growing demand for content and connectivity,” said Randall Stephenson, AT&T chairman and CEO. “Our 3-year plan delivers both substantial and consistent financial improvements over the next 3 years. We grow revenues, EBITDA and EPS every single year, and free cash flow is stable next year, but then grows in both of the next two years, as well. And all of this is inclusive of our investment in HBO Max.”

Highlights of AT&T’s capital allocation plan for the next 3 years:

• Dividend Growth & Payout Ratio: Continued modest annual dividend growth; dividends as percent of free cash flow of less than 50% in 2022;
• Share Retirement: 50-70% of post-dividend free cash flow being used to retire about 70% of the shares issued for the Time Warner deal;
• Debt Reduction: Retiring 100% of the acquisition debt from the Time Warner deal; a net-debt-to-adjusted EBITDA ratio between 2.0x and 2.25x by 2022;
• Portfolio Review: Continued disciplined review of portfolio; no major acquisitions.
• AT&T will continue to refresh its Board as two directors retire over the next 18 months. 
• AT&T expects Stephenson to remain CEO through at least 2020.

https://about.att.com/story/2019/att_third_quarter_earnings_2019.html