AT&T Surpasses Expectations in Q4 2024, But the CEO Has Big Warnings for U.S. Tech Markets
AT&T is closing out 2024 on a high note, reporting solid earnings and continuing its winning streak in the wireless industry. But alongside the good news, CEO John Stankey has a big warning for the U.S. tech markets—expect more surprises like the DeepSeek shakeup, which has sent shockwaves through the tech world.
In its Q4 earnings report, AT&T exceeded expectations with 1% revenue growth and marked its seventh consecutive year of subscriber growth. But beyond the financials, Stankey is closely watching the rising tech competition, particularly from newcomers like DeepSeek, which has reportedly outperformed established AI players for a fraction of the cost. This breakthrough has left industry leaders scrambling to adapt to rapid technological advances.
Key Highlights from AT&T’s Q4 Earnings Call
- Continued Subscriber Growth: AT&T announced it has grown its subscriber base for the seventh consecutive year. The company is also on track to lead the industry in postpaid phone churn for the 14th time in the last 16 quarters.
- Fiber Network Investments: AT&T plans to phase out its copper network by 2029 and focus on expanding its fiber-optic network. Fiber technology is essential for faster internet speeds and improving overall service quality, aligning with AT&T’s goal to stay competitive in the broadband sector.
- Dividend and Buybacks: AT&T plans to uphold its dividend per share and start share buybacks in H2 2025, signaling confidence in its financial health and long-term strategy. The company aims for a net debt to adjusted EBITDA ratio of 2.5x, targeting $3 billion+ in cost savings by the end of 2027.
- Technology Shakeups: In response to a question about the impact of rising tech competitors, including DeepSeek, Stankey emphasized that the tech market is ripe for disruption. He warned that technology advancements like DeepSeek’s could lead to more unexpected shocks in the tech space.
- Focus on Long-Term Growth: Despite facing some challenges, AT&T expects double-digit earnings growth from 2027 onwards, and its guidance for 2025 adjusted EPS is between $1.97 to $2.07. The company also expects to generate $16 billion+ in free cash flow in 2025.
AT&T’s Strategy for the Future: Staying Ahead of the Curve
Investing in Fiber for Long-Term Growth
One of AT&T’s main focuses for the future is its fiber-optic network, which it views as critical to staying competitive in the fast-evolving telecommunications space. The company plans to phase out its copper network by 2029, a move that will free up resources for more fiber penetration.
The shift toward fiber is essential for enabling faster and more reliable broadband services. It also aligns with the growing demand for higher-speed internet, which is increasingly important for both consumers and businesses. AT&T’s push for fiber aligns with its strategy to future-proof its infrastructure and maintain a leadership position in the industry.
Responding to Rising Tech Disruptions
While AT&T’s earnings report shows a strong finish to 2024, Stankey is also cautious about the broader tech landscape. He specifically called out DeepSeek, a new AI competitor that has reportedly outpaced established companies like ChatGPT and Google’s Bard, offering better performance at a fraction of the cost. The rise of DeepSeek has sent shockwaves through the tech market, and Stankey acknowledges that more disruptions like this could be on the horizon.
He explained that DeepSeek and similar innovations highlight the speed at which new technologies can emerge, catch competitors off guard, and quickly shift the balance of power in the tech world. “Necessity is the mother of invention,” Stankey said, adding that there is “an awful lot of money” and “creative minds” working on making tech smarter and cheaper, which will inevitably lead to more disruptions in the future.
Managing Rising Competition
As new players disrupt the tech market, AT&T is committed to staying agile and adapting quickly to these shifts. Stankey pointed out that the tech industry is rapidly changing, with new players challenging established companies. He made it clear that AT&T will need to “stay on its game” to maintain its competitive edge, especially in the face of emerging technologies like AI, which is becoming more integrated into various sectors, from telecommunications to finance and beyond.
Stankey also emphasized that despite the disruptions, AT&T is well-positioned to thrive in the evolving landscape. The company’s focus on 5G expansion and fiber investments will help AT&T stay ahead of its competitors, even as newer tech players introduce game-changing innovations.
What’s Next for AT&T: Strong Guidance for 2025 and Beyond
Looking ahead, AT&T has a solid plan for growth in 2025 and beyond.
- Adjusted EPS: AT&T expects adjusted earnings per share (EPS) for 2025 to fall between $1.97 and $2.07. The company anticipates higher depreciation due to its ongoing 5G investments, which are expected to impact the numbers in the short term.
- Free Cash Flow: The company is targeting $16 billion+ in free cash flow in 2025, a key metric for investors looking for strong returns.
- Tax Expenses: AT&T expects a sharp increase in cash taxes, projecting $3.3 billion in taxes for 2025, up from $1.5 billion the previous year.
Stankey emphasized the company’s commitment to capital discipline and cost savings, setting a target of $3 billion+ in savings by the end of 2027. The company will also maintain its dividend per share, signaling confidence in its long-term financial position.
Conclusion: The Tech Industry is Changing Fast—AT&T Is Ready for the Future
AT&T’s Q4 2024 earnings highlight its strong growth in the wireless and broadband sectors, marking a successful year despite challenges from rising interest rates and competition. The company’s strategy to invest heavily in fiber networks and 5G infrastructure ensures that it remains competitive in an increasingly tech-driven world.
However, CEO John Stankey also warned that more technological shocks like DeepSeek’s rapid rise are inevitable. The tech industry is in a state of constant flux, and AT&T will need to continue adapting to remain at the forefront. With strong guidance for 2025, solid plans for growth, and an eye on emerging technologies, AT&T is preparing for the future of the wireless and tech sectors, even in a world full of disruptions.
