What’s AT&T’s Outlook for 2018?
AT&T’s outlook on consolidated results for 2018
Sprint (S) and T-Mobile (TMUS) have tried extensively to attract customers away from other major mobile companies like AT&T (T) and Verizon (VZ) with aggressive pricing techniques. During AT&T’s recent 4Q17 earnings conference call, management gave guidance on the expected performance of the company in full-year 2018. On a standalone basis, AT&T expects adjusted EPS (earnings per share) to be in the $3.50 range in 2018, which includes impacts of tax reform as well as the new revenue recognition standard. Wall Street analysts expect AT&T’s adjusted EPS to rise ~13.8% on a YoY (year-over-year) basis to reach ~$3.47 in 2018 as compared to $3.05 a year ago in 2017.
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Key points from AT&T’s guidance on 2018 results
AT&T’s management forecasts FCF (or free cash flow) and capital expenditures to be in the ~$21.0 billion and ~$25.0 billion range, respectively, in 2018. Further, the effective tax rate is anticipated to be ~23% in 2018. The lower tax rate is anticipated to boost cash from operations by nearly $3.0 billion in 2018 as compared to prior expectations.
Through the DIRECTV acquisition, AT&T has become one of the world’s largest pay-TV providers with customers in the United States (SPY) as well as 11 Latin American countries.
AT&T’s focus on growing the newly acquired Mexican and Latin American operations appears to be successful and is helping offset ongoing weakness in the US. In Mexico, AT&T added 1.3 million wireless net customers in 4Q17. Total Mexican wireless customers for the company are now 15.1 million. In Latin America, DIRECTV gained 139,000 video customers in 4Q17. Total Latin American subscribers for the company now stand at 13.6 million.
As of the end of 4Q17, Verizon remains the largest player in the US wireless industry by customer. AT&T was the second largest, T-Mobile was the third largest, and Sprint was the fourth largest player by customer at the end of the quarter.