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What Are AT&T’s Key Growth Drivers in 2019?

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AT&T’s outlook for 2019

AT&T (T) is optimistic about 2019 and expects its adjusted EPS to rise at a low-single-digit rate in the year. The company expects to generate $26 billion in free cash flow next year. AT&T’s management has highlighted that the company’s discretionary cash flow after dividends will be used to pay down its high debt balance. The company’s management plans to lower its financial leverage to the 2.5x range by the end of 2019.

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AT&T is concentrating on growing its media and content business after successfully purchasing Time Warner in mid-June. It’s also betting significantly on the 5G wireless revolution and is neck and neck with Verizon (VZ) in deploying 5G technology in the United States. The company expects its 5G services to unlock huge revenue opportunities.

Analysts’ EPS estimates for 2019

Analysts expect AT&T to post adjusted EPS of $0.85 in the fourth quarter to take its total EPS for 2018 to $3.52, a rise of ~15.4% from $3.05 in 2017. In 2019, analysts expect AT&T to post adjusted EPS of $3.58, a rise of ~1.7% from $3.52 in 2018.

AT&T finished the third quarter with 150.3 million wireless customers. Verizon, T-Mobile (TMUS), and Sprint (S) closed the quarter with 154 million, 77.2 million, and 53.5 million wireless customers, respectively.

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