Analyst Note| Michael Hodel, CFA |
AT&T’s push to add customers showed during the first quarter, with solid wireless, broadband, and HBO Max gains. The firm also increased network investment plans for the year, though it did so in a way (using vendor financing) that will cause reported capital spending to decline somewhat, allowing management to maintain its $26 billion free cash flow target. AT&T stressed that it is trying to avoid overemphasizing financial metrics to instead make prudent long-term investments. The increased spending appears to be going into the wireless network to ensure that the firm takes full advantage of the C-band spectrum deployment, doing other work at the same time. Our fair value estimate remains $36, and we believe the stock is attractive.