Is AT&T’s €2.25 Billion Eurobond Move Shifting the Capital Allocation Narrative for T?

• AT&T recently completed a €2.25 billion floating rate senior unsecured Eurobond offering maturing in September 2027, with a 0.15% discount and variable coupon.
• This substantial fixed-income transaction highlights AT&T’s ability to access European debt markets and may enhance its financial flexibility for upcoming investments.
• We’ll examine how this large Euro-denominated bond issuance could impact AT&T’s investment narrative around capital allocation and funding strategy.

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AT&T Investment Narrative Recap

For shareholders, AT&T’s core story rests on its ability to drive stable returns through 5G and fiber expansion while maintaining customer stickiness and managing financial leverage. The recent €2.25 billion Eurobond issuance highlights access to global debt markets, but does not appear to materially affect the most important short-term catalyst: successful execution of fiber and 5G buildout, or the key risk: ongoing competitive threats and churn in wireless and legacy business segments.

Of recent announcements, earnings stand out, AT&T posted Q2 revenue of US$30.85 billion and net income of US$4.5 billion, up year-on-year. Continued top and bottom-line improvement ties in directly to the company’s ability to reinvest and finance expansion initiatives like those supported by the Eurobond. However, investors still weigh whether incremental capital will provide adequate returns given secular pressures and the heavy capex cycle.

In sharp contrast, investors must not overlook the potential impact if legacy Business Wireline declines accelerate or regulatory delays extend cost-saving timelines in 2025...

Read the full narrative on AT&T (it's free!)

AT&T's narrative projects $130.6 billion in revenue and $17.0 billion in earnings by 2028. This requires 1.7% yearly revenue growth and a $4.3 billion earnings increase from the current $12.7 billion.

Uncover how AT&T's forecasts yield a $30.62 fair value, a 5% upside to its current price.

Exploring Other Perspectives

On the more optimistic end, some analysts projected AT&T could reach US$130.2 billion in annual revenue and US$17.6 billion in earnings by 2028, assuming aggressive fiber cost savings and margin gains. If this latest funding move accelerates those efforts, it could shift the growth story, but opinions differ widely and it’s worth reviewing these alternate forecasts before settling on your own outlook.

Explore 16 other fair value estimates on AT&T - why the stock might be worth over 2x more than the current price!

Build Your Own AT&T Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your AT&T research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.
• Our free AT&T research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate AT&T's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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