what happened
Shares of AT&T (NYSE: T) climbed on Friday after the telecommunications leader increased its growth forecast for HBO and reiterated its commitment to its dividend. From 15:35 EST, AT & T’s share price rose more than 1% after rising 4.5% earlier in the day.
Approximately
AT&T now expects to have a total of 120 million to 150 million HBO Max and HBO subscribers by the end of 2025. This is sharply higher than the previous estimate of 75 million to 90 million issued in October 2019.
AT&T said international expansion and a new version of the ad-supported HBO Max streaming service would help its subscribers’ profits. The telecommunications company plans to launch HBO Max in 60 markets outside the US this year.
Investors like what they heard from AT & T’s leadership team on Friday. Image Source: Getty Images.
CEO John Stankey said in an interview with CNBC that AT&T can maintain its substantial dividend even if it invests in its growth initiatives. He expects the company’s dividend payments in 2021 to account for less than 60% of the projected free cash flow of $ 26 billion. ” Stankey said.
AT & T’s shares are currently offering a solid 7% return to investors.
Now what
As with other streaming service providers, AT&T has seen the growth of subscribers accelerate during the coronavirus pandemic, as people seek safer and cheaper home businesses. Stankey, in turn, made the wise decision to divest underperforming segments of AT & T’s business, such as the struggling DIRECTV operations, in order to better focus the company on its streaming business.
AT&T will also prioritize debt repayment over share buybacks, which will help further strengthen its cash flow generation, as well as the ability to reward investors with enough dividend payments.
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