AT&T Targets Double-Digit EPS Growth Through Fiber Expansion and Cost Reductions

AT&T is shifting its long-term strategy toward fiber-wireless convergence and a $6 billion cost-reduction program. The company plans to retire legacy copper infrastructure by 2030. It is targeting a double-digit compound annual growth rate for earnings-per-share (EPS) through 2028 as it moves away from older network technologies.

"If we put the right assets in play in our industry, that we could grow at a better rate, and we could ultimately have a better profitability equation. I think you started to see the evidence of that last quarter where that inflection point started to hit," said John Stankey, CEO of AT&T, at the Goldman Sachs Communacopia + Technology Conference.

Operational Efficiency and Copper Retirement

To achieve these financial targets, AT&T has identified $6 billion in potential cost savings. This reduction will come from decommissioning legacy copper lines, shutting down central offices, and terminating real estate leases. By streamlining its footprint, the company expects to lower its operational overhead while focusing capital expenditure on high-speed fiber and 5G wireless networks.

The Convergence Strategy

Central to this transformation is the convergence of fiber and wireless services. AT&T data indicates that the percentage of customers utilizing both services has reached approximately 45%, an increase of 5 percentage points over the last two years. Management views this bundled approach as a driver for customer retention and long-term value.

"Fiber and fiber broadband is a superior product, and that is what drives a lot of the surprise and delight that ultimately gives the customer the better brand point of view, makes the entire bundle stickier, and allows you to, over that lifetime value, grow some accretion and benefit," said Stankey.

Future Network Outlook

Toward the end of the decade, the company intends to define itself through two core pillars: a metropolitan fiber footprint and a nationwide wireless network. According to a transcript of the conference, Stankey described the vision: "At the end of this decade, what you’re going to have is a metropolitan fiber provider with a kickass nationwide wireless network, and that’s all it’s going to support."

This pivot represents a departure from the company’s historical reliance on copper-based landline infrastructure, which has faced declining usage and rising maintenance costs. By focusing on fiber, AT&T aims to compete against cable providers while leveraging its existing wireless infrastructure to create an integrated consumer offering.