Why AT&T Stock Surged This Week
Key Points
AT&T's converged connectivity strategy is resonating with consumers.
The telecom giant is adding subscribers at a solid clip.
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Shares of AT&T (NYSE: T) jumped more than 10% this past week, according to data from S&P Global Market Intelligence.
The wireless carrier delivered an impressive quarterly financial report and issued a bullish long-term growth forecast.
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Image source: AT&T.
AT&T is back to its winning ways
A focus on bundled offerings is helping AT&T attract more customers. The communications leader won 421,000 postpaid phone and 283,000 fiber subscribers in the fourth quarter.
During a conference call with analysts, CEO John Stankey said AT&T saw an upturn in the portion of its fiber customers that also subscribed to its wireless services.
"Our fiber convergence rate climbed 200 basis points year over year to 42%, which is our fastest annual increase since we began tracking this metric," Stankey said. "This is further evidence that where we have fiber, we win with fiber and 5G."
Moreover, AT&T's postpaid churn rate -- an important metric of account cancellations -- came in at less than 1%. Investors were happy to see that the wireless giant was also doing an admirable job of retaining its existing customers, despite the promotional activity of rivals like Verizon and T-Mobile.
More cash for shareowners
In all, AT&T's convergence-based strategy helped it generate $16.6 billion in free cash in 2024. The telecom expects that figure to grow to more than $21 billion by 2028.
AT&T intends to pass much of that cash on to shareholders. Its stock currently sports a 4.2% dividend yield. The company's board of directors also approved a new $10 billion stock buyback program.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.
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