Owning shares of AT&T Inc (T) has been an exercise in patience since the retirement of visionary CEO Ed Whitacre — who forged the modern company by combining wireline and wireless franchises of the Baby Bells, suggests Roger Conrad, editor of Conrad's Utility Investor.

Whitacre’s successors failed spectacularly to add to his legacy: Launching an ultimately failed effort to forge a multi-media giant and eventually ceding the top positions in the company’s core business to arch-rivals Verizon Communications (VZ) and T-Mobile US (TMUS).

A little over two years ago, current CEO John Stankey and his team started returning AT&T to its telecom roots. Halving the dividend, the disappointing aftermath of the Warner Brothers Discovery (WBD) spinoff/merger and two successive first half reductions in 2022 guidance understandably shook investors’ confidence in management’s plans and ability to execute them.

Now investors have reason to be hopeful again. Management raised the mid-point of its 2022 earnings guidance range, while affirming a $14 billion free cash flow target that would cover dividends with $4 billion plus to spare. Despite inflation pressures, operating cost cutting stayed on track and the company reported faster wireless and fiber broadband customer growth, as well as higher margins.

AT&T now has over 100 million Internet of Things connections, including one million automobiles. That’s the best evidence yet of meaningful uptake of its 5G and converged fiber broadband offerings with manufacturing and industry. And it should pick up steam in coming years, particularly as facilities re-shore to the US.

After the Warner spinoff and other asset sales, AT&T’s debt burden is still around $150 billion, making further reduction a top priority. And there’s $21 billion in projected CAPEX next year in addition to the $20 billion plus this year.

The result is a premium on consistent operating cash flow, which could be challenging in deepening recession. That means the stock is once again best considered an Aggressive Holding. But AT&T is a buy for very patient value seekers at a price of $20 or lower.

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