AT&T Senior Executive Vice President and CFO John Stephens Updates Shareholders

Rhea-AI Summary

AT&T Inc. (NYSE:T) CFO John Stephens delivered an update at the Morgan Stanley European Tech, Media and Telecommunications Conference, highlighting strong momentum in postpaid wireless and customer retention strategies. The company anticipates over $26 billion in free cash flow for 2020, maintaining a high dividend payout ratio. Significant investments in 5G and fiber are expected to enhance network quality, while ongoing business transformation initiatives aim to optimize operations. AT&T has successfully refinanced over $60 billion of debt, positioning itself for future growth.

Positive

• Anticipated free cash flow for 2020 over $26 billion.
• Ongoing success in reducing customer churn and promoting higher-tier unlimited plans.
• Refinanced over $60 billion in debt at low rates, with only $30 billion due through 2025.
• Investments in 5G and fiber expected to enhance network quality and customer offerings.

Negative

• None.

DALLAS--(BUSINESS WIRE)--John Stephens, senior executive vice president and chief financial officer of AT&T Inc.* (NYSE:T), spoke today at the Morgan Stanley European Tech, Media and Telecommunications Conference where he provided an update to shareholders. He touched on the following areas:

Customer-centric focus continues to resonate across strategic areas of broadband connectivity (both 5G and fiber) and software-based entertainment. Stephens said he is pleased to see momentum from the third quarter continue in postpaid wireless. He further noted that the ability to further reduce churn, drive incremental adoption of higher-tier unlimited plans that include HBO Max, showcase the company’s industry leading network and give customers what they want should yield positive long-term value creation across AT&T’s customer base. In addition, the combination of HBO Max’s availability on Amazon’s Fire TV and the launch of Wonder Woman 84 on HBO Max and in theaters simultaneously December 25 should expand HBO Max’s attractiveness to both existing and new customers.

Strong cash generation and disciplined capital allocation gives AT&T financial strength and flexibility to invest in growth in its market-based priorities of fiber, 5G and HBO Max while simultaneously meeting its existing financial commitments. The company has refinanced more than $60 billion of debt at historically low rates and now has about $30 billion of debt coming due through 2025. AT&T expects 2020 full-year free cash flow of $26 billion or higher with a full year dividend payout ratio percentage in the high 50s%.¹ The company also continues to expect gross capital investment in the $20 billion range for 2020.²

Network quality driven by significant investments in 5G and fiber helped support strong wireless financial and operational results and healthy broadband trends in the third quarter. In addition, the company believes that its recent and anticipated network investments will bolster AT&T’s network foundation to compete as the need for high-quality connectivity only continues to increase. Looking forward, Stephens indicated that AT&T’s integrated fiber strategy is expected to improve the company’s connectivity offering for both consumer and enterprise markets and enhance its 5G network quality in a cost-efficient manner.

Business transformation efforts are on track with the company’s expectations and have already delivered savings from efficiencies, organizational alignments and the optimization of cash returns from select business operating units. AT&T remains focused on adding value for its customers through improved experiences and continued innovation, while simultaneously relying on technology and process improvements to enhance returns across its operations.

^{1 Free cash flow dividend payout ratio is total dividends paid divided by free cash flow. Free cash flow is cash from operating activities minus capital expenditures. Due to high variability and difficulty in predicting items that impact cash from operating activities and capital expenditures, the company is not able to provide a reconciliation between projected free cash flow and the most comparable GAAP metric without unreasonable effort.
2 Gross capital investment includes capital expenditures and cash payments for vendor financing and excludes expected FirstNet reimbursements; in 2020, vendor financing is expected to be in the $3 billion range and FirstNet reimbursements are expected to be about $1 billion.}

*About AT&T

AT&T Inc. (NYSE:T) is a diversified, global leader in telecommunications, media and entertainment, and technology. WarnerMedia is a leading media and entertainment company that creates and distributes premium and popular content to global audiences through its consumer brands, including: HBO, HBO Max, Warner Bros., TNT, TBS, truTV, CNN, DC Entertainment, New Line, Cartoon Network, Adult Swim and Turner Classic Movies. Xandr, now part of WarnerMedia, provides marketers with innovative and relevant advertising solutions for consumers around premium video content and digital advertising through its platform. AT&T Communications provides more than 100 million U.S. consumers with entertainment and communications experiences across TV, mobile and broadband. Plus, it serves high-speed, highly secure connectivity and smart solutions to nearly 3 million business customers. AT&T Latin America provides pay-TV services across 10 countries and territories in Latin America and the Caribbean and wireless services to consumers and businesses in Mexico.

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com. © 2020 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. FirstNet and the FirstNet logo are registered trademarks and service marks of the First Responder Network Authority. All other marks contained herein are the property of their respective owners.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.

This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at https://investors.att.com.