AT&T Chief Executive Officer John Stankey Updates Shareholders
September 16 2020 - 4:51PM
Business Wire
John Stankey, chief executive officer of AT&T Inc.*
(NYSE:T), spoke recently at the Goldman Sachs Communacopia
Conference where he provided an update on the company’s operational
and capital allocation strategies.
Focus on strategic growth opportunities. Stankey
acknowledged the material impact the current economic backdrop has
had across multiple industries. He said the subsequent changes in
consumer and business behavior have accelerated AT&T’s focus on
aligning its business and investments towards key structural trends
across several of its end markets. The company’s strategic areas of
focus are improving broadband connectivity (fiber, 5G), developing
software-based entertainment (HBO Max, AT&T TV) and leveraging
WarnerMedia’s legacy of fantastic storytelling to engage consumers
and gain insights across multiple distribution points.
Stankey said the company remains focused on its efforts to align
its operations to support its strategic objectives while
emphasizing customer experience, effectiveness of its engagement
efforts and operational efficiency. As part of these efforts,
AT&T is enhancing its strategy to increase customer engagement
across media and distribution products that drive customer value
and align with AT&T’s brand positioning.
Simultaneously, the company is working to optimize the returns
of business lines that fall outside of its focus areas. Stankey
said this process may lead to further monetization of non-core
assets in AT&T’s portfolio. At the end of the second quarter,
AT&T had more than $500 billion in assets on its balance sheet,
giving it additional opportunities to drive incremental shareholder
value.
Network improvements provide the foundation to compete in
evolving wireless market. Stankey said that he sees the company
as well positioned to compete in a competitive — and evolving —
wireless industry. He believes the company’s significant
investments over the past few years have contributed to improved
network quality and expanded capacity. AT&T was recently named
the “Best Wireless Network” for the third year in a row.1 The
combination of nationwide 5G with further investment to expand its
fiber network, gives the company confidence in its ability to
retain its existing customers as well as attract new customers. In
addition, Stankey said that he expects the ability to bundle
wireless services with HBO Max will further support AT&T’s
acquisition and retention efforts since recent activity suggests
bundling is helping support uptake of the company’s higher-ARPU
unlimited wireless plans.
HBO Max progress continues with increased engagement.
Stankey is pleased with the initial performance of HBO Max, which
contributed to an increase in total domestic HBO and HBO Max
subscribers in the first half of 2020 and helped the company reach
its subscriber target earlier than expected. The company had
originally projected a total of 36 million HBO and HBO Max domestic
subscribers by year-end 2020. He reiterated that HBO Max has
generated solid levels of viewer engagement, as reflected in
significantly higher weekly viewing hours than for HBO Now, and
noted that AT&T customers had higher levels of HBO Max
engagement and activations. AT&T believes it has additional
opportunities to engage viewers both as it scales its
direct-to-consumer offerings and works with theatrical release
partners to explore distribution models. As previously announced,
AT&T is also developing an advertising-based version of HBO Max
to support its customer acquisition and engagement goals.
Broadband accessibility. Stankey said that the COVID
pandemic has further illustrated the need for universal broadband —
not just to address the educational needs of America’s students and
help charge the economy, but also to create opportunities for
entirely new markets. He said that private investment to build
broadband networks has been largely successful. However, he
believes that strategic collaboration with and investment from the
federal government will help provide universal access to
broadband.
Confident in resilient businesses and strong cash flows to
support financial commitments. Stankey reiterated that AT&T
remains confident in the resiliency of its wireless, broadband and
business connectivity operations even with an otherwise challenged
economic backdrop. He said that the COVID pandemic has underscored
the need for high quality connectivity empowering customers — both
consumers and businesses — to take advantage of the significant
network improvements made over the last few years. Stankey also
said that even with limited visibility into the longer-term
economic effects and duration of the COVID pandemic, the company
remains confident in its ability to generate strong cash flows to
support its financial commitments, including its dividend policy
and further debt reduction.
AT&T has provided guidance that it expects a dividend payout
ratio at year-end 2020 in the 60s% range, and it is targeting the
low end of that range.2 At the same time, the company plans to
continue to focus on lowering its net debt to strengthen its
balance sheet and will remain opportunistic around opportunities to
further improve its borrowing costs. AT&T has reduced net debt
by about $30 billion since the close of the Time Warner
acquisition. The company’s debt maturing within 4 years has been
reduced by about $23 billion in 2020, an improvement of about $8
billion since the end of the second quarter.3 And it expects to
close this month an exchange offer for 42 series of notes with
maturities from 2031 to 2058 to take advantage of favorable market
conditions and adjust its debt maturity structure.
AT&T plans to announce third quarter 2020 earnings on
Thursday, October 22, 2020.
1 GWS OneScore, September 2020. Based on overall national
wireless performance. 2 Free cash flow dividend payout ratio is
total dividends paid divided by free cash flow. 3 Excluding
commercial paper.
*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. 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200916005927/en/
Fletcher Cook AT&T Inc. Phone: 214-912-8541 Email:
fletcher.cook@att.com
Daphne Avila AT&T Inc. Phone: 972-266-3866 Email:
daphne.avila@att.com
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