AT&T ANALYST MEETING
Mike Viola Senior Vice President, Investor Relations, AT&T Inc.
Cautionary Language Concerning Forward-Looking Statements Information set forth in this presentation 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 presentation based on new information or otherwise. This presentation 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. The “quiet period” for FCC Spectrum Auctions 101/102 (28Ghz and 24Ghz) is now in effect. During the quiet period, auction applicants are required to avoid discussions of bids, bidding strategy and post-auction market structure with other auction applicants.
Randall Stephenson Chairman and CEO, AT&T Inc.
100% 100% 5% 3% Latin America / Other 15% 25% Entertainment Group AT&T 17% Business Wireline 15% Composition 17% WarnerMedia 16% 3 rd Quarter 48% 39% Mobility REVENUE ADJ. EBITDA Note: WarnerMedia revenue shown net of eliminations
John Donovan CEO, AT&T Communications, LLC
Mobility Growing revenues and EBITDA +2.3% service revenue growth YoY 1 ~50% High quality phone subscriber base +2.7mn smartphones added since 3Q17 Of AT&T’s Adj. EBITDA 1 Nation’s Best Network 1 On a comparable basis; 3Q 18
Leading the Exploring service Working with Laying 5G groundwork opportunities Developers Path to 5G
Business Steady EBITDA over last 3 years Billions ($B) 3,600 Agencies $2.8 $2.6 $2.8 $2.7 $2.7 $2.7 $2.7 $2.6 $2.6 250,000 + Subscribers ~1/3 FirstNet square miles covered Reimbursements to come 3Q16 3Q17 3Q18 Comparable Business Wireline EBITDA
Entertainment Broadband growing Group Video product evolution Path to EBITDA stability
Entertainment Group Path to stabilizing EBITDA ~$0.4B ~($1B) ~$0.4B ~$10B ~$10B ~$0.2B ~$1B ~($1B) Cost Broadband Initiatives OTT Voice and Growth Profitability Video Linear Accounting Increased Subscriber Improvement ARPU growth Pressure efficiency and ARPU growth Losses Fiber automation 2-year price Repackaging subscriber lock roll-off growth Adjusted Xandr promotions advertising 2018 EBITDA 2019 EBITDA ~25mn Video Subscribers ~25mn Video Subscribers
John Stankey CEO, WarnerMedia
WarnerMedia Highlights Home Box Office Revenues & Operating Income 1 23 Primetime Emmy Awards in 2018 $ in billions Over 140 million global subscribers 2 12.0 Turner 10.0 8.0 CNN continues as the #1 digital news destination $8.2 $8.7 $7.7 $8.1 $7.9 6.0 3 of the top 5 ad-supported cable nets in primetime YTD 3 4.0 2.0 $2.6 $2.4 $2.0 $2.0 $1.8 Warner Bros. - 3Q17 4Q17 1Q18 2Q18 3Q18 Strong 4Q theatrical slate Revenues Operating Income Producing >70 series for the 2018-2019 TV season 1 Reflects historic Time Warner adjusted results and RSNs. Otter Media is included in WarnerMedia results following AT&T's 8/7/18 acquisition of the controlling interest. Note: All stats through Q3; (2) As of year end 2017. Includes Cinemax and unconsolidated joint ventures; (3) Among adults 18-49
The Entertainment Industry is Evolving RAPIDLY SHIFTING TOWARDS DIGITAL CONSUMPTION AND SPENDING… Watching Premium / Dynamic Monetization Longform & & Mobile Models Shortform Native Digital … AND DIRECT CUSTOMER RELATIONSHIP IS CRITICAL
Iconic brands Creative Strong global and franchises excellence presence Well Positioned to Capitalize Award winning Top talent content relationships
Complements existing businesses Good for distribution partners Direct to Enables expanded reach and Consumer growing subscriber bases Captures data and analytics to inform new products and enable better monetization
Our New Direct to Consumer Offer TARGET LAUNCH: 4Q 2019 BUNDLE SERVICE Entry-level Service PREMIUM Premium Service SERVICE Additional ENTRY • Classics • Comedy Premium & Popular • Kids & Family • Niche/Genre SERVICE Original Programming • Theatrical Movie-Focused Blockbuster Movies WARNERMEDIA AND LICENSED CONTENT FROM OTHERS
Positioned for the Future Engagement Penetration ARPU sVOD aVOD Wholesale Distribution AT&T Reach
Lori Lee CEO, AT&T Latin America and Global Marketing Officer
At a Glance 31M SUBSCRIBERS • Descriptive content for stat is Aleck Sans 40pt. 12 COUNTRIES $8.3B 2017 REVENUE
2015 2016 2017 3Q-2018 Mexico MOBILE 9M 12M 15M 17M Environment for Growth SUBS Network Investment PEOPLE Completed 44M 78M 94M ~100M COVERED The Most Reliable Network in Mexico 1 1 Claim based on a 3rd party analysis during drive-testing developed by Nielsen. The test reported that AT&T’s network leads in overall composite “reliability” indicator ( Note - reliability factors in 2G, 3G and 4G LTE networks).
Vrio Simple free cash flow 1 Sustained track record of growth and cash generation 10.8% 8.5% 8.5% Revenue growth 2 Opportunity with OTT 2016 2017 3Q 2018 . 1 Simple Free Cash Flow = Adjusted EBITDA less Capital Expenditures 2 Revenue growth figures are on a constant currency basis, excluding Venezuela.
Brian Lesser CEO, Xandr
Buying in mass buying audiences BUYING CONTEXTUALLY DIGITAL ADVERTISING IS BORN EXPLOSION OF AD TECH AND PLATFORMS TV AD AD VIEWERSHIP SUBSCRIBER DATA DATA COMEDY CENTRAL NFL NETWORK GOOGLE 3 RD PARTY DATA ESPN FOX SPORTS FACEBOOK A&E LOCATION DATA NETFLIX YOUTUBE AMAZON PRIME VIDEO SITE VISIT DATA BROWSING DATA PURCHASE DATA
Ad tech has NO SINGLE PLAYER MAJOR PLAYERS NOT ADVERTISERS brought us HAS ASSEMBLED WELL POSITIONED IN AND AGENCIES THE ASSETS PREMIUM TV AND VIDEO ARE FRUSTRATED to a critical moment in time
Compelling Set of Assets DATA CONTENT DISTRIBUTION TECHNOLOGY
Our Media Sales Business and Platform Businesses Complement Each Other to Magnify the Opportunity INVENTORY TV Platform Direct Sales AGENCIES & AUDIENCES/ Digital Platform ADVERTISERS VIEWERS Programmatic Sales 3 rd party
OUTPACE THE MARKET Measuring Success INTERNAL USE SCALE WITH 3 RD PARTIES OF PLATFORM
John Stephens CFO, AT&T Inc.
The Integrated Growth Story AT&T AT&T COMMUNICATIONS LATIN AMERICA Mobility: top and Continued solid AT&T Mexico Nearly $7B bottom line growth performance with improving annualized revenues managed growth profitability and growing Stable EBITDA in Entertainment Direct-to-consumer Sustained cash Management team, Group in 2019 plan to launch in 4Q 19 generation at Vrio ad inventory and platform in place
END OF YEAR RUN RATE RUN RATE 2019 2020 2021 TARGET Merger • Marketing COST $1.5B • Corporate overhead SYNERGIES • Procurement Synergies • Advertising REVENUE $1.0B • Churn reduction SYNERGIES • Cross selling TOTAL $2.5B ~ $0.7B ~ $2.0B ~ $2.5B SYNERGIES
Leverage Update 2019 2019 PLAN ~$6-$8B ~$12 B Free cash flow after dividends Other cash ~$170B generation initiatives ~$158B ~$150B ~2.8x 1 LIQUIDITY AND REFINANCING ~2.6x 1 Pension plan Hedged Successfully managed essentially against rising near term maturities ~2.5x 1 fully funded interest rates and refi risk YE 2018 2019 YE 2019 1 Net debt to Adj. EBITDA ratio; illustrative of $60B Adj. EBITDA
2019 2019 FREE CASH FLOW $26B range 2019 DIVIDEND PAYOUT High 50s % Consolidated NET DEBT TO ADJ. EBITDA 2.5x range Guidance 1 GROSS CAPITAL INVESTMENT $23B range 2 ADJ. EPS GROWTH % Low single digits 1 Excludes expected FirstNet reimbursement in the $1 billion range; includes potential vendor financing. 2 Adjustments include merger-related adjusted amortization costs in the range of $7.5 billion, a non-cash mark-to-market benefit plan gain/loss, merger integration and other adjustments. We expect the mark-to-market adjustment which is driven by interest rates and investment returns that are not reasonably estimable at this time, to be a significant item. Accordingly, we cannot provide a reconciliation between forecasted adjusted diluted EPS and reported diluted EPS without unreasonable effort.
AT&T ANALYST MEETING
Recommend
More recommend
