Beauty on Credit

AT&T CFO Pascal Desroches provides shareholder update

DALLAS – () –Pascal Desroches, Senior Executive Vice-President and Chief Financial Officer of AT&T Inc.* (NYSE: T) spoke today at the Credit Suisse Communications conference, where he provided an update to shareholders.

Desroches noted that in recent quarters, AT & T’s mobility strategy of focusing on the long-term value of its high-value customer base has successfully reversed previous subscriber losses. These gains, coupled with continued opportunities to reduce costs through the transformation of the company’s distribution channels, give AT&T confidence in its ability to continue to generate profitable growth in postpaid subscribers.

Desroches said AT & T’s network is performing as well as ever and that as the company accelerates its deployment of C-band spectrum, it plans to reach 200 million people by the end of 2023, further strengthening its ability to deliver even faster average speeds across the country and to densify its network as demand for 5G increases and the use cases for the technology expand. Desroches indicated that the company’s outlook includes expectations for continued high wireless competition and, therefore, recent promotional activities from other wireless service providers do not come as a significant surprise.

Desroches also said the company’s plan to double the size of AT & T’s fiber-optic footprint to around 30 million customer sites by the end of 2025 is expected to open up new cases of use and opportunities given the company’s integrated fiber deployment strategy and penetration trends in areas where fiber has already been deployed.

Desroches expects WarnerMedia’s second quarter results to benefit from positive comparisons with the second quarter of 2020, which represented the worst of the pandemic impacts in this business unit. He also said that in the second half of the year, he expects WarnerMedia to benefit from improvements in advertising revenue, a return to theaters and broadcast rate profits from the second half of 2020 restructuring. also expressed confidence in the upcoming planned international launch of HBO Max and in the company’s ability to meet its forecast of 67 to 70 million HBO Max customers by the end of 2021.

Desroches reiterated the guidance previously provided by AT&T for 2022-2024 following the expected close of the pending WarnerMedia-Discovery transaction: Low-digit revenue CAGR and Mid-digit adjusted EBITDA and Adjusted EPS CAGR EPS.1,2,3 The company expects to generate more than $ 20 billion in free cash flow on an annual basis after closing, with a dividend payout ratio of between 40% and 43%.4 for a total dividend of 8 to 9 billion dollars per year.

Also during this period, the company plans to increase capital investment to around $ 24 billion per year, focused on 5G and fiber. The company also expects net debt to Adjusted EBITDA to be in the range of 2.6 times after the deal closes, falling to less than 2.5 times by the end of the year. year 2023.5 AT&T expects to have the option to repurchase shares once the net debt to Adjusted EBITDA drops below 2.5x. Ultimately, the company’s capital allocation decisions after the WarnerMedia transaction closes will be primarily guided by where management expects to generate the best returns for its shareholder base.

Desroches also reiterated that the company does not plan to reset the current dividend until the approval and closing of the proposed WarnerMedia-Discovery transaction. After the transaction closes, he expects the resized dividend to continue to provide a very attractive yield in the 95e percentile of dividend-paying stocks.

AT&T plans to report its second quarter 2021 results on Thursday, July 22, before the market opens.

* About AT&T

AT&T Inc. (NYSE: T) is a diverse global leader in telecommunications, media and entertainment, and technology. Consumers and businesses have over 225 million monthly subscriptions to our services. AT&T Communications provides mobile and broadband entertainment and communications experiences to more than 100 million US consumers. In addition, it offers highly secure broadband connectivity and intelligent solutions to nearly 3 million business customers. 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 consumer-relevant advertising solutions around premium video content and digital advertising through its platform. AT&T Latin America provides pay television services in 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, not by AT&T Inc. Additional information is available at about.att.com. © 2021 AT&T Intellectual property. All rights reserved. AT&T, the Globe logo, and other marks are intellectual property trademarks and service marks of AT&T and / or AT&T affiliates. All other trademarks contained in this document are the property of their respective owners.

1 Compound annual growth rate.

2 EBITDA is the operating result before depreciation.

3 The company expects the diluted EPS adjustments reported for 2021-2024 to include merger-related amortization ($ 4.3 billion for 2021 and about $ 1 billion per quarter in 2022 until closing. of the WarnerMedia transaction) and other adjustments, a non-money market value. benefit plan gains / losses and other items. The company expects the mark-to-market adjustment, which is determined by interest rates and investment returns which are not reasonably estimable at present, to be a material consideration. AT & T’s 2022-2024 EPS is dependent on future levels of income and expenses which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between these projected non-GAAP metrics and the reported GAAP metrics without unreasonable effort.

4 The dividend payout ratio is the total dividends paid divided by free cash flow. Free cash flow is a non-GAAP financial measure frequently used by investors and rating agencies to provide relevant and useful information. Free cash flow is cash flow from operating activities less capital expenditures. Due to the high variability and difficulty predicting items that impact cash flow from operating activities and capital expenditures, the Company is unable to provide a reconciliation between cash flows. available projections and the most comparable GAAP metric without unreasonable effort.

5 Net debt / Adjusted EBITDA ratios are non-GAAP financial measures frequently used by investors and rating agencies to provide relevant and useful information. AT & T’s Net Debt to Adjusted EBITDA ratio is calculated by dividing Net Debt by the sum of the last four quarters of Adjusted EBITDA. Estimates of Adjusted EBITDA depend on future levels of income and expenses which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between Adjusted EBITDA and the most comparable GAAP measure without unreasonable effort.

Cautionary Language Regarding Forward-Looking Statements

The information contained in this press release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. A discussion of factors that may affect future results is contained in documents filed by AT&T with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise any statements contained in this press release based on new information or otherwise.

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


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