BARCELONA, Spain--(BUSINESS WIRE)--
John Stephens, chief financial officer of AT&T*, provided some color around the company’s strategy and operations while speaking at the Morgan Stanley European Technology, Media and Telecom Conference today.
AT&T expects its wireless service revenues to stabilize or grow in the near term. Much of the company’s base has migrated to plans with no overages. The company expects benefits from ongoing trends in its wireless operations. Specifically, it expects:
- Continued expansion of its smartphone base;
- Continued growth in prepaid subscribers and revenues;
- Ongoing benefits from low postpaid phone churn levels; and
- Opportunities from bundling wireless services with premium entertainment.
AT&T introduced its over-the-top video service, DIRECTV NOW, in November 2016. Stephens announced that the service has reached over 900,000 subscribers less than a year after its launch.1 About half of these subscribers are cord cutters or cord nevers, with about 10% of those coming from AT&T’s DIRECTV and U-verse services. The other half have migrated from other traditional TV providers.
AT&T’s strategy to bundle DIRECTV NOW with other services has been successful. About 50% of DIRECTV NOW subscribers have at least one additional service with the company. Only about 40% of DIRECTV NOW subscribers have postpaid wireless services with AT&T, giving the company an opportunity to attract new wireless subscribers with compelling offers. Churn for subscribers with multiple services is significantly lower than for subscribers to individual services.
The company continues to expect additional pressure in the fourth quarter from natural disasters. Following Hurricane Maria, the company has suspended charges to its video subscribers in Puerto Rico. While customer cancellations in Puerto Rico may affect overall subscriber counts, the company expects positive video net adds in the fourth quarter — including DIRECTV NOW.
AT&T has launched 5G Evolution in Austin and Indianapolis with plans to reach 20-plus metros by the end of 2017. The company’s 5G Evolutions plans include parts of Minneapolis — including areas near the stadium — to deliver the latest technology in time for the Big Game in February.
For the full year, AT&T continues to expect adjusted earnings growth in the mid-single digits, adjusted consolidated operating margin expansion, capital expenditures in the $22 billion range and free cash flow — cash from operating activities minus capital expenditures — at the low end of the $18 billion range.2
The full session included discussions of the company’s strategy and third-quarter results. A replay of the webcast will be available later today at https://edge.media-server.com/m6/p/yvv6aihd.
1Consistent with industry practice, DIRECTV NOW includes over-the-top connections that are on a free-trial.
22017 guidance is on a business-as-usual basis without the impact of Time Warner. Adjustments include non-cash mark-to-market benefit plan gain/loss, merger integration and amortization costs, impacts of recent natural disasters and other adjustments. Traditionally, the mark-to-market adjustment is the largest item, which is driven by interest rates and investment returns that are not reasonably estimable at this time.
*About AT&T
AT&T Inc. (NYSE:T) is a holding company. 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 about AT&T Inc. is available at about.att.com.
© 2017 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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