John Stankey, chief executive
officer of AT&T Inc. (NYSE:T), spoke today at the UBS Global
TMT Conference, where he provided an update to
shareholders.
Stankey characterized current wireless industry demand trends as
healthy, noting that any seasonal uptick in competition remains
broadly in line with historical trends. He remains confident in the
sustainability of AT&T’s wireless momentum, which he attributed
to a number of factors including rising share in previously
underpenetrated segments of the market (e.g., first responders),
improved customer experience, better network performance and
AT&T’s simplified and consistent go-to-market strategy. Stankey
reiterated prior comments that AT&T’s outlook for 2022 and
beyond does not assume a continuation of outsized industry net adds
experienced in 2021. Should recent wireless industry trends
continue, he believes the changes made to AT&T’s go-to-market
strategy puts the company in a better position to capitalize on
healthier than expected demand.
Looking forward, Stankey sees AT&T’s 2022 postpaid phone
ARPU remaining stable with 2021 levels. Continued opportunity to
upgrade customers to higher-ARPU unlimited plans and improved
international roaming is expected to offset the impact of
amortization accounting for device promotions. Notably, fewer than
a quarter of gross adds and upgrades in the third quarter traded in
newer devices for premium promotional offers. Only about 20% of
AT&T’s postpaid smartphones are on Unlimited Elite – the
company’s highest-ARPU and fastest-growing rate plan.
AT&T’s 5G deployment plans are on track. Stankey indicated
he does not anticipate any material impact from the proactive
accommodations made to address Federal Aviation Administration
concerns around the deployment of C-band spectrum. In addition, the
company remains comfortable with its fiber build plan. In the
coming years, Stankey expects multiple opportunities from the
country’s largest fiber network, including improved consumer and
business penetration and the ability to simultaneously support a
robust 5G network. Having reached an inflection point in Consumer
Wireline revenue and EBITDA1 growth, Stankey expects AT&T to
continue improving its broadband position through the expansion of
its fiber footprint.
Regarding the pending WarnerMedia-Discovery transaction, Stankey
said the regulatory review process is proceeding as expected.
Stankey reiterated expectations of leverage levels of 2.6x at the
close of the deal and 2.5x by yearend 2023. Post transaction close,
the company expects an aggregate annual dividend of $8 billion to
$9 billion, which equates to a ~40% payout ratio assuming $20
billion in free cash flow the first full year after the close of
the transaction.2 AT&T continues to expect the transaction to
close by mid-2022.
*About AT&T
AT&T Inc. (NYSE:T) is a diversified, global leader in
telecommunications, media and entertainment, and technology.
AT&T Communications provides more than 100 million U.S.
consumers with entertainment and communications experiences across
mobile and broadband. Plus, it serves high-speed, highly secure
connectivity and smart 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
relevant advertising solutions for consumers around premium video
content and digital advertising through its platform. AT&T
Latin America provides 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. © 2021 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.
Cautionary Statement Concerning Forward-Looking
Statements
Information set forth in this communication, including financial
estimates and statements as to the expected timing, completion and
effects of the proposed transaction between AT&T, Magallanes,
Inc. (“Spinco”), and Discovery, Inc. (“Discovery”) constitute
forward-looking statements within the meaning of the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These estimates and statements are subject to risks and
uncertainties, and actual results might differ materially. Such
estimates and statements include, but are not limited to,
statements about the benefits of the transaction, including future
financial and operating results, the combined Spinco and Discovery
company’s plans, objectives, expectations and intentions, and other
statements that are not historical facts. Such statements are based
upon the current beliefs and expectations of the management of
AT&T and Discovery and are subject to significant risks and
uncertainties outside of our control. Among the risks and
uncertainties that could cause actual results to differ from those
described in the forward-looking statements are the following: the
occurrence of any event, change or other circumstances that could
give rise to the termination of the proposed transaction; the risk
that Discovery stockholders may not approve the transaction
proposals; the risk that the necessary regulatory approvals may not
be obtained or may be obtained subject to conditions that are not
anticipated; risks that any of the other closing conditions to the
proposed transaction may not be satisfied in a timely manner; risks
that the anticipated tax treatment of the proposed transaction is
not obtained; risks related to potential litigation brought in
connection with the proposed transaction; uncertainties as to the
timing of the consummation of the proposed transaction; risks and
costs related to the implementation of the separation of Spinco,
including timing anticipated to complete the separation, any
changes to the configuration of the businesses included in the
separation if implemented; the risk that the integration of
Discovery and Spinco being more difficult, time consuming or costly
than expected; risks related to financial community and rating
agency perceptions of each of AT&T and Discovery and its
business, operations, financial condition and the industry in which
it operates; risks related to disruption of management time from
ongoing business operations due to the proposed merger; failure to
realize the benefits expected from the proposed merger; effects of
the announcement, pendency or completion of the proposed merger on
the ability of AT&T, Spinco or Discovery to retain customers
and retain and hire key personnel and maintain relationships with
their suppliers, and on their operating results and businesses
generally; and risks related to the potential impact of general
economic, political and market factors on the companies or the
proposed transaction. The effects of the COVID-19 pandemic may give
rise to risks that are currently unknown or amplify the risks
associated with the foregoing factors.
These risks, as well as other risks associated with the proposed
transaction, are more fully discussed in the proxy
statement/prospectus included in the registration statements filed
with the SEC in connection with the proposed transaction.
Discussions of additional risks and uncertainties are contained in
AT&T’s and Discovery’s filings with the Securities and Exchange
Commission. Neither AT&T nor Discovery is under any obligation,
and each expressly disclaims any obligation, to update, alter, or
otherwise revise any forward-looking statements, whether written or
oral, that may be made from time to time, whether as a result of
new information, future events, or otherwise. Persons reading this
announcement are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date
hereof.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in
respect of the proposed transaction between AT&T, Spinco, and
Discovery. In connection with the proposed transaction, on November
18, 2021 AT&T, Spinco and Discovery filed relevant materials
with the Securities and Exchange Commission (“SEC”), including a
registration statement on Form S-4 by Discovery containing a
preliminary prospectus of Discovery that also constitutes a
preliminary proxy statement of Discovery, and a registration
statement on Form S‑4 and Form S-1 by Spinco containing a
preliminary prospectus of Spinco. The information in each
preliminary prospectus and the preliminary proxy statement is not
complete and may be changed. This communication is not a substitute
for the registration statements, proxy statement/prospectus or any
other document which AT&T, Spinco or Discovery may file with
the SEC. STOCKHOLDERS OF AT&T AND DISCOVERY ARE URGED TO READ
ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE
REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS, BECAUSE THEY
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain copies of the
proxy statement/prospectus as well as other filings containing
information about AT&T, Spinco and Discovery, without charge,
at the SEC’s website, http://www.sec.gov. Copies of documents filed
with the SEC by AT&T or Spinco will be made available free of
charge on AT&T’s investor relations website at
https://investors.att.com. Copies of documents filed with the SEC
by Discovery will be made available free of charge on Discovery’s
investor relations website at
https://ir.corporate.discovery.com/investor-relations.
No Offer or Solicitation
This communication is for informational purposes only and is not
intended to and does not constitute an offer to sell, or the
solicitation of an offer to subscribe for or buy, or a solicitation
of any vote or approval in any jurisdiction, nor shall there be any
sale, issuance or transfer of securities in any jurisdiction in
which such offer, sale or solicitation would be unlawful, prior to
registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended, and otherwise in accordance
with applicable law.
Participants in Solicitation
AT&T and its directors and executive officers, and Discovery
and its directors and executive officers, may be deemed to be
participants in the solicitation of proxies from the holders of
Discovery capital stock and/or the offering of Discovery securities
in respect of the proposed transaction. Information about the
directors and executive officers of AT&T is set forth in the
proxy statement for AT&T’s 2021 Annual Meeting of Stockholders,
which was filed with the SEC on March 11, 2021. Information about
the directors and executive officers of Discovery is set forth in
the proxy statement for Discovery’s 2021 Annual Meeting of
Stockholders, which was filed with the SEC on April 30, 2021.
Investors may obtain additional information regarding the interest
of such participants by reading the proxy statement/prospectus
regarding the proposed transaction when it becomes available.
1 EBITDA is operating income before depreciation and
amortization.
2 Dividend payout ratio is total dividends paid divided by free
cash flow. Free cash flow is a non-GAAP financial measure that is
frequently used by investors and credit rating agencies to provide
relevant and useful information. Free cash flow is cash from
operating activities minus capital expenditures, and AT&T will
include cash distributions received from DIRECTV, including those
reported as investing activities, as part of Free Cash Flow. 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211206005870/en/
Fletcher Cook Phone: 214-912-8541 Email:
fletcher.cook@att.com
Daphne Avila Phone: 972-266-3866 Email:
daphne.avila@att.com
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