Increases Quarterly Dividend by 2.1%, 33rd Consecutive Annual
Increase
- Consolidated revenues of $40.9 billion, up 4.6% with DIRECTV
acquisition
- Operating income up 8.2%
- Net income attributable to AT&T up 11.2%
- Cash from operations of $11.0 billion
- Free cash flow of $5.2 billion
- Diluted EPS of $0.54 as reported and $0.74 as adjusted, compared to
$0.50 and $0.74 in the year-ago quarter
-
2.3 million wireless net adds driven by connected devices, Mexico and
Cricket
-
U.S. wireless postpaid churn of 1.05%, down 11 basis points year over
year
-
Strong U.S. wireless operating margin of 29.6%; best-ever U.S.
wireless service EBITDA margin of 50.1%
-
700,000 branded smartphones added to U.S. subscriber base
-
323,000 U.S. DIRECTV net adds with TV subscriber base stable
-
171,000 IP broadband net adds
-
Full-year guidance on track to meet or exceed expectations
Company Website:
http://www.att.com
DALLAS -- (Business Wire)
AT&T
Inc. (NYSE:T)
today reported growing revenues and net income with solid margins and
earnings for the third quarter. Detailed results, including financial
tables, are included in the accompanying Investor Briefing and SEC Form
8-K. These materials and associated slide presentation of third-quarter
results are available on the AT&T
Investor Relations website.
AT&T also announced that its board of directors has approved a 2.1%
increase in the company’s quarterly dividend. AT&T’s quarterly dividend
will increase from $0.48 to $0.49 per share. The annual dividend will
increase from $1.92 to $1.96 per share. The dividend will be payable on
Feb. 1, 2017 to common stockholders of record on Jan. 10, 2017.
AT&T will host a webcast presentation on Monday, October 24, 2016, at
8:30 a.m. ET to discuss the Time Warner transaction and third-quarter
results. Links to the webcast and accompanying documents will be
available on the AT&T
Investor Relations website. The third-quarter earnings conference
call previously scheduled for Tuesday, October 25, 2016, at 4:30 p.m. ET
is cancelled.
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.
About AT&T
AT&T Inc. (NYSE:T)
helps millions around the globe connect with leading entertainment,
mobile, high speed internet and voice services. We’re the world’s
largest provider of pay TV. We have TV customers in the U.S. and 11
Latin American countries. We offer the best global coverage of any U.S.
wireless provider.* And we help businesses worldwide serve their
customers better with our mobility and highly secure cloud solutions.
Additional information about AT&T products and services is available at http://about.att.com.
Follow our news on Twitter at @ATT, on Facebook at http://www.facebook.com/att
and YouTube at http://www.youtube.com/att.
© 2016 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.
*Global coverage claim based on offering discounted voice and data
roaming; LTE roaming; voice roaming; and world-capable smartphone and
tablets in more countries than any other U.S. based carrier.
International service required. Coverage not available in all areas.
Coverage may vary per country and be limited/restricted in some
countries.
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 www.att.com/investor.relations.
The “quiet period” for FCC Spectrum Auction 1000 (also known as the 600
MHz incentive auction) 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.
Additional Information and Where to Find It
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of any
vote or approval. This communication may be deemed to be solicitation
material in respect of the proposed merger between AT&T Inc. and Time
Warner Inc. In connection with the proposed merger, AT&T Inc. intends to
file a registration statement on Form S-4, containing a proxy
statement/prospectus with the Securities and Exchange Commission
(“SEC”). STOCKHOLDERS OF TIME WARNER INC. ARE URGED TO READ ALL RELEVANT
DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
MERGER. 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 Inc. and Time Warner Inc., without charge, at the
SEC’s website, http://www.sec.gov. Copies
of documents filed with the SEC by AT&T Inc. will be made available free
of charge on AT&T’s Investor Relations website, www.att.com/investor.relations.
Copies of documents filed with the SEC by Time Warner Inc. will be made
available free of charge on Time Warner’s Investor Relations website, ir.timewarner.com.
Participants in Solicitation
AT&T Inc. and its directors and executive officers, and Time Warner Inc.
and its directors and executive officers, may be deemed to be
participants in the solicitation of proxies from the holders of Time
Warner common stock in respect of the proposed merger. Information about
the directors and executive officers of AT&T is set forth in the proxy
statement for AT&T’s 2016 Annual Meeting of Stockholders, which was
filed with the SEC on March 11, 2016. Information about the directors
and executive officers of Time Warner is set forth in the proxy
statement for Time Warner’s 2016 Annual Meeting of Stockholders, which
was filed with the SEC on April 29, 2016. Investors may obtain
additional information regarding the interest of such participants by
reading the proxy statement/prospectus regarding the proposed merger
when it becomes available.
AT&T Q3 2016 INVESTOR BRIEFING
AT&T Reports Third-Quarter Results
Increases Quarterly Dividend by 2.1%, 33rd Consecutive Annual
Increase
-
Consolidated revenues of $40.9 billion, up 4.6% with DIRECTV
acquisition
-
Operating income up 8.2%
-
Net income attributable to AT&T up 11.2%
-
Cash from operations of $11.0 billion
-
Free cash flow of $5.2 billion
-
Diluted EPS of $0.54 as reported and $0.74 as adjusted, compared to
$0.50 and $0.74 in the year-ago quarter
HIGHLIGHTS:
-
2.3 million wireless net adds driven by connected devices, Mexico and
Cricket
-
U.S. wireless postpaid churn of 1.05%, down 11 basis points year over
year
-
U.S. wireless operating margin of 29.6%; best-ever U.S. wireless
service EBITDA margin of 50.1%
-
700,000 branded smartphones added to U.S. subscriber base
-
323,000 U.S. DIRECTV net adds with TV subscriber base stable
-
More than 1.2 million U.S. DIRECTV net adds since acquisition
-
171,000 IP broadband net adds
-
More than 390 million North American 4G LTE POPs
-
Year-to-date cash from operations of $29.2 billion; free cash flow
$13.3 billion year to date
-
Full-year guidance on track to meet or exceed expectations
CONSOLIDATED FINANCIAL RESULTS
AT&T’s consolidated revenues for the third quarter totaled $40.9
billion, up 4.6% versus the year-earlier period due to the July 24, 2015
acquisition of DIRECTV. Excluding the impact of the DIRECTV acquisition
and foreign exchange, revenues were essentially flat, as growth in video
and IP-based services mostly offset pressures from declines in wireless
and legacy services. Compared with results for the third quarter of
2015, operating expenses were $34.5 billion versus $33.2 billion;
operating income was $6.4 billion versus $5.9 billion; and operating
income margin was 15.7% versus 15.2%. When adjusting for $0.14 of
amortization, $0.03 in merger- and integration-related costs and $0.03
of employee-separation costs, operating income was $8.3 billion versus
$7.9 billion; and operating income margin was 20.3%, consistent with the
year-ago quarter.
Third-quarter net income attributable to AT&T totaled $3.3 billion, or
$0.54 per diluted share, compared to $3.0 billion, or $0.50 per diluted
share, in the year-ago quarter. Adjusting for $0.20 of amortization,
merger- and integration-related costs and other expenses, earnings per
diluted share was $0.74 compared to an adjusted $0.74 in the year-ago
quarter.
Cash from operating activities was $11.0 billion in the third quarter,
up 1.8%, and capital investment1 totaled $5.9 billion. Free
cash flow — cash from operating activities minus capital expenditures —
was $5.2 billion for the quarter, down 6.5%, and $13.3 billion year to
date, up 3.7%.
AT&T also announced that its board of directors has approved a
2.1%increase in the company’s quarterly dividend. AT&T’s quarterly
dividend will increase from $0.48 to $0.49 per share. The annual
dividend will increase from $1.92 to $1.96 per share. The dividend will
be payable on Feb. 1, 2017 to common stockholders of record on Jan. 10,
2017.
____________________
13Q16 includes $87 million in capital purchases in Mexico
with favorable vendor payment terms.
Business Solutions
The Business Solutions segment provides both wireless and wireline
services to business customers and to individual subscribers who
purchase wireless services through employer-sponsored plans. AT&T’s
wireless and wired networks provide complete communications solutions to
these customers. AT&T’s business customer revenues include results from
enterprise, public sector, wholesale and small/midsize customers.
FINANCIAL HIGHLIGHTS
Total third-quarter revenues from business customers were $17.8 billion,
up 0.4% versus the year-earlier quarter. Growth in mobility and
strategic business services offset declines in legacy services and a
continuing low-growth economy. When adjusting for the transition of
certain hosting operations, total revenues would have been even higher.
Business Solutions service revenues were $15.6 billion, essentially
stable year over year.
Third-quarter operating expenses were $13.5 billion, up 0.5% versus the
third quarter of 2015. Operating income totaled $4.3 billion, up 0.1%
year over year. Third-quarter operating income margin was 24.2%, stable
year over year with declines in higher-margin legacy services offsetting
growth in wireless and IP revenue and cost efficiencies.
BUSINESS WIRELESS FINANCIAL RESULTS
Business wireless revenues were up 4.0% year over year to $9.9 billion
driven by wireless service revenue growth and higher equipment revenues.
Wireless service revenues were up 4.1% year over year, reflecting
smartphone and tablet gains and continued migration from consumer plans.
BUSINESS WIRELINE FINANCIAL RESULTS
In business wireline, declines in legacy products were partially offset
by continued growth in strategic business services. Total business
wireline revenues were $7.8 billion, down 3.7% year over year. When
adjusting for the impact of the transition of certain hosting operations
and foreign exchange pressures, wireline revenues would have decreased
2.5%. When adjusting for these same items, data revenues were stable.
Data revenues make up nearly 60% of Business Solutions wireline revenues.
Revenues from strategic business services, the next-generation wireline
capabilities that lead AT&T’s most advanced business solutions —
including VPNs, Ethernet, cloud, hosting, IP conferencing, voice over
IP, dedicated internet, U-verse and security services — grew by $242
million, or 9.1%, versus the year-earlier quarter. These services
represent an annualized revenue stream of more than $11 billion.
SUBSCRIBER METRICS
At the end of the third quarter, AT&T had 79.4 million business wireless
subscribers. The company added 191,000 postpaid subscribers and 1.3
million connected devices in the third quarter. Postpaid business
wireless subscriber churn was 0.97% versus 1.05% in the year-ago quarter.
During the quarter, the company also added nearly 15,000 high-speed IP
broadband business subscribers. Total business broadband had a loss of
18,000 subscribers in the quarter.
BUSINESS INNOVATION
Through its powerful global networks, AT&T provides integrated solutions
to business customers and offers a wide variety of wired and wireless
products and services to increase businesses’ productivity. AT&T serves
millions of business customers, from the largest multinational
corporations to small businesses, in all major industries. AT&T
continually develops products and services to ensure that its business
customers have access to the latest technology solutions. In recent
business news, AT&T:
-
Announced a multiyear agreement between AT&T and Amazon Web Services
(AWS) to deliver integrated solutions that combine the companies’
leading cloud and networking capabilities. The collaboration will help
customers migrate to and use the AWS Cloud with the AT&T network. The
solutions are intended to span cloud networking, mobility, IoT,
security and analytics.
-
Teamed up with IBM to help businesses manage their networking
services. IBM will take advantage of AT&T FlexWare, which makes it
easy to set up and manage virtual network functions on a single
device. AT&T will also be able to run applications on IBM’s cloud,
cognitive, analytics and security infrastructure. In addition to
making AT&T FlexWare available to clients, IBM is rolling out the
solution in many of its own sites.
-
Introduced a trial with Qualcomm Technologies Inc. to test how drones
can connect more safely and securely on commercial 4G LTE. The
research will look at coverage, signal strength and how drones
function in flight.
-
Collaborated with VeloCloud to deliver AT&T Software-defined Wide Area
Network (AT&T SD-WAN), a key step in helping businesses evolve their
networks from hardware to software. The AT&T SD-WAN portfolio will
include a network-based solution combining hybrid networking with
multiple types of network access. The network-based solution will be
available in 2017. The AT&T SD-WAN premises-based, over-the-top
solution will be available later this year.
-
Closed significant business deals with Live Nation, State of Wisconsin
and Waste Management.
Entertainment Group
AT&T’s Entertainment Group provides entertainment, high-speed internet
and communications services predominantly to residential customers in
the United States.
FINANCIAL HIGHLIGHTS
Total revenues were $12.7 billion, up 17.1% versus the year-earlier
quarter mostly due to the acquisition of DIRECTV. Also contributing to
the gain was continued growth in consumer IP services.
Broadband revenues were up 5% in the quarter with IP broadband growing
by 12%. AdWorks has grown to a $1.5 billion annualized revenue stream
with double-digit revenue growth year to date and strong margins.
Third-quarter operating expenses were $11.2 billion, up 14.2% from a
year ago due to the acquisition of DIRECTV and higher content costs.
Operating income totaled $1.5 billion, up from the year-ago $1.0
billion. Third-quarter operating income margin was 11.7%, up from 9.4%
in the year-earlier quarter with satellite and IP revenue growth and
cost efficiencies offsetting TV content cost pressure and declines in
legacy services. In the fourth quarter, on a sequential basis, margins
will be pressured by a full quarter of NFL Sunday Ticket costs, annual
content cost increases and start-up costs for DIRECTV NOW.
SUBSCRIBER METRICS
Total video subscribers were essentially flat in the quarter as
competition increases. The company added 323,000 satellite subscribers
in the third quarter. U-verse TV subscribers declined 326,000 as the
company continued to focus on profitability and increasingly emphasized
satellite sales. For the second straight quarter, gross additions
increased on a year-over-year basis even when excluding IPTV customers
transitioning to DIRECTV.
The Entertainment Group ended the quarter with 25.3 million video
subscribers. While the company expects positive video net adds in the
fourth quarter, it expects total video net adds for the year to decline
slightly. At the end of the third quarter, about 100,000 pending video
customers had the capability to watch TV on their mobile devices;
however, these customers were not included in third-quarter subscriber
numbers since the video service had not yet been installed at their
homes.
The Entertainment Group had a net gain of 156,000 IP broadband
subscribers in the third quarter. Total Entertainment Group broadband
subscribers decreased 5,000 in the quarter. IP broadband subscribers at
the end of the quarter totaled 12.8 million.
ENTERTAINMENT GROUP INNOVATION
In recent news, the company:
-
Launched an updated DIRECTV App that allows customers to watch live
and recorded programs virtually anywhere.
-
Premiered a new “Data Free TV” feature that lets AT&T wireless
customers stream AT&T DIRECTV and U-verseSM content
without counting it against their data allowance.
-
Entered into 10 key DIRECTV NOW content agreements with program
providers whose premium brands will be part of the company’s new
streaming platform, planned to launch in the fourth quarter of 2016.
As publicly announced HBO, , Disney, Turner, Discovery Networks, NBCU,
Scripps Networks, STARZ, AMCN (AMC Networks), AETN (A+E Networks) and
Viacom will be among the more than 100 channels included on DIRECTV
NOW.
-
Since the end of the second quarter, announced the launch of our 100%
fiber network under the AT&T Fiber brand in 14 additional metro areas
— Augusta, Ga.; Bakersfield, Calif.; Cleveland; Columbus, Ohio;
Detroit; Greater New Orleans; Huntsville, Ala.; Indianapolis;
Louisville, Ky.; Lubbock, Texas; Memphis, Tenn.; Mobile, Ala.;
Sacramento, Calif. and St. Louis — bringing the total to 39 major
metros where AT&T’s gigabit connection is available.
-
Expanded live 4K broadcast offerings with premier content from the
Olympics, MLB, UFC, PGA, College Football and the World Series of
Beach Volleyball.
-
Received top honors in several J.D. Power studies:
-
AT&T outscored all other full-service wireless providers for the
top overall ranking in the J.D. Power 2016 Full-Service Wireless
Purchase Experience StudySM Volume 2.
-
AT&T also earned the top ranking among full-service wireless
providers in the J.D. Power 2016 Full Service Wireless Customer
Performance Care StudySM Volume 2. AT&T scored
significantly higher than the industry average — by 16 points —
and increased its overall score by 20 points over the prior
6-month period.
-
AT&T ranked “Highest In Customer Satisfaction with Small/Medium
Business Wireline Service, 2 Years in a Row” in the J.D. Power
2016 Business Wireline Satisfaction Study.
Consumer Mobility
The Consumer Mobility segment provides nationwide wireless service to
consumer and wholesale subscribers located in the United States or in
U.S. territories. The company’s wireless network powers voice and data
services, including high-speed internet, video entertainment and home
monitoring services.
FINANCIAL HIGHLIGHTS
Total revenues from Consumer Mobility customers totaled $8.3 billion,
down 5.9% versus the year-earlier quarter, reflecting declines in
equipment revenues from lower handset sales and in postpaid service
revenues due to the success of Mobile Share plans and migrations to
business plans. Third-quarter operating expenses were $5.7 billion, down
5.7% versus the third quarter of 2015, reflecting lower equipment and
commission costs as well as increased operational efficiencies.
AT&T’s Consumer Mobility operating income totaled $2.6 billion, down
6.2% versus the third quarter of 2015. Third-quarter operating income
margin was 31.1%, down slightly from the year-earlier quarter with lower
volumes, fewer subsidized sales and cost efficiencies mostly offsetting
service-revenue pressure from customers choosing Mobile Share plans.
Consumer Mobility EBITDA margin was 42.5%, compared to 42.3% in the
third quarter of 2015. (EBITDA margin is operating income before
depreciation and amortization, divided by total wireless revenues.)
EBITDA service margin was 50.9%, up from 50.5% in the year-ago quarter.
(EBITDA service margin is operating income before depreciation and
amortization, divided by total service revenues.)
SUBSCRIBER METRICS
At the end of the third quarter, AT&T had 53.9 million Consumer Mobility
subscribers. In the quarter, Consumer Mobility gained 50,000 total
subscribers with 21,000 postpaid, 304,000 prepaid and 41,000 connected
device net adds offsetting a loss of 316,000 reseller subscribers.
Consumer Mobility postpaid churn was 1.19%, compared to 1.33% in the
year-ago quarter.
CONSUMER MOBILITY INNOVATION
AT&T is a leader in mobile internet, delivering expanded choice in
devices, services and applications. In recent weeks, AT&T:
-
Introduced Mobile Share Advantage (MSA) plans, which offer more data
at a lower cost per megabyte than some of the plans previously offered
by AT&T. With the new MSA plans, customers get unlimited talk and
text, rollover data and shareable data with no overage charges. In
place of overage charges, once a customer uses the data in a plan,
data speeds are reduced for the remainder of the billing cycle.
-
Reached agreements with Empresa De Telecomunicaciones De Cuba to allow
AT&T wireless customers to roam in Cuba and to enable direct
interconnection between the U.S. and Cuba. The deal continues to
enhance AT&T’s global coverage for customers.
-
Enhanced the AT&T THANKS program by adding priority presale ticket
access to popular Live Nation concerts. The first two presales gave
customers early access to tickets to see Panic! At the Disco and
Thomas Rhett. The company also introduced new tiers with benefits and
offers to complement customers’ needs.
-
Launched a new smartphone plan for Cricket customers starting at
$30/month that includes unlimited talk and text, plus 1GB of
high-speed data.
International
The International segment includes wireless services in Mexico and
satellite entertainment services in Latin America.
Total International revenues totaled $1.9 billion. Third-quarter
operating expenses were $1.9 billion. AT&T’s International operating
loss totaled $54 million. Third-quarter operating income margin was
(2.9)%.
MEXICO
AT&T owns and operates a wireless network in Mexico. AT&T covered about
74 million people in Mexico with 4G LTE at the end of the third quarter
and expects to cover 100 million POPs by the end of 2018.
Total wireless revenues from Mexico totaled $582 million, up 0.2% versus
the year-earlier quarter, largely due to subscriber growth offset by
foreign exchange and competitive pressures. Third-quarter operating loss
was $148 million compared to a loss of $134 million in the year-ago
quarter, reflecting continued investment in operations, network and
subscriber acquisition. Third-quarter operating expenses benefitted from
a few one-time items. Margins in the fourth quarter are expected to be
consistent with prior quarters.
In the quarter, AT&T added 163,000 postpaid subscribers and 606,000
prepaid subscribers to reach 10.7 million total wireless subscribers in
Mexico, a 32% increase from a year ago.
DIRECTV LATIN AMERICA
AT&T is a leading provider of pay television services in Latin America
with satellite operations serving Argentina, Brazil, Chile, Colombia,
Ecuador, Peru, Uruguay, Venezuela and parts of the Caribbean. It also
owns 41% of Sky Mexico. Sky Mexico financial results are accounted for
as an equity method investment.
DIRECTV Latin America revenues reflect macroeconomic pressure with
weakening local currencies. Total revenues from Latin America were $1.3
billion. Operating income was $94 million.
Third-quarter subscriber net losses were 48,000, driven by declines in
Colombia, Argentina and Brazil. Total subscribers at the end of the
quarter were 12.5 million. Sky Mexico had approximately 7.8 million
subscribers as of June 30, 2016.
INTERNATIONAL HIGHLIGHTS
In recent weeks AT&T:
-
Continued to make significant progress in building the company’s
customer base and deploying a 4G LTE network in Mexico, while
expanding distribution to match this expanded network reach.
-
Opened additional points of sale throughout the country. The company
also completed the rebrand of nearly 2,900 Nextel and Iusacell points
of sale to AT&T.
AT&T Mobility
AT&T’s U.S. mobility operations are divided between the Business
Solutions and Consumer Mobility segments. For comparison purposes, the
company is providing supplemental information for its total domestic
mobility operations.
FINANCIAL HIGHLIGHTS
Wireless revenues reflected lower service revenues from the continued
adoption of Mobile Share plans and lower equipment revenues primarily
from fewer handset upgrades and higher bring-your-own-device subscribers.
-
Total wireless revenues were $18.2 billion, down 0.7% year over year,
due to decreases in service and equipment revenues. Wireless service
revenues of $15.0 billion were down 0.9% year over year but were up
sequentially. Continued growth of smartphones and tablets partially
offset adoption of Mobile Share plans. Wireless equipment revenues
decreased 0.2% to $3.2 billion.
-
Third-quarter wireless operating expenses totaled $12.8 billion, down
0.8% year over year, reflecting operating efficiencies and lower sales
volumes, which offset higher promotional costs. Wireless operating
income was $5.4 billion, down 0.5% year over year, reflecting
continued adoption of Mobile Share plans and increased promotional
activity.
-
Wireless margins reflect adoption of AT&T NextSM,
increases in BYOD customers, lower smartphone upgrade volumes and
continued efforts to drive operating costs out of the business. AT&T’s
reported third-quarter wireless operating income margin was 29.6%,
consistent with the year-earlier quarter.
-
Wireless EBITDA margin was 41.2%, compared to 40.7% in the third
quarter of 2015. Wireless EBITDA service margin was a best-ever 50.1%,
up from 49.4% in the year-ago quarter.
ARPU
The continued adoption of AT&T Next is reflected in postpaid service
ARPU (average revenues per user).
-
Phone-only postpaid ARPU decreased 1.9% versus the year-earlier
quarter; however, phone-only postpaid ARPU with AT&T Next monthly
billings increased 1.7% year over year. This growth comes even with
lower upgrade volumes, promotional offers and an increasing number of
customers holding onto their devices after completing Next payments.
SUBSCRIBER METRICS
In the third quarter, AT&T posted a net increase in total wireless
subscribers of 1.5 million to reach more than 133 million in service, up
6.9 million over the past year.
-
The company added 212,000 postpaid subscribers and 304,000 prepaid
subscribers with gains in both Cricket and GoPhone.
-
AT&T also added 1.3 million connected devices. It lost 315,000
reseller subscribers in the quarter, largely due to disconnects from
the company’s 2G network. The company added 299,000 postpaid tablet
and computing devices in the quarter and lost 268,000 postpaid phone
subscribers with the majority of the losses in lower-ARPU feature
phones.
-
The company had 516,000 branded net adds (both postpaid and prepaid)
in the quarter, including 165,000 branded smartphone net adds. About
700,000 total branded smartphones were added to the base.
-
The company expects to shut down its 2G network on or around Jan. 1,
2017. At the end of the third quarter, the company had about 4 million
2G subscribers. This includes 2.8 million connected devices, 673,000
reseller, 335,000 postpaid and 210,000 prepaid. This compares to more
than 6 million 2G subscribers at the end of the second quarter. The
company has had success migrating these subscribers and will continue
those efforts in the fourth quarter; however, the 2G shutdown is
expected to impact net adds and churn in the fourth quarter.
CHURN
Improvements in postpaid and prepaid churn helped offset higher
connected device and reseller churn.
-
Postpaid churn was 1.05%, compared to 1.16% in the year-ago quarter,
an 11 basis point improvement. That includes about 2 basis points of
pressure from the 2G network shutdown. Postpaid phone churn was 0.90%,
a 14 basis point improvement from the year-ago quarter. Branded churn
was 1.63%, compared to 1.68% in the year-ago quarter. Total churn was
1.45%, up from 1.33% in the year-ago quarter driven by churn from the
shutdown of the 2G network. The planned shutdown of the 2G network
contributed more than 20 basis points of pressure to total churn.
SMARTPHONES
The company’s branded smartphone base continued to grow in the quarter,
and even more customers moved off the subsidy model — either choosing
AT&T Next or bringing their own devices.
-
The company had 7.0 million branded smartphone gross adds and upgrades
in the quarter, including 1.9 million from prepaid. The postpaid
upgrade rate in the quarter was 5.1%.
-
Sales on AT&T Next were 4.3 million, or 83% of all postpaid smartphone
gross adds and upgrades. The company also had 595,000 BYOD gross adds,
the second most ever. That means about 94% of postpaid smartphone
transactions in the quarter were non-subsidy.
-
About 50% of the company’s postpaid smartphone base is currently
on AT&T Next, with almost 80% of postpaid smartphone subscribers
on no-device-subsidy plans.
-
At the end of the quarter, 90%, or 58.7 million, of AT&T’s postpaid
phone subscribers had smartphones. Smartphones accounted for 96% of
postpaid phone sales during the quarter.
DATA PLANS
Customers continue to choose Mobile Share and unlimited wireless with TV
plans.
-
The total number of Mobile Share connections was 57.1 million with an
average of about 3 devices per account. Nearly 40% of Mobile Share
accounts are on 15 gigabyte or larger data plans.
-
About 6.7 million postpaid subscribers are on unlimited wireless with
TV plans.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
____________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) October 22, 2016
AT&T INC.
(Exact Name of Registrant as Specified in Charter)
Delaware |
| 1-8610 |
| 43-1301883 |
(State or Other Jurisdiction of Incorporation)
| |
(Commission File Number)
| |
(IRS Employer Identification No.)
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| | | |
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208 S. Akard St., Dallas, Texas |
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| 75202 |
(Address of Principal Executive Offices)
| | | |
(Zip Code)
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Registrant’s telephone number, including area code (210) 821-4105
__________________________________
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below):
__ Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
__ Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
__ Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240-14d-2(b))
__ Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 8.01Other Events.
Throughout this document, AT&T Inc. is referred to as “we” or “AT&T.” We
are a holding company whose subsidiaries and affiliates operate in the
communications and digital entertainment services industry. Our
subsidiaries and affiliates provide services and equipment that deliver
wireless, video and broadband services both domestically and
internationally, as well as traditional telephony services.
Overview
We announced on October 22, 2016, that third-quarter 2016 net income
attributable to AT&T totaled $3.3 billion, or $0.54 per diluted share,
compared to $3.0 billion, or $0.50 per diluted share in the third
quarter of 2015.
Our third-quarter 2016 results include 24 days of DIRECTV-related
operations that were not reported in the comparable period in 2015,
contributing to higher revenues and expenses when compared to the same
period of the prior year. Third-quarter 2016 revenues were $40.9
billion, up 4.6 percent from the third-quarter 2015. Third quarter
revenues reflect increased revenues primarily from our acquisition of
DIRECTV. Compared with results for the third quarter of 2015, operating
expenses were $34.5 billion versus $33.2 billion; operating income was
$6.4 billion, up from $5.9 billion; and AT&T’s operating income margin
was 15.7 percent, compared to 15.2 percent. Third-quarter 2016 cash from
operating activities was $11.0 billion, up from $10.8 billion in the
year-ago quarter primarily due to the acquisition of DIRECTV partially
offset by the timing of working capital payments.
Many of our products, including AT&T Mobility and AT&T U-verse®
(U-verse), are offered to subscribers in multiple segments. Accordingly,
to aid in understanding subscriber trends, we are presenting an overall
discussion of these customer metrics. We reported a net gain of 2.3
million North American wireless subscribers in the third quarter of
2016, of which 1.5 million were in the U.S. At September 30, 2016, our
North American wireless customer base was approximately 144.0 million
compared to 134.5 million in the prior year, and our domestic wireless
subscribers totaled 133.3 million compared to 126.4 million. During the
third quarter, net adds were as follows:
-
North American branded net adds (combined postpaid and prepaid) were
1.3 million, of which 516,000 were domestic. North American prepaid
subscriber net adds were 910,000, of which 304,000 were domestic.
North American postpaid subscriber net adds were 375,000, of which
212,000 were domestic. Total domestic postpaid tablet and computing
device net adds were 299,000.
-
Connected devices were 1.3 million; 1.1 million attributable to
connected cars.
-
North American reseller had a net loss of 341,000, with 315,000 in the
U.S. primarily attributable to the expected year-end 2016 shutdown of
our 2G U.S. network.
We no longer offer subsidized device purchases for the majority of our
U.S. customers, instead allowing subscribers to purchase devices on
installment (AT&T Next) or to bring their own device (BYOD). During the
first quarter of 2016, we also introduced an integrated offer that
allows for unlimited wireless data when combined with our video
services, ending the third quarter with more than 6.7 million
subscribers to this offer. At September 30, 2016, Mobile Share plans
represented nearly 57.1 million domestic wireless connections and about
80 percent of our domestic wireless postpaid smartphone base was on a
no-device-subsidy Mobile Share plans.
Sales under our equipment installment programs, including AT&T Next,
represented 83 percent of all postpaid smartphone gross adds and
upgrades, compared to 71 percent in the third quarter of 2015. During
the third quarter of 2016, we sold 4.3 million smartphones under our
AT&T Next program and had BYOD gross adds of 595,000. More than 94
percent of smartphone transactions in the quarter were no-subsidy
compared to 80 percent in the year-ago quarter. At September 30, 2016,
about 50 percent of the postpaid smartphone base is on AT&T Next
compared to approximately 40 percent at September 30, 2015.
At September 30, 2016, we had 37.8 million video subscribers compared
with 38.0 million at September 30, 2015. Total video subscribers
decreased by 50,000 in the third quarter of 2016.
Our total broadband connections were 15.6 million at September 30, 2016,
and 15.8 million at September 30, 2015. During the third quarter, we
added 171,000 IP broadband subscribers, for a total of 13.7 million at
September 30, 2016. Total broadband subscribers declined by 23,000 in
the quarter.
At September 30, 2016, our total switched access lines were 14.6 million
compared with 17.4 million at September 30, 2015. The number of U-verse
voice connections (which use VoIP technology and therefore are not
included in the access line total) increased by 114,000 in the quarter
to reach 5.7 million at September 30, 2016, compared to 5.4 million at
September 30, 2015.
Segment Summary
Business Solutions
Revenues from our Business Solutions (ABS) segment for the third quarter
of 2016 were $17.8 billion, up 0.4 percent versus the year-ago quarter
primarily due to growth in strategic business services and higher
wireless service revenues, largely due to migrations from our Consumer
Mobility segment. These revenue increases were mostly offset by
continued declines in our legacy voice and data products, lower
equipment revenues and foreign exchange pressures. Third-quarter 2016
ABS operating expenses totaled $13.5 billion, up 0.5 percent versus the
third quarter of 2015. The ABS operating margin was 24.2 percent,
compared to 24.3 percent in the year-earlier quarter with declines in
higher-margin legacy services mostly offset by wireless and IP revenue
growth and cost efficiencies.
We had approximately 79.4 million business wireless subscribers at
September 30, 2016, compared to 71.6 million at September 30, 2015.
During the third quarter of 2016, business wireless net adds for
connected devices were 1.3 million and postpaid net adds were 191,000.
Postpaid business wireless subscriber churn was 0.97 percent, compared
to 1.05 percent in the year-ago quarter.
During the third quarter of 2016, we added 15,000 high-speed Internet
business subscribers, bringing total business IP broadband to 963,000
subscribers. Total business broadband connections had a loss of 18,000
subscribers in the quarter.
Entertainment Group
Our Entertainment Group (Entertainment) segment includes the results of
the U.S. satellite-based DIRECTV operations as well as broadband and
wired voice services to domestic residential customers. Entertainment
revenues for the third quarter of 2016 were $12.7 billion, up 17.1
percent versus the year-ago quarter due to the acquisition of DIRECTV as
well as strong growth in consumer IP broadband. Revenues from legacy
voice and data products continue to decline. Third-quarter 2016
Entertainment operating expenses totaled $11.2 billion compared to $9.8
billion in the third quarter of 2015, largely due to the acquisition of
DIRECTV and higher content costs. The Entertainment operating margin was
11.7 percent, compared to 9.4 percent in the year-earlier quarter with
satellite video and IP revenue growth and cost efficiencies offsetting
programming content cost pressure and declines in legacy services.
At September 30, 2016, Entertainment had approximately 51.0 million
revenue connections, compared to 52.6 million at September 30, 2015,
which included:
-
Approximately 25.3 million video connections at September 30, 2016,
compared to 25.4 million at September 30, 2015. During the third
quarter of 2016, we added 323,000 satellite subscribers; however,
U-verse subscribers declined 326,000 as we focused on profitability
and increasingly emphasized satellite sales, including U-verse
subscribers choosing to switch to satellite. At September 30, 2016,
more than 80 percent of our domestic video subscribers are on the
DIRECTV platform.
-
Approximately 14.2 million broadband connections at September 30,
2016, compared to 14.3 million at September 30, 2015. During the third
quarter, we added 156,000 IP broadband subscribers, for a total of
12.8 million at September 30, 2016. Total broadband subscribers
declined 5,000 in the quarter.
-
Approximately 11.5 million wired voice connections at September 30,
2016, compared to 12.9 million at September 30, 2015. Voice
connections include switched access lines and VoIP connections.
Consumer Mobility
Revenues from our Consumer Mobility segment, which consist of consumer,
wholesale and resale subscribers located in the U.S., for the third
quarter of 2016 were $8.3 billion, down 5.9 percent versus the year-ago
quarter, reflecting a $632 million decline in postpaid service revenues
due to the popularity of Mobile Share plans, migrations of customers to
our ABS segment and lower equipment revenues, reflecting lower
smartphone upgrade volumes and an increase in BYOD. This decline was
partially offset by an increase of $250 million in prepaid service
revenues. Third-quarter 2016 Consumer Mobility operating expenses
totaled $5.7 billion, down 5.7 percent versus the third quarter of 2015
reflecting lower equipment and commission costs as well as increased
operational efficiencies. The Consumer Mobility operating margin was
31.1 percent, compared to 31.2 percent in the year-earlier quarter with
the pressure from customers choosing our lower service rate Mobile Share
plans offset by lower volumes, fewer subsidized sales and cost
efficiencies.
We had approximately 53.9 million Consumer Mobility subscribers at
September 30, 2016, compared to 54.8 million at September 30, 2015.
During the third quarter of 2016, we had branded net adds of 325,000
(prepaid net adds were 304,000 and consumer postpaid net adds were
21,000). Consumer reseller had a net loss of 316,000. Our business
wireless offerings allow for individual subscribers to purchase wireless
services through employer-sponsored plans for a reduced price. The
migration of these subscribers to the ABS segment negatively impacted
Consumer postpaid subscriber and service revenues growth.
Total customer churn of Consumer Mobility subscribers was 2.11 percent
versus 1.90 percent in the third quarter of 2015, including postpaid
churn of 1.19 percent, compared to 1.33 percent in the year-ago quarter.
International
Our International segment consists of the Latin American operations
acquired in our July 2015 acquisition of DIRECTV as well as the Mexican
wireless operations acquired earlier in 2015. Third quarter 2016
operating revenues were $1.9 billion, up 23.1 percent versus the prior
year, with $1.3 billion attributable to video services in Latin America
and $582 million of wireless revenues in Mexico. Our international
segment revenues reflect foreign exchange pressures in our DIRECTV Latin
America and Mexican wireless results. Operating expenses were $1.9
billion compared to $1.6 billion in the third quarter of 2015, largely
due to our acquisition of DIRECTV. The International operating margin
was (2.9) percent, compared to (5.4) percent in the year-earlier quarter.
At September 30, 2016, we had approximately 10.7 million wireless
subscribers in Mexico and 12.5 million video connections in Latin
America, including 5.3 million in Brazil. During the third quarter of
2016, our Mexico wireless business had net adds of 743,000 subscribers
and our Latin America video connections declined by 48,000.
Supplemental Discussion
As a supplemental discussion of our operating results, for comparison
purposes, we are providing a view of our combined AT&T Mobility
operations (domestic only). AT&T Mobility revenues for the third quarter
of 2016 were $18.2 billion, down 0.7 percent versus the third quarter of
2015, and AT&T Mobility’s operating income margin was 29.6 percent
compared to 29.6 percent in the year-ago quarter reflecting continuing
adoption of AT&T Next, an increase in BYOD customers, lower smartphone
upgrade volumes and continued efforts to drive operating costs out of
the business.
For the quarter ended September 30, 2016, postpaid phone-only ARPU
decreased 1.9 percent versus the year-earlier quarter and 0.3 percent
sequentially. Postpaid phone-only ARPU plus AT&T Next increased 1.7
percent versus the year earlier quarter and was flat sequentially.
Postpaid churn was 1.05 percent, compared to 1.16 percent in the
year-ago. Total customer churn was 1.45 percent versus 1.33 percent in
the third quarter of 2015.
Repurchases of our common stock under our previously announced share
repurchase authorization by our Board of Directors totaled 6 million
shares, or $247 million during the third quarter of 2016. At September
30, 2016, about 396 million shares remain available under approved share
repurchase authorizations.
CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS
Information set forth in this filing contains financial estimates and
other forward-looking statements that are subject to risks and
uncertainties. 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 or revise statements contained
in this filing based on new information or otherwise.
Item 9.01 Financial Statements and Exhibits.
The following exhibits are filed as part of this report:
(d) Exhibits
99.1 AT&T Inc. selected financial statements and operating data.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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AT&T INC.
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Date: October 22, 2016
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By: /s/ Debra L. Dial
Debra L. Dial
Senior Vice President and Controller
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AT&T Inc. |
| | | | |
| | |
| | | | | |
| |
| |
Financial Data | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
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Consolidated Statements of Income
|
Dollars in millions except per share amounts | | |
Three Months Ended
| | | | | |
Nine Months Ended
| | | | |
Unaudited | | |
September 30,
| |
Percent
| | |
September 30,
|
|
Percent
| | |
|
|
| 2016 |
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|
2015
|
|
|
Change
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|
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| 2016 |
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2015
|
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Change
|
|
|
Operating Revenues | | | | | | | | | | | | | | | | | | |
Service
| | $ | 37,272 | |
$
|
35,539
| | |
4.9
| |
%
| $ | 111,515 | |
$
|
94,042
| | |
18.6
| |
%
|
Equipment
|
|
| 3,618 |
|
|
3,552
|
| |
1.9
| |
%
|
| 10,430 |
|
|
10,640
|
|
|
-2.0
| |
%
|
Total Operating Revenues |
|
| 40,890 |
|
|
39,091
|
| |
4.6
| |
%
|
| 121,945 |
|
|
104,682
|
|
|
16.5
| |
%
|
| | | | | | | | | | | | | | | | | |
|
Operating Expenses | | | | | | | | | | | | | | | | | | |
Cost of services and sales
| | | | | | | | | | | | | | | | | | |
Equipment
| | | 4,455 | | |
4,501
| | |
-1.0
| |
%
| | 13,090 | | |
13,400
| | |
-2.3
| |
%
|
Broadcast, programming and operations
| | | 4,909 | | |
4,081
| | |
20.3
| |
%
| | 14,239 | | |
6,351
| | |
-
| |
%
|
Other cost of services (exclusive of depreciation and amortization
shown separately below)
| | | 9,526 | | |
9,214
| | |
3.4
| |
%
| | 28,436 | | |
27,604
| | |
3.0
| |
%
|
Selling, general and administrative
| | | 9,013 | | |
9,107
| | |
-1.0
| |
%
| | 26,363 | | |
24,535
| | |
7.5
| |
%
|
Depreciation and amortization
|
|
| 6,579 |
|
|
6,265
|
| |
5.0
| |
%
|
| 19,718 |
|
|
15,539
|
|
|
26.9
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%
|
Total Operating Expenses |
|
| 34,482 |
|
|
33,168
|
| |
4.0
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%
|
| 101,846 |
|
|
87,429
|
|
|
16.5
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%
|
Operating Income |
|
| 6,408 |
|
|
5,923
|
| |
8.2
| |
%
|
| 20,099 |
|
|
17,253
|
|
|
16.5
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%
|
Interest Expense | | | 1,224 | | |
1,146
| | |
6.8
| |
%
| | 3,689 | | |
2,977
| | |
23.9
| |
%
|
Equity in Net Income of Affiliates | | | 16 | | |
15
| | |
6.7
| |
%
| | 57 | | |
48
| | |
18.8
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%
|
Other Income (Expense) - Net |
|
| (7 | ) |
|
(57
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)
| |
87.7
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%
|
| 154 |
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|
61
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|
|
-
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%
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Income Before Income Taxes | | | 5,193 | | |
4,735
| | |
9.7
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%
| | 16,621 | | |
14,385
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15.5
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%
|
Income Tax Expense |
|
| 1,775 |
|
|
1,657
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7.1
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%
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| 5,803 |
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|
4,784
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|
|
21.3
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%
|
Net Income |
|
| 3,418 |
|
|
3,078
|
| |
11.0
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%
|
| 10,818 |
|
|
9,601
|
|
|
12.7
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%
|
Less: Net Income Attributable to Noncontrolling Interest |
|
| (90 | ) |
|
(84
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)
| |
-7.1
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%
|
| (279 | ) |
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(262
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)
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|
-6.5
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%
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Net Income Attributable to AT&T |
| $ | 3,328 |
|
$
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2,994
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11.2
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%
| $ | 10,539 |
|
$
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9,339
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|
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12.8
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%
|
| | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | |
|
Basic Earnings Per Share Attributable to AT&T | | $ | 0.54 | |
$
|
0.50
| | |
8.0
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%
| $ | 1.70 | |
$
|
1.71
| | |
-0.6
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%
|
Weighted Average Common Shares Outstanding (000,000)
| | | 6,168 | | |
5,924
| | |
4.1
| |
%
| | 6,171 | | |
5,447
| | |
13.3
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%
|
| | | | | | | | | | | | | | | | | |
|
Diluted Earnings Per Share Attributable to AT&T | | $ | 0.54 | |
$
|
0.50
| | |
8.0
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%
| $ | 1.70 | |
$
|
1.71
| | |
-0.6
| |
%
|
Weighted Average Common Shares Outstanding with Dilution (000,000)
|
|
| 6,189 |
|
|
5,943
|
|
|
4.1
|
|
%
|
| 6,191 |
|
|
5,463
|
|
|
13.3
|
|
%
|
| | | | | | | | | | | | | | | | |
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AT&T Inc. |
| | |
| | |
Financial Data | | | | | | |
| | | | | |
|
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Consolidated Balance Sheets |
Dollars in millions | | | | | | |
Unaudited | | | Sep. 30, | | |
Dec. 31,
|
|
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| 2016 |
|
|
|
2015
|
|
Assets | | | | | | |
Current Assets | | | | | | |
Cash and cash equivalents
| | $ | 5,895 | | |
$
|
5,121
| |
Accounts receivable - net of allowances for doubtful accounts of
$650 and $704
| | | 16,855 | | | |
16,532
| |
Prepaid expenses
| | | 1,333 | | | |
1,072
| |
Other current assets
|
|
| 13,291 |
|
|
|
13,267
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|
Total current assets
|
|
| 37,374 |
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|
|
35,992
|
|
Property, Plant and Equipment - Net | | | 123,922 | | | |
124,450
| |
Goodwill | | | 105,271 | | | |
104,568
| |
Licenses | | | 94,241 | | | |
93,093
| |
Customer Lists and Relationships - Net | | | 15,227 | | | |
18,208
| |
Other Intangible Assets - Net | | | 8,734 | | | |
9,409
| |
Investments in Equity Affiliates | | | 1,679 | | | |
1,606
| |
Other Assets |
|
| 16,527 |
|
|
|
15,346
|
|
Total Assets |
| $ | 402,975 |
|
|
$
|
402,672
|
|
| | | | | |
|
Liabilities and Stockholders' Equity | | | | | | |
Current Liabilities | | | | | | |
Debt maturing within one year
| | $ | 7,982 | | |
$
|
7,636
| |
Accounts payable and accrued liabilities
| | | 28,849 | | | |
30,372
| |
Advanced billing and customer deposits
| | | 4,637 | | | |
4,682
| |
Accrued taxes
| | | 2,686 | | | |
2,176
| |
Dividends payable
|
|
| 2,948 |
|
|
|
2,950
|
|
Total current liabilities
|
|
| 47,102 |
|
|
|
47,816
|
|
Long-Term Debt |
|
| 117,239 |
|
|
|
118,515
|
|
Deferred Credits and Other Noncurrent Liabilities | | | | | | |
Deferred income taxes
| | | 59,649 | | | |
56,181
| |
Postemployment benefit obligation
| | | 33,483 | | | |
34,262
| |
Other noncurrent liabilities
|
|
| 20,899 |
|
|
|
22,258
|
|
Total deferred credits and other noncurrent liabilities
|
|
| 114,031 |
|
|
|
112,701
|
|
Stockholders' Equity | | | | | | |
Common stock
| | | 6,495 | | | |
6,495
| |
Additional paid-in capital
| | | 89,536 | | | |
89,763
| |
Retained earnings
| | | 35,319 | | | |
33,671
| |
Treasury stock
| | | (12,589 | ) | | |
(12,592
|
)
|
Accumulated other comprehensive income
| | | 4,850 | | | |
5,334
| |
Noncontrolling interest
|
|
| 992 |
|
|
|
969
|
|
Total stockholders' equity
|
|
| 124,603 |
|
|
|
123,640
|
|
Total Liabilities and Stockholders' Equity |
| $ | 402,975 |
|
|
$
|
402,672
|
|
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AT&T Inc. | | |
| | |
Financial Data | | | | | |
| | | | |
|
|
|
|
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|
Consolidated Statements of Cash Flows |
Dollars in millions |
|
Nine Months Ended
|
Unaudited | |
September 30,
|
|
| 2016 |
|
|
|
2015
|
|
Operating Activities | | | | | |
Net income
| $ | 10,818 | | |
$
|
9,601
| |
Adjustments to reconcile net income to net cash provided by
operating activities:
| | | | | |
Depreciation and amortization
| | 19,718 | | | |
15,539
| |
Undistributed earnings from investments in equity affiliates
| | (22 | ) | | |
(36
|
)
|
Provision for uncollectible accounts
| | 1,036 | | | |
895
| |
Deferred income tax expense
| | 3,011 | | | |
1,539
| |
Net gain from sale of investments, net of impairments
| | (88 | ) | | |
(46
|
)
|
Changes in operating assets and liabilities:
| | | | | |
Accounts receivable
| | (1,108 | ) | | |
737
| |
Other current assets
| | 1,805 | | | |
546
| |
Accounts payable and accrued liabilities
| | (1,173 | ) | | |
1,332
| |
Equipment installment plan receivables and securitizations
| | 207 | | | |
(1,682
|
)
|
Deferred fulfillment costs
| | (1,883 | ) | | |
(884
|
)
|
Retirement benefit funding
| | (770 | ) | | |
(595
|
)
|
Other - net
|
| (2,349 | ) |
|
|
(251
|
)
|
Total adjustments
|
| 18,384 |
|
|
|
17,094
|
|
Net Cash Provided by Operating Activities
|
| 29,202 |
|
|
|
26,695
|
|
| | | | |
|
Investing Activities | | | | | |
Capital expenditures:
| | | | | |
Purchase of property and equipment
| | (15,283 | ) | | |
(13,356
|
)
|
Interest during construction
| | (669 | ) | | |
(566
|
)
|
Acquisitions, net of cash acquired
| | (2,922 | ) | | |
(30,694
|
)
|
Dispositions
| | 184 | | | |
79
| |
Sales of securities, net
|
| 501 |
|
|
|
1,490
|
|
Net Cash Used in Investing Activities
|
| (18,189 | ) |
|
|
(43,047
|
)
|
| | | | |
|
Financing Activities | | | | | |
Net change in short-term borrowings with original maturities of
three months or less
| | - | | | |
(1
|
)
|
Issuance of long-term debt
| | 10,140 | | | |
33,967
| |
Repayment of long-term debt
| | (10,688 | ) | | |
(9,962
|
)
|
Purchase of treasury stock
| | (444 | ) | | |
-
| |
Issuance of treasury stock (excluding acquisition of DIRECTV)
| | 137 | | | |
133
| |
Dividends paid
| | (8,850 | ) | | |
(7,311
|
)
|
Other
|
| (534 | ) |
|
|
(2,875
|
)
|
Net Cash (Used in) Provided by Financing Activities
|
| (10,239 | ) |
|
|
13,951
|
|
Net increase (decrease) in cash and cash equivalents
| | 774 | | | |
(2,401
|
)
|
Cash and cash equivalents beginning of year
|
| 5,121 |
|
|
|
8,603
|
|
Cash and Cash Equivalents End of Period | $ | 5,895 |
|
|
$
|
6,202
|
|
| | | | | | |
|
AT&T Inc. | | | | |
| |
| | | | | |
| | |
Consolidated Supplementary Data | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary Financial Data |
Dollars in millions except per share amounts | |
Three Months Ended
| | | | |
|
Nine Months Ended
| | | |
Unaudited | |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Capital expenditures
| | | | | | | | | | | | | | | |
Purchase of property and equipment
| $ | 5,581 | |
$
|
5,028
| | |
11.0
|
%
| $ | 15,283 | |
$
|
13,356
| | |
14.4
|
%
|
Interest during construction
| $ | 232 | |
$
|
227
| | |
2.2
|
%
| $ | 669 | |
$
|
566
| | |
18.2
|
%
|
| | | | | | | | | | | | | | |
|
Dividends Declared per Share
| $ | 0.48 | |
$
|
0.47
| | |
2.1
|
%
| $ | 1.44 | |
$
|
1.41
| | |
2.1
|
%
|
| | | | | | | | | | | | | | |
|
End of Period Common Shares Outstanding (000,000)
| | | | | | | | | | 6,141 | | |
6,152
| | |
-0.2
|
%
|
Debt Ratio
| | | | | | | | | | 50.1 | % | |
50.8
|
%
| |
-70
|
BP
|
Total Employees
|
|
|
|
|
|
|
|
|
| 273,140 |
|
|
281,240
|
|
|
-2.9
|
%
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscribers and connections in thousands | | | | | | | | | | | | | | | |
Unaudited | | | | | | | | | |
September 30,
| |
Percent
| |
|
|
|
|
|
|
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Wireless Subscribers | | | | | | | | | | | | | | | |
Domestic
| | | | | | | | | | 133,338 | | |
126,406
| | |
5.5
|
%
|
Mexico
|
|
|
|
|
|
|
|
|
| 10,698 |
|
|
8,091
|
|
|
32.2
|
%
|
Total Wireless Subscribers
|
|
|
|
|
|
|
|
|
| 144,036 |
|
|
134,497
|
|
|
7.1
|
%
|
| | | | | | | | | | | | | | |
|
Total Branded Wireless Subscribers | | | | | | | | | | 100,821 | | |
95,305
| | |
5.8
|
%
|
| | | | | | | | | | | | | | |
|
Video Connections | | | | | | | | | | | | | | | |
Domestic
| | | | | | | | | | 25,321 | | |
25,450
| | |
-0.5
|
%
|
PanAmericana
| | | | | | | | | | 7,139 | | |
7,006
| | |
1.9
|
%
|
Brazil
|
|
|
|
|
|
|
|
|
| 5,337 |
|
|
5,538
|
|
|
-3.6
|
%
|
Total Video Connections
|
|
|
|
|
|
|
|
|
| 37,797 |
|
|
37,994
|
|
|
-0.5
|
%
|
| | | | | | | | | | | | | | |
|
Broadband Connections | | | | | | | | | | | | | | | |
IP
| | | | | | | | | | 13,715 | | |
13,076
| | |
4.9
|
%
|
DSL
|
|
|
|
|
|
|
|
|
| 1,903 |
|
|
2,756
|
|
|
-31.0
|
%
|
Total Broadband Connections
|
|
|
|
|
|
|
|
|
| 15,618 |
|
|
15,832
|
|
|
-1.4
|
%
|
| | | | | | | | | | | | | | |
|
Voice Connections | | | | | | | | | | | | | | | |
Network Access Lines
| | | | | | | | | | 14,603 | | |
17,352
| | |
-15.8
|
%
|
U-verse VoIP Connections
|
|
|
|
|
|
|
|
|
| 5,707 |
|
|
5,443
|
|
|
4.9
|
%
|
Total Retail Consumer Voice Connections
|
|
|
|
|
|
|
|
|
| 20,310 |
|
|
22,795
|
|
|
-10.9
|
%
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| |
Three Months Ended
| | | | | |
Nine Months Ended
| | | |
| |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Wireless Net Additions | | | | | | | | | | | | | | | |
Domestic
| | 1,532 | | |
2,513
| | |
-39.0
|
%
| | 4,674 | | |
5,825
| | |
-19.8
|
%
|
Mexico
|
| 743 |
|
|
(231
|
)
|
|
-
|
%
| | 2,014 |
|
|
(689
|
)
|
|
-
|
%
|
Total Wireless Net Additions
|
| 2,275 |
|
|
2,282
|
|
|
-0.3
|
%
| | 6,688 |
|
|
5,136
|
|
|
30.2
|
%
|
| | | | | | | | | | | | | | |
|
Total Branded Wireless Net Additions | | 1,285 | | |
125
| | |
-
|
%
| | 3,881 | | |
1,405
| | |
-
|
%
|
| | | | | | | | | | | | | | |
|
Video Net Additions | | | | | | | | | | | | | | | |
Domestic
| | (2 | ) | |
(65
|
)
| |
96.9
|
%
| | (103 | ) | |
(37
|
)
| |
-
|
%
|
PanAmericana
| | (36 | ) | |
16
| | |
-
|
%
| | 73 | | |
16
| | |
-
|
%
|
Brazil
|
| (12 | ) |
|
(129
|
)
|
|
90.7
|
%
| | (107 | ) |
|
(129
|
)
|
|
17.1
|
%
|
Total Video Net Additions
|
| (50 | ) |
|
(178
|
)
|
|
71.9
|
%
| | (137 | ) |
|
(150
|
)
|
|
8.7
|
%
|
| | | | | | | | | | | | | | |
|
Broadband Net Additions | | | | | | | | | | | | | | | |
IP
| | 171 | | |
192
| | |
-10.9
|
%
| | 447 | | |
871
| | |
-48.7
|
%
|
DSL
|
| (194 | ) |
|
(321
|
)
|
|
39.6
|
%
| | (607 | ) |
|
(1,067
|
)
|
|
43.1
|
%
|
Total Broadband Net Additions
|
| (23 | ) |
|
(129
|
)
|
|
82.2
|
%
|
| (160 | ) |
|
(196
|
)
|
|
18.4
|
%
|
| | | | | | | | | | | | | | | | | |
|
BUSINESS SOLUTIONS
The Business Solutions segment provides services to business customers,
including multinational companies; governmental and wholesale customers;
and individual subscribers who purchase wireless services through
employer-sponsored plans. We provide advanced IP-based services
including Virtual Private Networks (VPN); Ethernet-related products and
broadband, collectively referred to as strategic business services; as
well as traditional data and voice products. We utilize our wireless and
wired networks (referred to as “wired” or “wireline”) to provide a
complete communications solution to our business customers.
Segment Results |
Dollars in millions | |
Three Months Ended
|
| |
| |
|
Nine Months Ended
|
| | |
Unaudited | |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Segment Operating Revenues | | | | | | | | | | | | | | | |
Wireless service
| $ | 8,049 | |
$
|
7,732
| | |
4.1
|
%
| $ | 23,867 | |
$
|
23,003
| | |
3.8
|
%
|
Fixed strategic services
| | 2,888 | | |
2,646
| | |
9.1
|
%
| | 8,447 | | |
7,745
| | |
9.1
|
%
|
Legacy voice and data services
| | 4,046 | | |
4,616
| | |
-12.3
|
%
| | 12,567 | | |
14,081
| | |
-10.8
|
%
|
Other service and equipment
| | 908 | | |
885
| | |
2.6
|
%
| | 2,652 | | |
2,585
| | |
2.6
|
%
|
Wireless equipment
|
| 1,876 |
|
|
1,813
|
|
|
3.5
|
%
|
| 5,422 |
|
|
5,499
|
|
|
-1.4
|
%
|
Total Segment Operating Revenues |
| 17,767 |
|
|
17,692
|
|
|
0.4
|
%
|
| 52,955 |
|
|
52,913
|
|
|
0.1
|
%
|
| | | | | | | | | | | | | | |
|
Segment Operating Expenses | | | | | | | | | | | | | | | |
Operations and support expenses
| | 10,925 | | |
10,921
| | |
-
|
%
| | 32,584 | | |
32,966
| | |
-1.2
|
%
|
Depreciation and amortization
|
| 2,539 |
|
|
2,474
|
|
|
2.6
|
%
|
| 7,568 |
|
|
7,276
|
|
|
4.0
|
%
|
Total Segment Operating Expenses |
| 13,464 |
|
|
13,395
|
|
|
0.5
|
%
|
| 40,152 |
|
|
40,242
|
|
|
-0.2
|
%
|
Segment Operating Income | | 4,303 | | |
4,297
| | |
0.1
|
%
| | 12,803 | | |
12,671
| | |
1.0
|
%
|
Equity in Net Income of Affiliates |
| - |
|
|
-
|
|
|
-
|
%
|
| - |
|
|
-
|
|
|
-
|
%
|
Segment Contribution | $ | 4,303 |
|
$
|
4,297
|
|
|
0.1
|
%
| $ | 12,803 |
|
$
|
12,671
|
|
|
1.0
|
%
|
| | | | | | | | | | | | | | |
|
Segment Operating Income Margin |
| 24.2 |
| % |
24.3
|
|
%
|
|
|
| 24.2 |
| % |
23.9
|
|
%
|
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscribers and connections in thousands | | | | | | | | | | | | | | | |
Unaudited | | | | | | | | | |
September 30,
| |
Percent
| |
|
|
|
|
|
|
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Business Solutions Wireless Subscribers | | | | | | | | | | | | | | | |
Postpaid/Branded
| | | | | | | | | | 50,014 | | |
47,414
| | |
5.5
|
%
|
Reseller
| | | | | | | | | | 58 | | |
83
| | |
-30.1
|
%
|
Connected Devices
|
|
|
|
|
|
|
|
|
| 29,355 |
|
|
24,064
|
|
|
22.0
|
%
|
Total Business Solutions Wireless Subscribers
|
|
|
|
|
|
|
|
|
| 79,427 |
|
|
71,561
|
|
|
11.0
|
%
|
| | | | | | | | | | | | | | |
|
Business Solutions IP Broadband Connections |
|
|
|
|
|
|
|
|
| 963 |
|
|
891
|
|
|
8.1
|
%
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| |
Three Months Ended
| | | | | |
Nine Months Ended
| | | |
| |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Business Solutions Wireless Net Additions | | | | | | | | | | | | | | | |
Postpaid/Branded
| | 191 | | |
265
| | |
-27.9
|
%
| | 509 | | |
850
| | |
-40.1
|
%
|
Reseller
| | 1 | | |
8
| | |
-87.5
|
%
| | (34 | ) | |
14
| | |
-
|
%
|
Connected Devices
|
| 1,290 |
|
|
1,602
|
|
|
-19.5
|
%
|
| 4,067 |
|
|
4,104
|
|
|
-0.9
|
%
|
Total Business Solutions Wireless Net Additions
|
| 1,482 |
|
|
1,875
|
|
|
-21.0
|
%
|
| 4,542 |
|
|
4,968
|
|
|
-8.6
|
%
|
| | | | | | | | | | | | | | |
|
Business Solutions Wireless Postpaid Churn
|
| 0.97 | % |
|
1.05
|
%
|
|
-8
|
BP
|
| 0.97 | % |
|
0.95
|
%
|
|
2
|
BP
|
| | | | | | | | | | | | | | |
|
Business Solutions IP Broadband Net Additions |
| 15 |
|
|
20
|
|
|
-25.0
|
%
|
| 52 |
|
|
70
|
|
|
-25.7
|
%
|
| | | | | | | | | | | | | | | | | |
|
ENTERTAINMENT GROUP
The Entertainment Group segment provides video, internet, voice
communication, and interactive and targeted advertising services to
customers located in the U.S. or in U.S. territories. We utilize our
copper and IP-based wired network and/or our satellite technology.
Segment Results |
Dollars in millions | |
Three Months Ended
| | |
| |
|
Nine Months Ended
|
| | |
Unaudited | |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Segment Operating Revenues | | | | | | | | | | | | | | | |
Video entertainment
| $ | 9,026 | |
$
|
7,162
| | |
26.0
|
%
| $ | 26,893 | |
$
|
11,024
| | |
-
|
%
|
High-speed internet
| | 1,892 | | |
1,685
| | |
12.3
|
%
| | 5,562 | | |
4,861
| | |
14.4
|
%
|
Legacy voice and data services
| | 1,168 | | |
1,419
| | |
-17.7
|
%
| | 3,725 | | |
4,547
| | |
-18.1
|
%
|
Other service and equipment
|
| 634 |
|
|
592
|
|
|
7.1
|
%
|
| 1,909 |
|
|
1,868
|
|
|
2.2
|
%
|
Total Segment Operating Revenues |
| 12,720 |
|
|
10,858
|
|
|
17.1
|
%
|
| 38,089 |
|
|
22,300
|
|
|
70.8
|
%
|
| | | | | | | | | | | | | | |
|
Segment Operating Expenses | | | | | | | | | | | | | | | |
Operations and support expenses
| | 9,728 | | |
8,450
| | |
15.1
|
%
| | 28,875 | | |
18,222
| | |
58.5
|
%
|
Depreciation and amortization
|
| 1,504 |
|
|
1,389
|
|
|
8.3
|
%
|
| 4,481 |
|
|
3,519
|
|
|
27.3
|
%
|
Total Segment Operating Expenses |
| 11,232 |
|
|
9,839
|
|
|
14.2
|
%
|
| 33,356 |
|
|
21,741
|
|
|
53.4
|
%
|
Segment Operating Income | | 1,488 | | |
1,019
| | |
46.0
|
%
| | 4,733 | | |
559
| | |
-
|
%
|
Equity in Net Income (Loss) of Affiliates |
| - |
|
|
2
|
|
|
-
|
%
|
| 1 |
|
|
(16
|
)
|
|
-
|
%
|
Segment Contribution | $ | 1,488 |
|
$
|
1,021
|
|
|
45.7
|
%
| $ | 4,734 |
|
$
|
543
|
|
|
-
|
%
|
| | | | | | | | | | | | | | |
|
Segment Operating Income Margin |
| 11.7 |
| % |
9.4
|
|
%
|
|
|
| 12.4 |
| % |
2.5
|
|
%
|
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscribers and connections in thousands | | | | | | | | | | | | | | | |
Unaudited | | | | | | | | | |
September 30,
| |
Percent
| |
|
|
|
|
|
|
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Video Connections | | | | | | | | | | | | | | | |
Satellite
| | | | | | | | | | 20,777 | | |
19,570
| | |
6.2
|
%
|
U-verse
|
|
|
|
|
|
|
|
|
| 4,515 |
|
|
5,854
|
|
|
-22.9
|
%
|
Total Video Connections
|
|
|
|
|
|
|
|
|
| 25,292 |
|
|
25,424
|
|
|
-0.5
|
%
|
| | | | | | | | | | | | | | |
|
Broadband Connections | | | | |
`
| | | | | | | | | | |
IP
| | | | | | | | | | 12,752 | | |
12,185
| | |
4.7
|
%
|
DSL
|
|
|
|
|
|
|
|
|
| 1,424 |
|
|
2,137
|
|
|
-33.4
|
%
|
Total Broadband Connections
|
|
|
|
|
|
|
|
|
| 14,176 |
|
|
14,322
|
|
|
-1.0
|
%
|
| | | | | | | | | | | | | | |
|
Voice Connections | | | | | | | | | | | | | | | |
Retail Consumer Switched Access Lines
| | | | | | | | 6,155 | | |
7,675
| | |
-19.8
|
%
|
U-verse Consumer VoIP Connections
|
|
|
|
|
|
|
| 5,378 |
|
|
5,216
|
|
|
3.1
|
%
|
Total Retail Consumer Voice Connections
|
|
|
|
|
|
|
|
|
| 11,533 |
|
|
12,891
|
|
|
-10.5
|
%
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| |
Three Months Ended
| | | | | |
Nine Months Ended
| | | |
| |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Video Net Additions | | | | | | | | | | | | | | | |
Satellite
| | 323 | | |
26
| | |
-
|
%
| | 993 | | |
26
| | |
-
|
%
|
U-verse
|
| (326 | ) |
|
(92
|
)
|
|
-
|
%
| | (1,099 | ) |
|
(66
|
)
|
|
-
|
%
|
Total Video Net Additions
|
| (3 | ) |
|
(66
|
)
|
|
95.5
|
%
| | (106 | ) |
|
(40
|
)
|
|
-
|
%
|
| | | | | | | | | | | | | | |
|
Broadband Net Additions | | | | | | | | | | | | | | | |
IP
| | 156 | | |
172
| | |
-9.3
|
%
| | 396 | | |
802
| | |
-50.6
|
%
|
DSL
|
| (161 | ) |
|
(278
|
)
|
|
42.1
|
%
| | (506 | ) |
|
(922
|
)
|
|
45.1
|
%
|
Total Broadband Net Additions
|
| (5 | ) |
|
(106
|
)
|
|
95.3
|
%
|
| (110 | ) |
|
(120
|
)
|
|
8.3
|
%
|
| | | | | | | | | | | | | | | | | |
|
CONSUMER MOBILITY
The Consumer Mobility segment provides nationwide wireless service to
consumers and wholesale and resale wireless subscribers located in the
U.S. or in U.S. territories. We utilize our U.S. wireless network to
provide voice and data services, including high-speed internet, video,
and home monitoring services.
Segment Results |
Dollars in millions | |
Three Months Ended
|
| |
| |
|
Nine Months Ended
|
| | |
Unaudited | |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
2015
|
|
Change
|
|
|
| 2016 |
|
2015
|
|
Change
|
|
Segment Operating Revenues | | | | | | | | | | | | | | | |
Service
| $ | 6,914 |
$
|
7,363
| |
-6.1
|
%
| $ | 20,805 |
$
|
22,019
| |
-5.5
|
%
|
Equipment
|
| 1,353 |
|
1,421
|
|
-4.8
|
%
|
| 3,976 |
|
4,298
|
|
-7.5
|
%
|
Total Segment Operating Revenues |
| 8,267 |
|
8,784
|
|
-5.9
|
%
|
| 24,781 |
|
26,317
|
|
-5.8
|
%
|
| | | | | | | | | | | | | | |
|
Segment Operating Expenses | | | | | | | | | | | | | | | |
Operations and support expenses
| | 4,751 | |
5,065
| |
-6.2
|
%
| | 14,343 | |
15,808
| |
-9.3
|
%
|
Depreciation and amortization
|
| 944 |
|
976
|
|
-3.3
|
%
|
| 2,798 |
|
2,912
|
|
-3.9
|
%
|
Total Segment Operating Expenses |
| 5,695 |
|
6,041
|
|
-5.7
|
%
|
| 17,141 |
|
18,720
|
|
-8.4
|
%
|
Segment Operating Income | | 2,572 | |
2,743
| |
-6.2
|
%
| | 7,640 | |
7,597
| |
0.6
|
%
|
Equity in Net Income of Affiliates |
| - |
|
-
|
|
-
|
%
|
| - |
|
-
|
|
-
|
%
|
Segment Contribution | $ | 2,572 |
$
|
2,743
|
|
-6.2
|
%
| $ | 7,640 |
$
|
7,597
|
|
0.6
|
%
|
| | | | | | | | | | | | | | |
|
Segment Operating Income Margin |
| 31.1 | % |
31.2
|
%
|
|
|
| 30.8 | % |
28.9
|
%
|
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscribers and connections in thousands | | | | | | | | | | | | | | | |
Unaudited | | | | | | | | | |
September 30,
| |
Percent
| |
|
|
|
|
|
|
|
|
|
| 2016 |
|
2015
|
|
Change
|
|
Consumer Mobility Subscribers | | | | | | | | | | | | | | | |
Postpaid
| | | | | | | | | | 27,374 | |
29,257
| |
-6.4
|
%
|
Prepaid
|
|
|
|
|
|
|
|
|
| 13,035 |
|
10,988
|
|
18.6
|
%
|
Branded
| | | | | | | | | | 40,409 | # |
40,245
| |
0.4
|
%
|
Reseller
| | | | | | | | | | 12,566 | |
13,647
| |
-7.9
|
%
|
Connected Devices
|
|
|
|
|
|
|
|
|
| 936 |
|
953
|
|
-1.8
|
%
|
Total Consumer Mobility Subscribers
|
|
|
|
|
|
|
|
|
| 53,911 |
|
54,845
|
|
-1.7
|
%
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| |
Three Months Ended
| | | | | |
Nine Months Ended
| | | |
| |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
2015
|
|
Change
|
|
|
| 2016 |
|
2015
|
|
Change
|
|
Consumer Mobility Net Additions | | | | | | | | | | | | | | | |
Postpaid
| | 21 | |
23
| |
-8.7
|
%
| | 89 | |
289
| |
-69.2
|
%
|
Prepaid
|
| 304 |
|
466
|
|
-34.8
|
%
|
| 1,169 |
|
895
|
|
30.6
|
%
|
Branded
| | 325 | |
489
| |
-33.5
|
%
| | 1,258 | |
1,184
| |
6.3
|
%
|
Reseller
| | (316) | |
149
| |
-
|
%
| | (1,140) | |
(218)
| |
-
|
%
|
Connected Devices
|
| 41 |
|
-
|
|
-
|
%
|
| 14 |
|
(109)
|
|
-
|
%
|
Total Consumer Mobility Net Additions
|
| 50 |
|
638
|
|
-92.2
|
%
|
| 132 |
|
857
|
|
-84.6
|
%
|
| | | | | | | | | | | | | | |
|
Total Churn
| | 2.11% | |
1.90%
| |
21
|
BP
| | 2.06% | |
1.93%
| |
13
|
BP
|
Postpaid Churn
|
| 1.19% |
|
1.33%
|
|
-14
|
BP
|
| 1.17% |
|
1.23%
|
|
-6
|
BP
|
| | | | | | | | | | | | | |
|
INTERNATIONAL
The International segment provides entertainment services in Latin
America and wireless services in Mexico. Video entertainment services
are provided to primarily residential customers using satellite
technology. We utilize our regional and national wireless networks in
Mexico to provide consumer and business customers with wireless data and
voice communication services. Our international subsidiaries conduct
business in their local currency and operating results are converted to
U.S. dollars using official exchange rates.
Segment Results |
Dollars in millions | |
Three Months Ended
|
| |
| |
|
Nine Months Ended
|
| | |
Unaudited | |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Segment Operating Revenues | | | | | | | | | | | | | | | |
Video entertainment
| $ | 1,297 | |
$
|
945
| | |
37.2
|
%
| $ | 3,649 | |
$
|
945
| | |
-
|
%
|
Wireless service
| | 484 | | |
494
| | |
-2.0
|
%
| | 1,428 | | |
1,153
| | |
23.9
|
%
|
Wireless equipment
|
| 98 |
|
|
87
|
|
|
12.6
|
%
|
| 297 |
|
|
155
|
|
|
91.6
|
%
|
Total Segment Operating Revenues |
| 1,879 |
|
|
1,526
|
|
|
23.1
|
%
|
| 5,374 |
|
|
2,253
|
|
|
-
|
%
|
| | | | | | | | | | | | | | |
|
Segment Operating Expenses | | | | | | | | | | | | | | | |
Operations and support expenses
| | 1,640 | | |
1,384
| | |
18.5
|
%
| | 4,951 | | |
2,131
| | |
-
|
%
|
Depreciation and amortization
|
| 293 |
|
|
225
|
|
|
30.2
|
%
|
| 868 |
|
|
346
|
|
|
-
|
%
|
Total Segment Operating Expenses |
| 1,933 |
|
|
1,609
|
|
|
20.1
|
%
|
| 5,819 |
|
|
2,477
|
|
|
-
|
%
|
Segment Operating Income (Loss) | | (54 | ) | |
(83
|
)
| |
34.9
|
%
| | (445 | ) | |
(224
|
)
| |
-98.7
|
%
|
Equity in Net Income (Loss) of Affiliates |
| 1 |
|
|
(4
|
)
|
|
-
|
%
|
| 24 |
|
|
(4
|
)
|
|
-
|
%
|
Segment Contribution | $ | (53 | ) |
$
|
(87
|
)
|
|
39.1
|
%
| $ | (421 | ) |
$
|
(228
|
)
|
|
-84.6
|
%
|
| | | | | | | | | | | | | | |
|
Segment Operating Income Margin |
| (2.9 | ) | % |
(5.4
|
)
|
%
|
|
|
| (8.3 | ) | % |
(9.9
|
)
|
%
|
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscribers and connections in thousands | | | | | | | | | | | | | | | |
Unaudited | | | | | | | | | |
September 30,
| |
Percent
| |
|
|
|
|
|
|
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Mexican Wireless Subscribers | | | | | | | | | | | | | | | |
Postpaid
| | | | | | | | | | 4,733 | | |
4,159
| | |
13.8
|
%
|
Prepaid
|
|
|
|
|
|
|
|
|
| 5,665 |
|
|
3,487
|
|
|
62.5
|
%
|
Branded
| | | | | | | | | | 10,398 | | |
7,646
| | |
36.0
|
%
|
Reseller
|
|
|
|
|
|
|
|
|
| 300 |
|
|
445
|
|
|
-32.6
|
%
|
Total Mexican Wireless Subscribers
|
|
|
|
|
|
|
|
|
| 10,698 |
|
|
8,091
|
|
|
32.2
|
%
|
| | | | | | | | | | | | | | |
|
Latin America Satellite Subscribers | | | | | | | | | | | | | | | |
PanAmericana
| | | | | | | | | | 7,139 | | |
7,006
| | |
1.9
|
%
|
SKY Brazil
|
|
|
|
|
|
|
|
|
| 5,337 |
|
|
5,538
|
|
|
-3.6
|
%
|
Total Latin America Satellite Subscribers
|
|
|
|
|
|
|
|
|
| 12,476 |
|
|
12,544
|
|
|
-0.5
|
%
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| |
Three Months Ended
| | | | | |
Nine Months Ended
| | | |
| |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Mexican Wireless Net Additions | | | | | | | | | | | | | | | |
Postpaid
| | 163 | | |
15
| | |
-
|
%
| | 444 | | |
47
| | |
-
|
%
|
Prepaid
|
| 606 |
|
|
(210
|
)
|
|
-
|
%
|
| 1,670 |
|
|
(677
|
)
|
|
-
|
%
|
Branded
| | 769 | | |
(195
|
)
| |
-
|
%
| | 2,114 | | |
(630
|
)
| |
-
|
%
|
Reseller
|
| (26 | ) |
|
(36
|
)
|
|
27.8
|
%
|
| (100 | ) |
|
(59
|
)
|
|
-69.5
|
%
|
Total Mexican Wireless Net Additions
|
| 743 |
|
|
(231
|
)
|
|
-
|
%
|
| 2,014 |
|
|
(689
|
)
|
|
-
|
%
|
| | | | | | | | | | | | | | |
|
Latin America Satellite Net Additions | | | | | | | | | | | | | | | |
PanAmericana
| | (36 | ) | |
16
| | |
-
|
%
| | 73 | | |
16
| | |
-
|
%
|
SKY Brazil
|
| (12 | ) |
|
(129
|
)
|
|
90.7
|
%
|
| (107 | ) |
|
(129
|
)
|
|
17.1
|
%
|
Total Latin America Satellite Net Additions
|
| (48 | ) |
|
(113
|
)
|
|
57.5
|
%
|
| (34 | ) |
|
(113
|
)
|
|
69.9
|
%
|
| | | | | | | | | | | | | |
|
SUPPLEMENTAL OPERATING INFORMATION - AT&T
MOBILITY
As a supplemental discussion of our operating results, for comparison
purposes, we are providing a view of our combined domestic wireless
operations (AT&T Mobility).
Operating Results |
Dollars in millions | |
Three Months Ended
|
| |
| |
|
Nine Months Ended
|
| | |
Unaudited | |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
Operating Revenues | | | | | | | | | | | | | | | |
Service
| $ | 14,963 | |
$
|
15,095
| | |
-0.9
|
%
| $ | 44,673 | |
$
|
45,022
| | |
-0.8
|
%
|
Equipment
|
| 3,229 |
|
|
3,234
|
|
|
-0.2
|
%
|
| 9,398 |
|
|
9,797
|
|
|
-4.1
|
%
|
Total Operating Revenues |
| 18,192 |
|
|
18,329
|
|
|
-0.7
|
%
|
| 54,071 |
|
|
54,819
|
|
|
-1.4
|
%
|
| | | | | | | | | | | | | | |
|
Operating Expenses | | | | | | | | | | | | | | | |
Operations and support expenses
| | 10,696 | | |
10,865
| | |
-1.6
|
%
| | 31,822 | | |
33,310
| | |
-4.5
|
%
|
Depreciation and amortization
|
| 2,107 |
|
|
2,046
|
|
|
3.0
|
%
|
| 6,244 |
|
|
6,082
|
|
|
2.7
|
%
|
Total Operating Expenses |
| 12,803 |
|
|
12,911
|
|
|
-0.8
|
%
|
| 38,066 |
|
|
39,392
|
|
|
-3.4
|
%
|
Operating Income | | 5,389 | | |
5,418
| | |
-0.5
|
%
| | 16,005 | | |
15,427
| | |
3.7
|
%
|
Equity in Net Income of Affiliates |
| - |
|
|
-
|
|
|
-
|
%
|
| - |
|
|
-
|
|
|
-
|
%
|
Operating Contribution | $ | 5,389 |
|
$
|
5,418
|
|
|
-0.5
|
%
| $ | 16,005 |
|
$
|
15,427
|
|
|
3.7
|
%
|
| | | | | | | | | | | | | | |
|
Operating Income Margin |
| 29.6 |
| % |
29.6
|
|
%
|
|
|
| 29.6 |
| % |
28.1
|
|
%
|
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary Operating Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscribers and connections in thousands | | | | | | | | | | | | | | | |
Unaudited | | | | | | | | | |
September 30,
| |
Percent
| |
|
|
|
|
|
|
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
AT&T Mobility Subscribers | | | | | | | | | | | | | | | |
Postpaid
| | | | | | | | | | 77,388 | | |
76,671
| | |
0.9
|
%
|
Prepaid
|
|
|
|
|
|
|
|
|
| 13,035 |
|
|
10,988
|
|
|
18.6
|
%
|
Branded
| | | | | | | | | | 90,423 | | # |
87,659
| | |
3.2
|
%
|
Reseller
| | | | | | | | | | 12,624 | | |
13,729
| | |
-8.0
|
%
|
Connected Devices
|
|
|
|
|
|
|
|
|
| 30,291 |
|
|
25,018
|
|
|
21.1
|
%
|
Total AT&T Mobility Subscribers
|
|
|
|
|
|
|
|
|
| 133,338 |
|
|
126,406
|
|
|
5.5
|
%
|
| | | | | | | | | | | | | | |
|
Domestic Licensed POPs (000,000)
|
|
|
|
|
|
|
|
|
| 323 |
|
|
321
|
|
|
0.6
|
%
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | |
|
| |
Three Months Ended
| | | | | |
Nine Months Ended
| | | |
| |
September 30,
| |
Percent
| | | |
September 30,
| |
Percent
| |
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
|
| 2016 |
|
|
2015
|
|
|
Change
|
|
AT&T Mobility Net Additions | | | | | | | | | | | | | | | |
Postpaid
| | 212 | | |
289
| | |
-26.6
|
%
| | 598 | | |
1,140
| | |
-47.5
|
%
|
Prepaid
|
| 304 |
|
|
466
|
|
|
-34.8
|
%
|
| 1,169 |
|
|
895
|
|
|
30.6
|
%
|
Branded
| | 516 | | |
755
| | |
-31.7
|
%
| | 1,767 | |
#
|
2,035
| | |
-13.2
|
%
|
Reseller
| | (315 | ) | |
156
| | |
-
|
%
| | (1,174 | ) | |
(205
|
)
| |
-
|
%
|
Connected Devices
|
| 1,331 |
|
|
1,602
|
|
|
-16.9
|
%
|
| 4,081 |
|
|
3,995
|
|
|
2.2
|
%
|
Total AT&T Mobility Net Additions
|
| 1,532 |
|
|
2,513
|
|
|
-39.0
|
%
|
| 4,674 |
|
#
|
5,825
|
|
|
-19.8
|
%
|
M&A Activity, Partitioned Customers and Other Adjustments
| | 1 | | |
(9
|
)
| |
-
|
%
| | 24 | | |
27
| | |
-11.1
|
%
|
| | | | | | | | | | | | | | |
|
Total Churn
| | 1.45 | % | |
1.33
|
%
| |
12
|
BP
| | 1.41 | % | |
1.35
|
%
| |
6
|
BP
|
Postpaid Churn
|
| 1.05 | % |
|
1.16
|
%
|
|
-11
|
BP
|
| 1.04 | % |
|
1.06
|
%
|
|
-2
|
BP
|
| | | | | | | | | | | | | |
|
SUPPLEMENTAL SEGMENT RECONCILIATION |
| | | | | |
| | |
| | |
| | |
| | |
| | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
Dollars in millions | | | | | | | | | | | | | | | | | | | | |
Unaudited | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
|
September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
Operations and Support Expenses
|
|
EBITDA
|
|
|
Depreciation and Amortization
|
|
Operating Income (Loss)
|
|
Equity in Net Income (Loss) of Affiliates
|
|
Segment Contribution
|
Business Solutions
| $ | 17,767 | | | $ | 10,925 | | | $ | 6,842 | | | $ | 2,539 | | $ | 4,303 | | | $ | - | | | $ | 4,303 | |
Entertainment Group
| | 12,720 | | | | 9,728 | | | | 2,992 | | | | 1,504 | | | 1,488 | | | | - | | | | 1,488 | |
Consumer Mobility
| | 8,267 | | | | 4,751 | | | | 3,516 | | | | 944 | | | 2,572 | | | | - | | | | 2,572 | |
International
|
| 1,879 |
|
|
| 1,640 |
|
|
| 239 |
|
|
| 293 |
|
| (54 | ) |
|
| 1 |
|
|
| (53 | ) |
Segment Total
|
| 40,633 |
|
|
| 27,044 |
|
|
| 13,589 |
|
|
| 5,280 |
|
| 8,309 |
|
| $ | 1 |
|
| $ | 8,310 |
|
Corporate and Other
| | 270 | | | | 270 | | | | - | | | | 17 | | | (17 | ) | | | | | | |
Acquisition-related items
| | - | | | | 290 | | | | (290 | ) | | | 1,282 | | | (1,572 | ) | | | | | | |
Certain Significant items
|
| (13 | ) |
|
| 299 |
|
|
| (312 | ) |
|
| - |
|
| (312 | ) | | | | | | |
AT&T Inc.
| $ | 40,890 |
|
| $ | 27,903 |
|
| $ | 12,987 |
|
| $ | 6,579 |
| $ | 6,408 |
| | | | | | |
| | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | |
|
September 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
Operations and Support Expenses
|
|
EBITDA
|
|
|
Depreciation and Amortization
|
|
Operating Income (Loss)
|
|
Equity in Net Income (Loss) of Affiliates
|
|
Segment Contribution
|
Business Solutions
|
$
|
17,692
| | |
$
|
10,921
| | |
$
|
6,771
| | |
$
|
2,474
| |
$
|
4,297
| | |
$
|
-
| | |
$
|
4,297
| |
Entertainment Group
| |
10,858
| | | |
8,450
| | | |
2,408
| | | |
1,389
| | |
1,019
| | | |
2
| | | |
1,021
| |
Consumer Mobility
| |
8,784
| | | |
5,065
| | | |
3,719
| | | |
976
| | |
2,743
| | | |
-
| | | |
2,743
| |
International
|
|
1,526
|
|
|
|
1,384
|
|
|
|
142
|
|
|
|
225
|
|
|
(83
|
)
|
|
|
(4
|
)
|
|
|
(87
|
)
|
Segment Total
|
|
38,860
|
|
|
|
25,820
|
|
|
|
13,040
|
|
|
|
5,064
|
|
|
7,976
|
|
|
$
|
(2
|
)
|
|
$
|
7,974
|
|
Corporate and Other
| |
316
| | | |
315
| | | |
1
| | | |
3
| | |
(2
|
)
| | | | | | |
Acquisition-related items
| |
(85
|
)
| | |
611
| | | |
(696
|
)
| | |
1,198
| | |
(1,894
|
)
| | | | | | |
Certain Significant items
|
|
-
|
|
|
|
157
|
|
|
|
(157
|
)
|
|
|
-
|
|
|
(157
|
)
| | | | | | |
AT&T Inc.
|
$
|
39,091
|
|
|
$
|
26,903
|
|
|
$
|
12,188
|
|
|
$
|
6,265
|
|
$
|
5,923
|
| | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars in millions | | | | | | | | | | | | | | | | | | | | |
Unaudited | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
|
September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
Operations and Support Expenses
|
|
EBITDA
|
|
|
Depreciation and Amortization
|
|
Operating Income (Loss)
|
|
Equity in Net Income (Loss) of Affiliates
|
|
Segment Contribution
|
Business Solutions
| $ | 52,955 | | | $ | 32,584 | | | $ | 20,371 | | | $ | 7,568 | | $ | 12,803 | | | $ | - | | | $ | 12,803 | |
Entertainment Group
| | 38,089 | | | | 28,875 | | | | 9,214 | | | | 4,481 | | | 4,733 | | | | 1 | | | | 4,734 | |
Consumer Mobility
| | 24,781 | | | | 14,343 | | | | 10,438 | | | | 2,798 | | | 7,640 | | | | - | | | | 7,640 | |
International
|
| 5,374 |
|
|
| 4,951 |
|
|
| 423 |
|
|
| 868 |
|
| (445 | ) |
|
| 24 |
|
|
| (421 | ) |
Segment Total
|
| 121,199 |
|
|
| 80,753 |
|
|
| 40,446 |
|
|
| 15,715 |
|
| 24,731 |
|
| $ | 25 |
|
| $ | 24,756 |
|
Corporate and Other
| | 759 | | | | 940 | | | | (181 | ) | | | 54 | | | (235 | ) | | | | | | |
Acquisition-related items
| | - | | | | 818 | | | | (818 | ) | | | 3,949 | | | (4,767 | ) | | | | | | |
Certain Significant items
|
| (13 | ) |
|
| (383 | ) |
|
| 370 |
|
|
| - |
|
| 370 |
| | | | | | |
AT&T Inc.
| $ | 121,945 |
|
| $ | 82,128 |
|
| $ | 39,817 |
|
| $ | 19,718 |
| $ | 20,099 |
| | | | | | |
| | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | |
|
September 30, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
Operations and Support Expenses
|
|
EBITDA
|
|
|
Depreciation and Amortization
|
|
Operating Income (Loss)
|
|
Equity in Net Income (Loss) of Affiliates
|
|
Segment Contribution
|
Business Solutions
|
$
|
52,913
| | |
$
|
32,966
| | |
$
|
19,947
| | |
$
|
7,276
| |
$
|
12,671
| | |
$
|
-
| | |
$
|
12,671
| |
Entertainment Group
| |
22,300
| | | |
18,222
| | | |
4,078
| | | |
3,519
| | |
559
| | | |
(16
|
)
| | |
543
| |
Consumer Mobility
| |
26,317
| | | |
15,808
| | | |
10,509
| | | |
2,912
| | |
7,597
| | | |
-
| | | |
7,597
| |
International
|
|
2,253
|
|
|
|
2,131
|
|
|
|
122
|
|
|
|
346
|
|
|
(224
|
)
|
|
|
(4
|
)
|
|
|
(228
|
)
|
Segment Total
|
|
103,783
|
|
|
|
69,127
|
|
|
|
34,656
|
|
|
|
14,053
|
|
|
20,603
|
|
|
$
|
(20
|
)
|
|
$
|
20,583
|
|
Corporate and Other
| |
984
| | | |
785
| | | |
199
| | | |
47
| | |
152
| | | | | | | |
Acquisition-related items
| |
(85
|
)
| | |
1,604
| | | |
(1,689
|
)
| | |
1,439
| | |
(3,128
|
)
| | | | | | |
Certain Significant items
|
|
-
|
|
|
|
374
|
|
|
|
(374
|
)
|
|
|
-
|
|
|
(374
|
)
| | | | | | |
AT&T Inc.
|
$
|
104,682
|
|
|
$
|
71,890
|
|
|
$
|
32,792
|
|
|
$
|
15,539
|
|
$
|
17,253
|
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
|
Exhibit 99.3
Discussion and Reconciliation of Non-GAAP Measures
We believe the following measures are relevant and useful information to
investors as they are part of AT&T's internal management reporting and
planning processes and are important metrics that management uses to
evaluate the operating performance of AT&T and its segments. Management
also uses these measures as a method of comparing performance with that
of many of our competitors.
Free Cash Flow
Free cash flow is defined as cash from operations minus Capital
expenditures. Free cash flow after dividends is defined as cash from
operations minus Capital expenditures and dividends. Free cash flow
dividend payout ratio is defined as the percentage of dividends paid to
free cash flow. We believe these metrics provide useful information to
our investors because management views free cash flow as an important
indicator of how much cash is generated by routine business operations,
including Capital expenditures, and makes decisions based on it.
Management also views free cash flow as a measure of cash available to
pay debt and return cash to shareowners.
Free Cash Flow and Free Cash Flow Dividend Payout Ratio |
Dollars in millions |
| |
Three Months Ended
|
|
Nine Months Ended
|
| | |
September 30,
| | |
September 30,
|
|
|
| 2016 |
|
|
2015
|
|
|
| 2016 |
|
|
2015
|
|
Net cash provided by operating activities
| | $ | 10,995 | |
$
|
10,797
| | | $ | 29,202 | |
$
|
26,695
| |
Less: Capital expenditures
|
|
| (5,813 | ) |
|
(5,255
|
)
|
|
| (15,952 | ) |
|
(13,922
|
)
|
Free Cash Flow |
|
| 5,182 |
|
|
5,542
|
|
|
| 13,250 |
|
|
12,773
|
|
| | | | | | | | | |
|
Less: Dividends paid
|
|
| (2,951 | ) |
|
(2,438
|
)
|
|
| (8,850 | ) |
|
(7,311
|
)
|
Free Cash Flow after Dividends
|
| $ | 2,231 |
|
$
|
3,104
|
|
| $ | 4,400 |
|
$
|
5,462
|
|
Free Cash Flow Dividend Payout Ratio |
|
| 56.9 | % |
|
44.0
|
%
|
|
| 66.8 | % |
|
57.2
|
%
|
| | | | | | | | | | | | | |
|
Capital Investment
Capital Investment is a non-GAAP financial measure that adds to Capital
expenditures the amount of vendor financing arrangements for capital
improvements to our wireless network in Mexico. These favorable payment
terms are considered vendor financing arrangements and are reported as
repayments of debt instead of Capital expenditures. Management believes
that Capital Investment provides relevant and useful information to
investors and other users of our financial data in evaluating long-term
investment in our business.
Capital Investment |
Dollars in millions |
| |
Three Months Ended
|
|
Nine Months Ended
|
| |
September 30,
| |
September 30,
|
|
|
| 2016 |
|
2015
|
|
| 2016 |
|
2015
|
Capital Expenditures
| | $ | 5,813 |
$
|
5,255
| | $ | 15,952 |
$
|
13,922
|
Vendor Financing
|
|
| 87 |
|
-
|
|
| 225 |
|
-
|
Capital Investment |
| $ | 5,900 |
$
|
5,255
|
| $ | 16,177 |
$
|
13,922
|
| | | | | | | | | |
|
EBITDA
Our calculation of EBITDA, as presented, may differ from similarly
titled measures reported by other companies. For AT&T, EBITDA excludes
other income (expense) – net, and equity in net income (loss) of
affiliates, as these do not reflect the operating results of our
subscriber base or operations that are not under our control. Equity in
net income (loss) of affiliates represents the proportionate share of
the net income (loss) of affiliates in which we exercise significant
influence, but do not control. Because we do not control these entities,
management excludes these results when evaluating the performance of our
primary operations. EBITDA also excludes interest expense and the
provision for income taxes. Excluding these items eliminates the
expenses associated with our capital and tax structures. Finally, EBITDA
excludes depreciation and amortization in order to eliminate the impact
of capital investments. EBITDA does not give effect to cash used for
debt service requirements and thus does not reflect available funds for
distributions, reinvestment or other discretionary uses. EBITDA is not
presented as an alternative measure of operating results or cash flows
from operations, as determined in accordance with U.S. generally
accepted accounting principles (GAAP).
EBITDA service margin is calculated as EBITDA divided by service
revenues.
When discussing our segment results, EBITDA excludes equity in net
income (loss) of affiliates, and depreciation and amortization from
segment contribution. For our supplemental presentation of our combined
domestic wireless operations (AT&T Mobility), EBITDA excludes
depreciation and amortization from Operating Income.
These measures are used by management as a gauge of our success in
acquiring, retaining and servicing subscribers because we believe these
measures reflect AT&T's ability to generate and grow subscriber revenues
while providing a high level of customer service in a cost-effective
manner. Management also uses these measures as a method of comparing
segment performance with that of many of its competitors. The financial
and operating metrics which affect EBITDA include the key revenue and
expense drivers for which segment managers are responsible and upon
which we evaluate their performance.
We believe EBITDA Service Margin (EBITDA as a percentage of service
revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a
percentage of total revenue) for our Consumer Mobility segment operating
margin and our supplemental AT&T Mobility operating margin. For the
periods covered by this report, we subsidized a portion of some of our
wireless handset sales, which are recognized in the period in which we
sell the handset. Management views this equipment subsidy as a cost to
acquire or retain a subscriber, which is recovered through the ongoing
service revenue that is generated by the subscriber. We also use
wireless service revenues to calculate margin to facilitate comparison,
both internally and externally with our wireless competitors, as they
calculate their margins using wireless service revenues as well.
There are material limitations to using these non-GAAP financial
measures. EBITDA, EBITDA margin and EBITDA service margin, as we have
defined them, may not be comparable to similarly titled measures
reported by other companies. Furthermore, these performance measures do
not take into account certain significant items, including depreciation
and amortization, interest expense, tax expense and equity in net income
(loss) of affiliates. Management compensates for these limitations by
carefully analyzing how its competitors present performance measures
that are similar in nature to EBITDA as we present it, and considering
the economic effect of the excluded expense items independently as well
as in connection with its analysis of net income as calculated in
accordance with GAAP. EBITDA, EBITDA margin and EBITDA service margin
should be considered in addition to, but not as a substitute for, other
measures of financial performance reported in accordance with GAAP.
EBITDA, EBITDA Margin and EBITDA Service Margin |
Dollars in millions | |
Three Months Ended
|
|
Nine Months Ended
|
| |
September 30,
| | |
September 30,
|
|
| 2016 |
|
|
2015
|
|
|
|
| 2016 |
|
|
2015
|
|
Net Income | $ | 3,418 | |
$
|
3,078
| | | | $ | 10,818 | |
$
|
9,601
| |
Additions:
| | | | | | | | | | |
Income Tax Expense
| | 1,775 | | |
1,657
| | | | | 5,803 | | |
4,784
| |
Interest Expense
| | 1,224 | | |
1,146
| | | | | 3,689 | | |
2,977
| |
Equity in Net (Income) of Affiliates
| | (16 | ) | |
(15
|
)
| | | | (57 | ) | |
(48
|
)
|
Other (Income) Expense - Net
| | 7 | | |
57
| | | | | (154 | ) | |
(61
|
)
|
Depreciation and amortization
|
| 6,579 |
|
|
6,265
|
|
|
|
| 19,718 |
|
|
15,539
|
|
EBITDA |
| 12,987 |
|
|
12,188
|
|
|
|
| 39,817 |
|
|
32,792
|
|
| | | | | | | | | |
|
Total Operating Revenues
| | 40,890 | | |
39,091
| | | | | 121,945 | | |
104,682
| |
Service Revenues
| | 37,272 | | |
35,539
| | | | | 111,515 | | |
94,042
| |
| | | | | | | | | |
|
EBITDA Margin | | 31.8 | % | |
31.2
|
%
| | | | 32.7 | % | |
31.3
|
%
|
EBITDA Service Margin |
| 34.8 | % |
|
34.3
|
%
|
|
|
| 35.7 | % |
|
34.9
|
%
|
| | | | | | | | | |
|
Segment EBITDA, EBITDA Margin and EBITDA Service Margin |
Dollars in millions | |
Three Months Ended
|
|
Nine Months Ended
|
| |
September 30,
| | |
September 30,
|
|
| 2016 |
|
|
2015
|
|
|
| 2016 |
|
|
2015
|
|
Business Solutions Segment |
|
|
|
|
|
|
|
|
|
Segment Contribution | $ | 4,303 | |
$
|
4,297
| | | $ | 12,803 | |
$
|
12,671
| |
Additions:
| | | | | | | | | |
Depreciation and amortization
|
| 2,539 |
|
|
2,474
|
|
|
| 7,568 |
|
|
7,276
|
|
EBITDA |
| 6,842 |
|
|
6,771
|
|
|
| 20,371 |
|
|
19,947
|
|
| | | | | | | | |
|
Total Segment Operating Revenues
| | 17,767 | | |
17,692
| | | | 52,955 | | |
52,913
| |
| | | | | | | | |
|
Segment Operating Income Margin | | 24.2 | % | |
24.3
|
%
| | | 24.2 | % | |
23.9
|
%
|
EBITDA Margin | | 38.5 | % | |
38.3
|
%
| | | 38.5 | % | |
37.7
|
%
|
|
|
|
|
|
|
|
|
|
|
Entertainment Group Segment |
|
|
|
|
|
|
|
|
|
Segment Contribution | $ | 1,488 | |
$
|
1,021
| | | $ | 4,734 | |
$
|
543
| |
Additions:
| | | | | | | | | |
Equity in Net (Income) of Affiliates
| | - | | |
(2
|
)
| | | (1 | ) | |
16
| |
Depreciation and amortization
|
| 1,504 |
|
|
1,389
|
|
|
| 4,481 |
|
|
3,519
|
|
EBITDA |
| 2,992 |
|
|
2,408
|
|
|
| 9,214 |
|
|
4,078
|
|
| | | | | | | | |
|
Total Segment Operating Revenues
| | 12,720 | | |
10,858
| | | | 38,089 | | |
22,300
| |
| | | | | | | | |
|
Segment Operating Income Margin | | 11.7 | % | |
9.4
|
%
| | | 12.4 | % | |
2.5
|
%
|
EBITDA Margin | | 23.5 | % | |
22.2
|
%
| | | 24.2 | % | |
18.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Consumer Mobility Segment |
|
|
|
|
|
|
|
|
|
Segment Contribution | $ | 2,572 | |
$
|
2,743
| | | $ | 7,640 | |
$
|
7,597
| |
Additions:
| | | | | | | | | |
Depreciation and amortization
|
| 944 |
|
|
976
|
|
|
| 2,798 |
|
|
2,912
|
|
EBITDA |
| 3,516 |
|
|
3,719
|
|
|
| 10,438 |
|
|
10,509
|
|
| | | | | | | | |
|
Total Segment Operating Revenues
| | 8,267 | | |
8,784
| | | | 24,781 | | |
26,317
| |
Service Revenues
| | 6,914 | | |
7,363
| | | | 20,805 | | |
22,019
| |
| | | | | | | | |
|
Segment Operating Income Margin | | 31.1 | % | |
31.2
|
%
| | | 30.8 | % | |
28.9
|
%
|
EBITDA Margin | | 42.5 | % | |
42.3
|
%
| | | 42.1 | % | |
39.9
|
%
|
EBITDA Service Margin | | 50.9 | % | |
50.5
|
%
| | | 50.2 | % | |
47.7
|
%
|
|
|
|
|
|
|
|
|
|
|
International Segment |
|
|
|
|
|
|
|
|
|
Segment Contribution | $ | (53 | ) |
$
|
(87
|
)
| | $ | (421 | ) |
$
|
(228
|
)
|
Additions:
| | | | | | | | | |
Equity in Net (Income) of Affiliates
| | (1 | ) | |
4
| | | | (24 | ) | |
4
| |
Depreciation and amortization
|
| 293 |
|
|
225
|
|
|
| 868 |
|
|
346
|
|
EBITDA |
| 239 |
|
|
142
|
|
|
| 423 |
|
|
122
|
|
| | | | | | | | |
|
Total Segment Operating Revenues
| | 1,879 | | |
1,526
| | | | 5,374 | | |
2,253
| |
| | | | | | | | |
|
Segment Operating Income Margin | | -2.9 | % | |
-5.4
|
%
| | | -8.3 | % | |
-9.9
|
%
|
EBITDA Margin |
| 12.7 | % |
|
9.3
|
%
|
|
| 7.9 | % |
|
5.4
|
%
|
| | | | | | | | |
|
Supplemental AT&T Mobility EBITDA, EBITDA Margin and EBITDA
Service Margin |
Dollars in millions | |
Three Months Ended
|
Nine Months Ended
|
| |
September 30,
| |
September 30,
|
|
| 2016 |
|
|
2015
|
|
|
| 2016 |
|
|
2015
|
|
AT&T Mobility |
|
|
|
|
|
|
|
|
|
Operating Contribution | $ | 5,389 | |
$
|
5,418
| | | $ | 16,005 | |
$
|
15,427
| |
Add: Depreciation and amortization
|
| 2,107 |
|
|
2,046
|
|
|
| 6,244 |
|
|
6,082
|
|
EBITDA |
| 7,496 |
|
|
7,464
|
|
|
| 22,249 |
|
|
21,509
|
|
| | | | | | | | |
|
Total Segment Operating Revenues
| | 18,192 | | |
18,329
| | | | 54,071 | | |
54,819
| |
Service Revenues
| | 14,963 | | |
15,095
| | | | 44,673 | | |
45,022
| |
| | | | | | | | |
|
Segment Operating Income Margin | | 29.6 | % | |
29.6
|
%
| | | 29.6 | % | |
28.1
|
%
|
EBITDA Margin | | 41.2 | % | |
40.7
|
%
| | | 41.1 | % | |
39.2
|
%
|
EBITDA Service Margin |
| 50.1 | % |
|
49.4
|
%
|
|
| 49.8 | % |
|
47.8
|
%
|
| | | | | | | | |
|
Adjusting Items
Adjusting items include revenues and costs we consider nonoperational in
nature, such as items arising from asset acquisitions or dispositions.
We also adjust for net actuarial gains or losses associated with our
pension and postemployment benefit plans due to the often significant
impact on our fourth-quarter results (we immediately recognize this gain
or loss in the income statement, pursuant to our accounting policy for
the recognition of actuarial gains and losses.) Consequently, our
adjusted results reflect an expected return on plan assets rather than
the actual return on plan assets, as included in the GAAP measure of
income.
The tax impact of adjusting items is calculated using the effective tax
rate during the quarter except for (1) adjustments related to Mexico
operations, which are taxed at the 30% marginal rate for Mexico and (2)
adjustments that, given their magnitude can drive a change in the
effective tax rate, reflect the actual tax expense or combined marginal
rate of approximately 38%.
Adjusting Items |
Dollars in millions | |
Three Months Ended
|
|
Nine Months Ended
|
| |
September 30,
| | |
September 30,
|
|
| 2016 |
|
2015
|
|
|
| 2016 |
|
|
2015
|
Operating Revenues | | | | | | | | | |
Merger related deferred revenue
| $ | - |
$
|
85
| | | $ | - | |
$
|
85
|
Storm revenue credits
|
| 13 |
|
-
|
|
|
| 13 |
|
|
-
|
Adjustments to Operating Revenues |
| 13 |
|
85
|
|
|
| 13 |
|
|
85
|
Operating Expenses | | | | | | | | | |
DIRECTV and other video merger integration costs
| | 189 | |
173
| | | | 495 | | |
337
|
Mexico merger integration costs
| | 84 | |
42
| | | | 231 | | |
83
|
Wireless merger integration costs
| | 17 | |
146
| | | | 92 | | |
570
|
Leap network decommissioning
| |
-
| |
250
| | | |
-
| | |
614
|
New cell site abandonment
| | - | |
35
| | | | - | | |
35
|
Storm costs
| | 17 | |
-
| | | | 17 | | |
-
|
Employee separation costs
| | 260 | |
122
| | | | 314 | | |
339
|
(Gain) loss on transfer of wireless spectrum
|
| 22 |
|
-
|
|
|
| (714 | ) |
|
-
|
Adjustments to Operations and Support Expenses |
| 589 |
|
768
|
|
|
| 435 |
|
|
1,978
|
Amortization of intangible assets
|
| 1,282 |
|
1,171
|
|
|
| 3,949 |
|
|
1,284
|
Adjustments to Operating Expenses |
| 1,871 |
|
1,939
|
|
|
| 4,384 |
|
|
3,262
|
Other | | | | | | | | | |
DIRECTV-related interest expense and exchange fees 1 | | - | |
38
| | | | 16 | | |
142
|
(Gain) loss on sale of investments 2 |
| - |
|
-
|
|
|
| 4 |
|
|
-
|
Adjustments to Income Before Income Taxes |
| 1,884 |
|
2,062
|
|
|
| 4,417 |
|
|
3,489
|
Tax impact of adjustments
| | 640 | |
705
| | | | 1,521 | | |
1,202
|
Tax-related items
|
| - |
|
(34
|
)
|
|
| - |
|
|
228
|
Adjustments to Net Income | $ | 1,244 |
$
|
1,391
|
|
| $ | 2,896 |
|
$
|
2,059
|
1 Includes interest expense incurred on the debt issued prior
to the close of the DIRECTV transaction and fees associated with the
exchange of DIRECTV notes for AT&T notes.
2 Residual
effect of previously adjusted item.
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted
EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and
Adjusted diluted EPS are non-GAAP financial measures calculated by
excluding from operating revenues, operating expenses and income tax
expense certain significant items that are non-operational or
non-recurring in nature, including dispositions and merger integration
and transaction costs. Management believes that these measures provide
relevant and useful information to investors and other users of our
financial data in evaluating the effectiveness of our operations and
underlying business trends.
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted
Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin,
Adjusted EBITDA service margin and Adjusted diluted EPS should be
considered in addition to, but not as a substitute for, other measures
of financial performance reported in accordance with GAAP. AT&T's
calculation of Adjusted items, as presented, may differ from similarly
titled measures reported by other companies.
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA
Service Margin |
Dollars in millions | |
Three Months Ended
|
|
Nine Months Ended
|
| |
September 30,
| | |
September 30,
|
|
| 2016 |
|
|
2015
|
|
|
| 2016 |
|
|
2015
|
|
Operating Income | $ | 6,408 | |
$
|
5,923
| | | $ | 20,099 | |
$
|
17,253
| |
Adjustments to Operating Revenues
| | 13 | | |
85
| | | | 13 | | |
85
| |
Adjustments to Operating Expenses
|
| 1,871 |
|
|
1,939
|
|
|
| 4,384 |
|
|
3,262
|
|
Adjusted Operating Income |
| 8,292 |
|
|
7,947
|
|
|
| 24,496 |
|
|
20,600
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA | | 12,987 | | |
12,188
| | | | 39,817 | | |
32,792
| |
Adjustments to Operating Revenues
| | 13 | | |
85
| | | | 13 | | |
85
| |
Adjustments to Operations and Support Expenses
|
| 589 |
|
|
768
|
|
|
| 435 |
|
|
1,978
|
|
Adjusted EBITDA |
| 13,589 |
|
|
13,041
|
|
|
| 40,265 |
|
|
34,855
|
|
| | | | | | | | |
|
Total Operating Revenues
| | 40,890 | | |
39,091
| | | | 121,945 | | |
104,682
| |
Adjustments to Operating Revenues
|
| 13 |
|
|
85
|
|
|
| 13 |
|
|
85
|
|
Total Adjusted Operating Revenues |
| 40,903 |
|
|
39,176
|
|
|
| 121,958 |
|
|
104,767
|
|
Service Revenues
| | 37,272 | | |
35,539
| | | | 111,515 | | |
94,042
| |
Adjustments to Operating Revenues
|
| 13 |
|
|
85
|
|
|
| 13 |
|
|
85
|
|
Adjusted Service Revenues |
| 37,285 |
|
|
35,624
|
|
|
| 111,528 |
|
|
94,127
|
|
| | | | | | | | |
|
Operating Income Margin
| | 15.7 | % | |
15.2
|
%
| | | 16.5 | % | |
16.5
|
%
|
Adjusted Operating Income Margin
| | 20.3 | % | |
20.3
|
%
| | | 20.1 | % | |
19.7
|
%
|
Adjusted EBITDA Margin | | 33.2 | % | |
33.3
|
%
| | | 33.0 | % | |
33.3
|
%
|
Adjusted EBITDA Service Margin |
| 36.4 | % |
|
36.6
|
%
|
|
| 36.1 | % |
|
37.0
|
%
|
| | | | | | | | |
|
Adjusted Diluted EPS |
| |
Three Months Ended
|
|
Nine Months Ended
|
| |
September 30,
| | |
September 30,
|
|
| 2016 |
|
|
2015
|
|
| 2016 |
|
|
2015
|
|
Diluted Earnings Per Share (EPS) | $ | 0.54 | |
$
|
0.50
| | $ | 1.70 | |
$
|
1.71
| |
Amortization of intangible assets
| | 0.14 | | |
0.13
| | | 0.42 | | |
0.16
| |
Merger integration and other costs1 | | 0.03 | | |
0.09
| | | 0.09 | | |
0.22
| |
Employee separations
| | 0.03 | | |
0.01
| | | 0.03 | | |
0.04
| |
Gain (loss) on transfer of wireless spectrum
| | - | | |
-
| | | (0.07 | ) | |
-
| |
Tax-related items
|
| - |
|
|
0.01
|
|
| - |
|
|
(0.04
|
)
|
Adjusted EPS | $ | 0.74 |
|
$
|
0.74
|
| $ | 2.17 |
|
$
|
2.09
|
|
Year-over-year growth - Adjusted |
| 0.0 | % |
|
|
|
| 3.8 | % |
|
|
Weighted Average Common Shares Outstanding with Dilution
(000,000) |
| 6,189 |
|
|
5,943
|
|
| 6,191 |
|
|
5,463
|
|
1Includes combined merger integration costs, Leap network
decommissioning, DIRECTV-related interest expense and exchange fees,
abandonments and other costs.
Entertainment Group Segment
Adjusted Operating Revenues includes the external operating revenues
from DIRECTV U.S. as reported in the DIRECTV Form 10-Q/A dated June 30,
2015 adjusted to (1) include operations reported in other DIRECTV
operating segments that AT&T has chosen to manage in our Entertainment
Group segment, (2) conform DIRECTV's practice of recognizing revenue to
be received under contractual commitments on a straight line basis over
the minimum contract period to AT&T's method of limiting the revenue
recognized to the monthly amounts billed and (3) eliminate intercompany
transactions from DIRECTV U.S. and the Entertainment Group segment.
Adjusting Entertainment Group segment operating revenues provides for
comparability between periods.
Entertainment Group Adjusted Operating Revenues |
Dollars in millions | |
Three Months Ended
|
|
Nine Months Ended
|
| |
September 30,
| | |
September 30,
|
|
| 2016 |
|
|
2015
|
|
|
| 2016 |
|
|
2015
|
|
Segment Operating Revenues | $ | 12,720 | |
$
|
10,858
| | | $ | 38,089 | |
$
|
22,300
| |
DIRECTV Operating Revenues1 | | | |
1,700
| | | | | |
14,864
| |
Adjustments:
| | | | | | | | | |
Other DIRECTV operations
| | | |
-
| | | | | |
182
| |
Revenue recognition
| | | |
35
| | | | | |
229
| |
Intercompany eliminations
|
|
|
|
(6
|
)
|
|
|
|
|
(40
|
)
|
Adjusted Segment Operating Revenues | $ | 12,720 |
|
$
|
12,587
|
|
| $ | 38,089 |
|
$
|
37,535
|
|
Year-over-year growth - Adjusted |
| 1.1 | % |
|
|
|
| 1.5 | % |
|
|
1Includes results from July 1, 2015 through July 24, 2015
acquisition date.
|
|
|
Net Debt to Adjusted EBITDA
Net Debt to EBITDA ratios are non-GAAP financial measures frequently
used by investors and credit rating agencies and management believes
these measures provide relevant and useful information to investors and
other users of our financial data. The Net Debt to Adjusted EBITDA ratio
is calculated by dividing the Net Debt by annualized Net Debt Adjusted
EBITDA. Annualized Net Debt Adjusted EBITDA excludes severance-related
adjustments as described in our credit agreements. Net Debt is
calculated by subtracting cash and cash equivalents and certificates of
deposit and time deposits that are greater than 90 days, from the sum of
debt maturing within one year and long-term debt. Annualized Adjusted
EBITDA is calculated by annualizing the year-to-date Net Debt Adjusted
EBITDA.
Net Debt to Adjusted EBITDA |
Dollars in millions | | |
|
| | |
| |
Three Months Ended
| | | | |
| | Mar. 31, | | Jun. 30 | | Sep. 30 | | | | YTD 2016 |
|
| 2016 |
|
| 2016 |
|
| 2016 |
|
|
|
|
Adjusted EBITDA
|
$
|
13,279
| |
$
|
13,397
| |
$
|
13,589
| | | |
$
| 40,265 | |
Add back severance
| |
(25
|
)
| |
(29
|
)
| |
(260
|
)
| | | | (314 | ) |
Net Debt Adjusted EBITDA
| |
13,254
| | |
13,368
| | |
13,329
| | | | | 39,951 | |
Annualized Net Debt Adjusted EBITDA | | | | | | | | | | 53,268 | |
End-of-period current debt
| | | | | | | | | | 7,982 | |
End-of-period long-term debt
| | | | | | | | | | 117,239 | |
Total End-of-Period Debt | | | | | | | | | | 125,221 | |
Less: Cash and Cash Equivalents
| | | | | | | | | | 5,895 | |
Net Debt Balance |
|
|
|
|
|
|
|
|
| 119,326 |
|
Annualized Net Debt Adjusted EBITDA Ratio |
|
|
|
|
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| 2.24 |
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View source version on businesswire.com: http://www.businesswire.com/news/home/20161022005016/en/
Contacts:
AT&T Corporate Communications
Fletcher Cook, 214-757-7629
fletcher.cook@att.com
Source: AT&T Inc.
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