Press release

AT&T Provides Updates to Shareholders at JP Morgan and MoffettNathanson Conferences

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The chief executive officer and chief financial officer of AT&T (NYSE:T)
gave updates at two events today. Randall Stephenson, chairman and CEO,
spoke today at the JP Morgan Global Technology, Media and Communications
Conference. John Stephens, chief financial officer, spoke at the
MoffettNathanson Media & Communications Summit. Included in their
comments were key updates for shareholders:

Capital allocation. AT&T continues to expect to achieve an
adjusted net debt-to-EBITDA ratio in the 2.5x range by the end of 2019.
The company has already announced $5B in asset monetization, against its
goal of $6 billion to $8 billion in net asset monetization for the full
year. The company expects by yearend to have repaid 75% of the $40
billion it borrowed to acquire Time Warner Inc. last year. To the extent
the company overachieves on cash generation this year, AT&T said it will
look at using a portion of its free cash flow after dividends to retire
some of the shares it issued in conjunction with acquiring Time Warner,
particularly with shares at today’s levels. Looking to 2020, AT&T said
it will continue to generate significant cash flow, and it will continue
to de-lever — though not at the same pace as in 2019.

U.S. wireless service revenue growth. AT&T continues to expect
full-year 2019 wireless service revenues to grow, which it expects will
contribute to wireless EBITDA growth. The Mobility segment represents
about half of AT&T’s total EBITDA. Catalysts for growth include postpaid
smartphone adoption, the move to higher-ARPU unlimited plans and
continued Cricket subscriber growth. The company also expects its
FirstNet build and superior network quality will help it attract and
retain customers. AT&T has been recognized by third parties for having
the nation’s fastest1 and best2 wireless network.

WarnerMedia had a strong first quarter and is organized for the
future. AT&T’s WarnerMedia unit plans to beta launch a subscriber
video on demand (SVOD) service in the fourth quarter of 2019 with a full
launch planned for first quarter 2020. This service will be anchored by
premium content from HBO, Warner Bros. and Turner, augmented by the
addition of original and third-party content in the longer term. The
company expects this service will have millions of customers, expanding
the audience for and increasing engagement with WarnerMedia content. The
company spends about $14 billion annually on content. It plans to take
back some owned-content previously licensed to others and instead make
it available on the upcoming WarnerMedia SVOD service.

FirstNet momentum. As previously announced, AT&T’s FirstNet
deployment is ahead of schedule with more than 600,000 connections
across more than 7,250 public safety agencies. The company expects
FirstNet subscriber growth to ramp throughout 2019. On average, for
every first responder subscribing to FirstNet with a personal device,
the company adds an additional family member as a subscriber. The
FirstNet build has also allowed AT&T to expand its sales distribution
network into new areas it didn’t previously serve.

5G expansion. AT&T has mobile 5G in parts of 19 cities today
and expects to have nationwide 5G coverage by early 2020. AT&T is
focusing first on business customers and the use cases and applications
that benefit from the high speeds and ultra-low latency this spectrum
will eventually offer. For example, the company is working with
hospitals, manufacturers and others. AT&T also plans to offer two 5G
smartphones in 2019, which it expects to promote to early adopters. In a
recent test on its live 5G network and using a commercially available
device, AT&T saw data speeds faster than 2 Gbps.

Focus on profitability in Entertainment Group. AT&T continues to
focus on profitability in its Entertainment Group and expects to meet or
beat its target for stable EBITDA of around $10B in both 2019 and 2020,
with growing broadband revenues and continued secular pressure on linear
video subscribers. The company expects elevated levels of linear video
declines throughout 2019, noting that second-quarter subscriber losses
in the past two years have averaged more than 100,000 higher
sequentially than in the first quarter. In premium video, it expects
that margins will improve as 2-year price locks expire. About 1.6
million video subscribers remained on these price locks at the end of
the first quarter, which the company expects to decline to zero by
yearend. In 2020, the company expects premium TV subscriber losses to
improve as a result of no subscribers on two-year price locks, improved
churn and additional subscribers from the launch of its thin-client
video product. The thin-client product will offer premium streaming at a
lower price than DIRECTV and with lower customer acquisition costs. AT&T
also expects continued support from higher broadband revenues, driven by
higher ARPUs as more subscribers move to its fiber platform. The
company anticipates these will combine for improved margin trends in
2020 versus 2019.

Reiterating 2019 guidance.3 For
full-year 2019, AT&T expects:

  • Free cash flow in the $26 billion range
  • Low single-digit adjusted EPS growth
  • Dividend payout ratio in the high 50s% range4
  • End-of-year net debt-to-adjusted EBITDA ratio in the 2.5x range
  • Gross capital investment in the $23 billion range5

Webcasts from the two conferences will be available for replay until
June 28, 2019:


1 Based on analysis by Ookla® of Speedtest Intelligence® data
average download speeds for Q1 2019.
2 Based on Global
Wireless Solutions (GWS)® “Best Network OneScore” awarded to AT&T for
overall national wireless network performance in 2018.
3
Adjustments to EPS include merger-related amortization in the range of
$7.5 billion, a non-cash mark-to-market benefit plan gain/loss, merger
integration and other adjustments. We expect the mark-to-market
adjustment which is driven by interest rates and investment returns that
are not reasonably estimable at this time, to be a significant item. Our
EPS, free cash flow and EBITDA estimates depend on future levels of
revenues and expenses which are not reasonably estimable at this time.
Accordingly, we cannot provide a reconciliation between our non-GAAP
metrics and the reported GAAP metrics without unreasonable effort. (Our
2019 outlook for Net Debt to Adjusted EBITDA ratio excludes the impact
of a new accounting standard for leases (ASC 842) that is effective
beginning January 1, 2019 to be consistent with our existing multi-year
guidance on this debt ratio.)
4 Free cash flow dividend
payout ratio is dividends divided by free cash flow.
5
Excludes expected FirstNet reimbursements in the $1 billion range;
includes potential vendor financing


*About AT&T

AT&T Inc. (NYSE:T)
is a diversified, global leader in telecommunications, media and
entertainment, and technology. It executes in the market under four
operating units. WarnerMedia’s HBO, Turner and Warner Bros. divisions
are world leaders in creating premium content, operate one of the
world’s largest TV and film studios, and own a world-class library of
entertainment. AT&T Communications provides more than 100 million U.S.
consumers with entertainment and communications experiences across TV,
mobile and broadband services. Plus, it serves nearly 3 million business
customers with high-speed, highly secure connectivity and smart
solutions. AT&T Latin America provides pay-TV services across 11
countries and territories in Latin America and the Caribbean, and is the
fastest growing wireless provider in Mexico, serving consumers and
businesses. Xandr provides marketers with innovative and relevant
advertising solutions for consumers around premium video content and
digital advertising through its AppNexus platform.

AT&T products and services are provided or offered by subsidiaries and
affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.
Additional information is available at about.att.com. © 2019 AT&T
Intellectual Property. All rights reserved. AT&T, the Globe logo and
other marks are trademarks and service marks of AT&T Intellectual
Property and/or AT&T affiliated companies. All other marks contained
herein are the property of their respective owners.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates
and other forward-looking statements that are subject to risks and
uncertainties, and actual results might differ materially. A discussion
of factors that may affect future results is contained in AT&T’s filings
with the Securities and Exchange Commission. AT&T disclaims any
obligation to update and revise statements contained in this news
release based on new information or otherwise.

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