AT&T ANALYST MEETING
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AT&T ANALYST MEETING
Mike ViolaSenior Vice President, Investor Relations, AT&T Inc.
Cautionary Language Concerning Forward-Looking Statements
Information set forth in this presentation 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 presentation based on new information or otherwise.
This presentation 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.
The “quiet period” for FCC Spectrum Auctions 101/102 (28Ghz and 24Ghz) 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.
Randall StephensonChairman and CEO, AT&T Inc.
AT&T Composition3rd Quarter
Note: WarnerMedia revenue shown net of eliminations
39%48%
16%17%
15%
17%25%
15%
ADJ. EBITDAREVENUE
Mobility
Entertainment Group
Business Wireline
Latin America / Other
WarnerMedia
5%
100% 100%
3%
John DonovanCEO, AT&T Communications, LLC
~50%
Growing revenues and EBITDA
+2.3% service revenue growth YoY1
High quality phone subscriber base
+2.7mn smartphones added since 3Q17
Nation’s Best Network
Mobility
Of AT&T’s Adj. EBITDA1
1 On a comparable basis; 3Q 18
Leading the Path to 5G
Laying 5G groundwork
Exploring service opportunities
Working with Developers
Steady EBITDA over last 3 years
3Q16 3Q17 3Q18
Comparable Business Wireline EBITDA
$2.8 $2.7$2.7$2.7 $2.6$2.8
Business
3,600 Agencies
250,000+ Subscribers
~1/3 FirstNet square miles covered
Reimbursements to come
$2.7 $2.6$2.6
Billions ($B)
Broadband growing
Video product evolution
Path to EBITDA stability
Entertainment Group
2019 EBITDA~25mn Video Subscribers
~$10B ~$10B~($1B) ~$1B ~$0.2B~$0.4B ~$0.4B
2018 EBITDA~25mn Video Subscribers
Voice and Accounting Pressure
~($1B)
Video Subscriber Losses
Linear Improvement
OTTProfitability
Broadband Growth
Cost Initiatives
2-year price lock roll-off
Xandradvertising
ARPU growth
Fiber subscriber growth
Increased efficiency and automation
ARPU growth
Repackaging
Adjusted promotions
Entertainment GroupPath to stabilizing EBITDA
John StankeyCEO, WarnerMedia
WarnerMedia Highlights
$2.4 $2.0 $2.0 $1.8 $2.6
$7.7 $8.7 $8.1 $7.9$8.2
-
2.0
4.0
6.0
8.0
10.0
12.0
3Q17 4Q17 1Q18 2Q18 3Q18
Revenues Operating Income
TurnerCNN continues as the #1 digital news destination
3 of the top 5 ad-supported cable nets in primetime YTD3
Home Box Office23 Primetime Emmy Awards in 2018
Over 140 million global subscribers2
Warner Bros.Strong 4Q theatrical slate
Producing >70 series for the 2018-2019 TV season
Revenues & Operating Income1
$ in billions
1Reflects historic Time Warner adjusted results and RSNs. Otter Media is included in WarnerMedia results following AT&T's 8/7/18 acquisition of the controlling interest.Note: All stats through Q3; (2) As of year end 2017. Includes Cinemax and unconsolidated joint ventures; (3) Among adults 18-49
Watching MonetizationModels
Longform & Shortform
Premium / Native Digital
Dynamic & Mobile
RAPIDLY SHIFTING TOWARDS DIGITAL CONSUMPTION AND SPENDING…
… AND DIRECT CUSTOMER RELATIONSHIP IS CRITICAL
The Entertainment Industry is Evolving
Well Positioned to Capitalize
Iconic brands and franchises
Award winningcontent
Creativeexcellence
Top talent relationships
Strong global presence
Complements existing businesses
Good for distribution partners
Enables expanded reach and growing subscriber bases
Captures data and analytics to inform new products and enable better monetization
Direct to Consumer
Our New Direct to Consumer Offer
WARNERMEDIA AND LICENSED CONTENT FROM OTHERS
TARGET LAUNCH: 4Q 2019
Entry-level Service
Premium Service
Additional
• Classics• Kids & Family• Theatrical
BUNDLESERVICE
PREMIUMSERVICE
Premium & Popular Original Programming
Blockbuster Movies
ENTRYSERVICE
Movie-Focused
• Comedy• Niche/Genre
aVOD Wholesale Distribution
sVOD
Positioned for the Future
Engagement
Penetration
ARPU
AT&T Reach
Lori LeeCEO, AT&T Latin America and Global Marketing Officer
• Descriptive content for stat is Aleck Sans 40pt.
At a Glance31M SUBSCRIBERS
12 COUNTRIES
$8.3B 2017REVENUE
Environment for Growth
Network Investment Completed
Mexico2015 2016 2017 3Q-2018
MOBILE SUBS 9M 12M 15M 17M
PEOPLE COVERED 44M 78M 94M ~100M
The Most Reliable Network in Mexico1
1 Claim based on a 3rd party analysis during drive-testing developed by Nielsen. The test reported that AT&T’s network leads in overall composite “reliability” indicator ( Note - reliability factors in 2G, 3G and 4G LTE networks).
Sustained track record of growth and cash generation
Opportunity with OTT
Vrio
2016 2017 3Q 2018
.1Simple Free Cash Flow = Adjusted EBITDA less Capital Expenditures2Revenue growth figures are on a constant currency basis, excluding Venezuela.
10.8% 8.5%8.5% Revenue growth2
Simple free cash flow1
Brian LesserCEO, Xandr
Buying in mass buying audiences
DIGITAL ADVERTISING IS BORN EXPLOSION OF AD TECH AND PLATFORMSBUYING CONTEXTUALLY
AD AD
SUBSCRIBERDATA
PURCHASEDATA
SITE VISITDATA
3RD PARTY DATA
BROWSINGDATA
TVVIEWERSHIP
DATA
LOCATIONDATA
COMEDY CENTRAL
ESPN
NFL NETWORK
FOX SPORTS
AMAZON PRIME VIDEO
NETFLIX YOUTUBE
A&E
Ad tech has brought us to a criticalmoment in time
MAJOR PLAYERS NOT WELL POSITIONED IN
PREMIUM TV AND VIDEO
ADVERTISERS AND AGENCIES
ARE FRUSTRATED
NO SINGLE PLAYER HAS ASSEMBLED
THE ASSETS
Compelling Set of Assets
DISTRIBUTION
DATA CONTENT
TECHNOLOGY
Our Media Sales Business and Platform Businesses Complement Each Other to Magnify the Opportunity
INVENTORY
AGENCIES & ADVERTISERS
AUDIENCES/ VIEWERS
Direct Sales
Programmatic Sales
3rd party
TV Platform
Digital Platform
Measuring Success
OUTPACE THE MARKET
SCALE WITH 3RD PARTIES
INTERNAL USE OF PLATFORM
John Stephens CFO, AT&T Inc.
The Integrated Growth Story
AT&T LATIN AMERICA
AT&T COMMUNICATIONS
Mobility: top and bottom line growth
Stable EBITDA in Entertainment Group in 2019
Continued solid performance with managed growth
Direct-to-consumer plan to launch in 4Q 19
Nearly $7B annualized revenues and growing
Management team, ad inventory and platform in place
AT&T Mexico improving profitability
Sustained cash generation at Vrio
Merger Synergies
END OF YEAR RUN RATE
RUN RATE TARGET
2019 2020 2021
COST SYNERGIES
$1.5B• Marketing
• Corporate overhead
• Procurement
REVENUE SYNERGIES
$1.0B• Advertising
• Churn reduction
• Cross selling
TOTALSYNERGIES
$2.5B ~ $0.7B ~ $2.0B ~ $2.5B
Leverage Update 20192019 PLAN
YE 2018 2019 YE 2019
~$170B
~$150B~2.8x1
~2.5x1
LIQUIDITY AND REFINANCING
~$6-$8B Other cash generation initiatives
~$158B
~2.6x1
1 Net debt to Adj. EBITDA ratio; illustrative of $60B Adj. EBITDA
Pension plan essentially fully funded
~$12B Free cash flow after dividends
Hedged against rising interest rates
Successfully managed near term maturities and refi risk
2019
Consolidated Guidance
2019
FREE CASH FLOW $26B range
DIVIDEND PAYOUT High 50s %
NET DEBT TO ADJ. EBITDA 2.5x range
GROSS CAPITAL INVESTMENT1
$23B range
ADJ. EPS GROWTH %2
Low single digits
1 Excludes expected FirstNet reimbursement in the $1 billion range; includes potential vendor financing.2 Adjustments include merger-related adjusted amortization costs 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. Accordingly, we cannot provide a reconciliation between forecasted adjusted diluted EPS and reported diluted EPS without unreasonable effort.
AT&T ANALYST MEETING
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