AT&T Conference Call Highlights

AT&T Inc. T reported its third quarter earnings on Wednesday. Shares of the company are down 3 percent.

Below are some key highlights and takeaways from its conference call.

Performance:

• It's been nearly 2 years since we first announced our VIP initiatives and our plans to transition to IP networks.
• Basically, we're doing everything we said we were going to do and more.
• We reached our 4G LTE build target in the third quarter four months ahead of schedule.
• The nation's most reliable LTE network now covers more than 300 million people.
• We continue to improve our cell site density and add capacity to help keep our network best in class.
• We're also on pace with our wireline network goals.
• Our high-speed IP broadband network now reaches 57 million customer locations.
• About two thirds of our U-verse video footprint now has access to 45 Mb per second speeds.
• We also continue to make progress on expanding our U-verse video footprint, and we have committed to deploy ultrafast AT&T GigaPower service in 17 markets.
• Our fiber-to-the-business expansion also is going strong.
• We now pass more than 600,000 new business customer locations with fiber, well on our way to our 1 million goal.
• More than 80% of our Smartphone base is now on usage-based plans.
• At the same time, Mobile Share Value has helped move customers off the traditional subsidy model.
• We also have launched new business opportunities that will leverage our investment in our high-speed networks.
• The connected car is ready to take off.
• In the third quarter alone, we added more than 500,000 connected cars as the 2015 models start to roll off the assembly lines.
• Digital Life, the first all-digital, all-IP home security and automation platform, has launched in 82 markets and has about 140,000 subscribers.
• A commercial rollout of network-on-demand-enabled Ethernet services is expected in Austin by the end of this year.

Financials:

• Our financial strength allows us to invest while still returning substantial value to shareholders.
• In fact, since 2012, we have returned more than $50 billion to shareholders through dividends and share buybacks.
• Cash flows are strong, and we have been aggressive in monetizing non-strategic assets.
• Including the sale of our Connecticut Wireline property, we have generated about $16 billion in cash proceeds from asset sales.
• This has helped us average nearly $20 billion a year in free cash flow and asset sales over the last two years.
• Consolidated revenue grew to $33 billion, up $800 million or 2.5% year-over-year.
• This was driven by continued Wireless growth as we repositioned our business model, solid Consumer Wireline growth, once again led by U-verse, and continued growth in Strategic Business Services.
• Reported EPS for the quarter was $0.58.
• In the quarter, we had $0.03 of costs associated with merger and integration-related expenses.
• We also redeemed some debt early in the quarter to take advantage of low interest rates.

Operational Highlights:

• We continue to have a large base of customers on discounted Mobile Share Value plans who have yet to migrate to Next.
• About 20% of our smartphone base is on Next, but about 52% of smartphone subscribers are on the non-subsidy pricing.
• This means that there are about 20 million potential Next customers we expect to upgrade. That's up from 17 million at the end of the second quarter.
• Next take rates continue to be strong in company-owned stores, nearly all or more than 90% of our Mobile Share Value customers with pre-Next pricing are choosing AT&T Next when they upgrade in company-owned stores.
• It all comes down to customer choice. Customers can choose the plan that is best for them, and that's great for us.
• Phone-only ARPU with Next billings improved sequentially by 2%. The average monthly Next billings were about $29 per month, driving our ARPU with Next higher.
• During the quarter, we added more than 2 million Mobile Share accounts, giving us 16.7 million in total. That's three times as many as we had a year ago.
• And we averaged about three connections per Mobile Share account or nearly 47 million connections in total. That's roughly 60% of our overall postpaid base.