HBO Max To See More Interest With Fire TV Debut, 'Wonder Woman 1984' Launch, Says Outgoing AT&T CFO

AT&T Inc's T outgoing Senior Executive Vice President and Chief Financial Officer John Stephens, in his update to the shareholders, spoke about the momentum in postpaid wireless plans. AT&T was able to reduce churn in the third quarter of 2020 and drive adoption of higher-tier unlimited plans that include HBO Max.

Stephens said that the combination of its network and user demand for entertainment would yield positive long-term value creation across AT&T's customer base. HBO Max's availability on Amazon.com Inc.'s AMZN Fire TV and the simultaneous release of "Wonder Woman 1984" on HBO Max and in theaters will add to HBO Max's attractiveness to new customers.

AT&T expects a 2020 full-year free cash flow of more than $26 billion. Dwelling deeper into capital allocation, Stephens said that AT&T's dividend payout ratio for full-year 2020 would be in the high 50s%.

AT&T has refinanced more than $60 billion of debt at historically low rates and has $30 billion debt due through 2025. The combination of higher free cash flow and lower-priced debt gives it the financial strength to invest in high-growth areas of fiber, 5G, and HBO Max.

Stephens said that AT&T's integrated fiber strategy is expected to improve the company's connectivity offering for both consumer and enterprise markets and enhance its 5G network quality in a cost-efficient manner.

The telecommunications company is also generating savings from efficiencies, organizational alignments, and the optimization of cash returns from select business operating units.

Why It Matters: AT&T saw traction in the third-quarter in mobility and broadband. It reported 5.53 million mobility net adds, significantly beating Bloomberg's consensus of 2.84 million.

Broadband net adds of 158,000 was a surprise beat as analysts expected a net add loss of 73,000. Domestic HBO and HBO Max subscribers totaled more than 38M and 57M, exceeding its year-end target of 36 million subscribers.

Price Action: AT&T shares closed higher by a marginal 0.14% at $28.32 on Friday.