Market Overview

John Stephens Discusses AT&T Results, Outlook at Oppenheimer Conference


John Stephens, AT&T
* senior executive vice president and chief financial officer
spoke today at the Oppenheimer Technology, Internet & Communications

Stephens said that the company was pleased by the second-quarter
performance of its WarnerMedia business, renamed after AT&T closed its
acquisition of Time Warner in June. Stephens noted that with the
acquisition of Time Warner, AT&T has scaled premium content to augment
AT&T's 170 million direct-to-consumer relationships, advanced
advertising technology and high-speed network capabilities.1

WarnerMedia was accretive to AT&T's second-quarter results in the 16
days following the close of the acquisition on June 14. For the
full-quarter, WarnerMedia delivered revenue growth in all three of its
operating units — HBO, Warner Bros and Turner. WarnerMedia received a
total of 166 Primetime Emmy nominations this year, and Warner Bros has
more than 75 series underway for the 2018-2019 television season, a
company record.

Stephens said the company is confident in its ability to manage its debt
portfolio. AT&T expects its net-debt-to-adjusted EBITDA ratio to reach
the 2.9x range by the end of 2018, dropping to the 2.5x range by the end
of 2019 and reaching historical levels in the 1.8x range by the end of
2022. The company expects 2018 full-year free cash flow in the high end
of the $21 billion range with accretion from WarnerMedia offset by
pressure from integration and deal-related costs. Stephens said the
company expects 2019 free cash flow will increase from 2018 levels as
one-time deal-related costs abate and the company takes advantage of
opportunities to further lower capital intensity.

The company expects its 2018 dividend payout as a percentage of free
cash flow will be in the low 60% range or lower. The company plans to
give its board of directors the flexibility to continue to increase the
quarterly dividend. He also noted that recently announced acquisitions
are expected to be funded with pending asset sales and reiterated that
the company will continue to explore opportunities to monetize non-core

Other updates from the company include:

  • AT&T's recently announced investments, including AppNexus, AlienVault
    and the 2.5 GHz spectrum auction in Mexico, will be essentially funded
    by the company's pending sale of data centers to Brookfield
    Infrastructure partners and recent spectrum sales, and don't affect
    de-leveraging plans or targets.
  • In the Entertainment Group segment, with a focus on new capabilities
    and revenue opportunities as well as advertising growth, AT&T believes
    it has an opportunity to improve trends in 2019.
  • In wireless, AT&T expects that service revenues will continue to grow
    in the second half of 2018 and that they will increase for the full
    year, both on a comparable basis. The company also expects that its
    postpaid phone net additions will be positive for full-year 2018.
  • In AT&T Business, with many indicators pointing to a stronger economy,
    the company remains hopeful that it will see a lift in demand for AT&T
    Business services.
  • In Latin America, the company expects a positive EBITDA trajectory for
    AT&T Mexico exiting 2018, with plans to be EBITDA positive in 2019.
    AT&T also remains focused on growing its Vrio pay TV operations in
    Latin America.

1 Represents cumulative video-capable D2C relationships
across the following services: Postpaid, prepaid and reseller wireless;
US and LatAm pay-TV, including DIRECTV NOW; Mexico wireless; and US
consumer broadband.

*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 the world's largest TV and film studio, 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 more than 3
million business customers with high-speed, highly secure connectivity
and smart solutions. AT&T International 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. AT&T ad and analytics provides marketers with innovative,
targeted, data-driven advertising solutions around premium video content.

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
© 2018 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 U.S. 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

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