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AT&T Investor Update

1Q09 Earnings Conference Call April 22, 2009

2009 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other marks contained herein are trademarks 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 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&Ts 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 companys Web site at www.att.com/investor.relations.

1Q09 Financial Summary


AT&T Diluted Earnings Per Share
$0.57 $0.53

Solid quarter, strong cost execution, results in line with full-year outlook:
$0.53 EPS includes $0.05 of pressure from incremental noncash pension/retiree benefits costs Stable consolidated revenues (0.6)% versus 1Q08; continuing economic impacts largely offset by growth in wireless, U-verseSM, broadband and strategic business services Stable consolidated margins 18.8% in 1Q09 versus 18.6% for full-year 2008

1Q08

1Q09

$4.6 billion in free cash flow before dividends

AT&T 1Q09 Highlights


Strong wireless growth 1.2 million total net adds; 875,000 postpaid net adds, up 24.1% versus 1Q08 1.6 million iPhone activations >40% new to AT&T, ARPU and churn characteristics continue to be strong 40.9% wireless OIBDA service margin up more than 500 basis points sequentially Strong U-verse TV growth 284,000 net adds to reach 1.3 million, with strong broadband and VoIP attach rates 471,000 increase in total broadband subscribers significant step up from recent quarters 16.4% growth in wireline IP data revenues driven by AT&T U-verse growth and continued double-digit gains in business IP revenues Margin strength, on track with full-year outlook driven by wireless improvement and disciplined execution of wireline cost initiatives

Strong execution, solid cost discipline, continued advances in key growth areas for the future

OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.

Revenue Trends
AT&T Consolidated Revenues
($ in billions) $30.7 $30.9 $31.3 $31.1 $30.6

$30.6 billion 1Q09 consolidated operating revenues, down 0.6% Economic impacts primarily affecting wireline voice, which was down 12.2% Growth in wireless and data services:

1Q08

2Q08

3Q08

4Q08

1Q09

Wireless Services Wireline Data

+9.6% +5.3% +16.4%

1Q09 Revenue Mix


Wireless 100% owned Wired Data/ Managed Services Wired Voice Advertising Solutions/Other 42% 24% 28% 6%

Wireline IP Data

Diversified mix with increased percentage of revenues coming from wireless and data services

Continued Strong Wireless Growth


AT&T Wireless Service Revenues
($ in billions) $10.6 $11.0 $11.3 $11.5 $11.7

Wireless service revenues up >$1 billion or 9.6% versus 1Q08 Total wireless subscribers up 6.9 million over past year, led by strong postpaid gains Year-over-year postpaid subscriber metrics:

1Q08

2Q08

3Q08

4Q08

1Q09

Gross adds Net adds Data ARPU Total ARPU

+9% +24% +27% +2%

Postpaid Gross Adds


(in millions)

Postpaid Net Adds


(in thousands)

Postpaid Subscriber ARPU


$59.21 $58.02

2.8

3.0 705

875

1Q08 1Q09

1Q08 1Q09

1Q08

1Q09

Continued Robust Wireless Data Growth, Up 38.6%


Wireless Data Revenues
($ in billions)

Wireless Data ARPU


$13.64

Wireless data revenue growth driven by more data-capable devices, richer applications
Continued strong data ARPU growth, up >25% year over year >94 billion text messages sent in 1Q09, more than double 1Q08 >40% growth in media bundles and Internet access revenues Postpaid subscribers with data plans up 900 basis points over past year, approaching 50%

$3.2

$2.3

$10.80

1Q08

1Q09

1Q08

1Q09

Strong Integrated Device Growth, More Than 1.6 Million iPhone Activations
AT&T Wireless Postpaid Integrated Devices in Service
(in millions) Percentage of Postpaid Subscribers with Integrated Devices

19.3

United States fastest 3G network strong spectrum position, increased use of 850 MHz for 3G Broad array of attractive devices Apple iPhone, BlackBerry BoldTM, quick messaging devices, netbooks Explosion of applications and content AT&T Apps Beta launched in first quarter, largest catalog of mobile music among U.S. wireless companies

16.2

13.1 10.3 8.8


22.3% 18.0% 15.8% 27.0%

31.7%

1Q08

2Q08

3Q08

4Q08

1Q09

40.9% Wireless OIBDA Service Margin


AT&T Wireless OIBDA Service Margin Wireless margin expansion on track with full-year outlook. Major drivers:
41.7% 41.2% 40.9%

ARPU and churn characteristics of growing iPhone 3G customer base Continuing operational improvements in network and support functions

iPhone 3G launch

35.8% 33.5%

>10 basis point year-over-year improvement in total churn

1Q08

2Q08

3Q08

4Q08

1Q09

Continue to expect wireless OIBDA margin in the mid 40% range long term

OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.

Strong AT&T U-verse Growth


AT&T U-verse TV Subscribers
(in thousands)

1,329

1,045 781 549 379

AT&T U-verse TV subscriber growth delivering high broadband and VoIP attach rates Double-digit U-verse TV penetration of eligible living units Mid-teens penetration in areas marketed to for at least 18 months Service includes a host of advanced features including: Total Home DVR 100+ High Definition channels integrated voice and broadband AT&T U-verse voice launched in 86% of markets Total video penetration of households served at 12.6%

1Q08

2Q08

3Q08

4Q08

1Q09

Net Gain AT&T U-verse TV Subscribers


(in thousands)

Net gain: AT&T U-verse VoIP 232 170 148 4 1Q08 27 73

264

284 170

120

2Q08

3Q08

4Q08

1Q09

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Step Up in Broadband Growth


AT&T Total Broadband Connections
Wireline Broadband Users Plus Wireless 3G LaptopConnect Users
(in millions) Net gain: AT&T U-verse high speed Internet subscribers

Strong broadband growth driven by strength in wireline consumer connections 471,000 first-quarter increase in total broadband subscribers >50% sequential increase in wireline broadband net adds

16.3 15.4 15.6 16.0

16.7

284 264 238

AT&T U-verse high speed Internet connections more than tripled over the past year to 1.3 million Continued growth in wireless/ broadband bundles Industrys largest Wi-Fi footprint, with >20,000 U.S. hotspots

168 148

1Q08

2Q08

3Q08

4Q08

1Q09

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Wireline Consumer Revenue and Connections Trends


AT&T Regional Consumer Revenue Per Household Served
$63.50 $62.23 (98) (196)

Sequential Change In Regional Consumer Connections


(in thousands) 1Q08 2Q08 3Q08 4Q08 1Q09

Regional consumer revenues down 6.8% year over year; ARPU growth and improved connections trends driven by U-verse TV and broadband 2.0% increase in consumer ARPU 23.0% year-over-year growth in consumer IP revenues (AT&T U-verse and broadband services) Improved connections trends where AT&T U-verse TV is marketed

(504)

(923) 1Q08 1Q09

(870)

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AT&T Business Solutions


AT&T Business Solutions Revenues
($ in billions)

1Q09

Year-OverYear Growth

Total Services (Excludes CPE) IP Data

$10.7 $10.3 $1.5

(4.0)% (2.8)% 10.5%

Total business trends reflect strong growth in IP data and strategic services, offset by continuing economic pressures, primarily impacting voice Economic impacts focused on voice usage; largest impacts in financial, transportation and general merchandise retailing sectors Largest economic impacts in low-margin areas such as CPE and international voice, with cost offsets New service adoption continues to be solid 10.5% growth in business IP data revenues 19.6% growth in strategic services

Strategic Business Services Revenues


($ in millions) $941 $907 $873 $810 $969

1Q08

2Q08

3Q08

4Q08

1Q09

Strategic business services include the new-generation capabilities that lead AT&Ts most advanced solutions including Ethernet, VPNs, hosting, IP conferencing and applications services.

Ethernet and VPNs up >20% IP conferencing up >70%

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Stable Consolidated Margin


1Q09 margin stable versus 2008 and on track with full-year outlook, reflecting operational improvements in both wireless and wireline Execution of major operational cost initiatives on track: Consolidate support organizations Integrate network planning and operations, business services Total force down by 8,000 since year end 2008 Further decline in dilution from iPhone 3G initiative along with improvements in wireless network and support costs

AT&T Consolidated Operating Income Margin


18.6% 18.8%

Full Year 2008

1Q09

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Cash Flow, Balance Sheet Strength


AT&T Cash Summary
($ in billions)

Cash From Operations


$7.9

Free cash flow and capital expenditures in line with previously outlined full-year outlook
$3.4

Capital Expenditures

Free Cash Flow


$5.0

$4.6

Cash from operations improvement reflects progress on cost initiatives and lower cash taxes Full-year 2009 capital expenditures expected to be in the $17 $18 billion range Total debt reduced by $5.8 billion over the past three quarters

Dividends Paid

$2.4

Debt-to-Capital Ratio
1Q08 1Q09

43.2%

Totals may not foot due to rounding.

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Free Cash Flow is defined as cash from operations less capital expenditures.

1Q09 Summary: Strong Execution, on Track with Full-Year Outlook


Cost discipline expense initiatives on track, driving stable margins Continued investment, strong ramp in major growth platforms wireless, advanced business solutions, AT&T U-verse services Strong wireless momentum, well positioned for next wave of wireless data growth strong network, attractive device lineup, innovation in applications and new services Solid U-verse TV ramp with high broadband and VoIP attach rates helping drive improved consumer connection trends Strong free cash flow with sound balance sheet and credit metrics Clear focus: disciplined execution as economy works toward recovery; ramp capabilities and scale to lead in industrys best growth areas

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AT&T Investor Update


1Q09 Earnings Conference Call April 22, 2009

2009 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

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