AT&T outlined its goals and priorities for this year at the Deutsche Bank Media, Telecom and Business Services Conferences. CFO John Stephens said there were two main points: completion of the company's pending acquisition of Time Warner and the investment of USD 23 billion into its US gigabit network. When the buy of Time Warner closes, the company will deploy a new advertising and analytics platform that will use customer data to develop new advertising capabilities within premium video.
AT&T will also be launching the next generation of its DirecTV Now video streaming service sometime in the first half of the year. The new platform will include features like cloud DVR and a third video stream. There will be more features added later in the year, like pay-per-view functionality and more video on demand.
Finally, AT&T will look to push profitability in its mobile operations in Mexico.
Regarding its investment plans, the company will deploy the FirstNet network, improve the quality of its mobile network and seek to be the first to bring 5G services to 12 cities by the end of the year. AT&T announced in February that it will first bring 5G to Atlanta, Dallas and Waco, Texas. Specifically, Stephens said AT&T expects to invest USD 25 billion in capital this year, or USD 23 billion net of expected FirstNet reimbursements. The company’s capital plans include USD 1 billion in incremental investment due to tax reform.
In terms of coverage, Stephens said that AT&T now reaches about 15 million customer locations with fibre. This includes more than 7 million consumer customer locations and more than 8 million business customer locations within 1,000 feet of AT&T’s fibre footprint. He expects this to increase to about 22 million locations by mid-2019.
For 2018, the company guided for adjusted EPS of around USD 3.50. It now adds that it expects organic adjusted EPS growth in the low single digits, driven by improvements in mobile service revenue trends, better profitability from its international operations, cost structure improvements from its software defined network/network function virtualization efforts and lower depreciation versus 2017. On a standalone basis, the company expects free cash flow of about USD 21 billion for the year. Given its strong financial position, Stephens said the company will look to retire debt.
Stephens discussed AT&T’s financial stability, including a pension plan that was more than 92 percent funded at the end of 2017, even with historically low interest rates. The company does not expect to make any material cash contributions to its pension fund for at least the next five years. The company has also exercised discipline with regard to its debt portfolio. At the end of 2017, AT&T’s weighted average maturity was 14.6 years at a weighted average interest rate of 4.4 percent.
