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8/3/2019 ATT Sales Presentation DECA Area
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AT&T Sales Presentation- Title TBD
TBDJanuary 12, 2010
© 2010 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other markscontained 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.
Keep this border thing.
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Agenda
Q and A
2
Introduction
Device
Network and Plans
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3
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&T’s filings withthe 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 thenon-GAAP financial measures and the GAAP financial
measures are available on the company’s Web site
at www.att.com/investor.relations.
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AT&T 4Q09 Highlights: Solid Execution,
Positive OutlookSolid Progress Across Key Growth Areas
• 2.7 million wireless net adds, 9.2% service revenue growth
• 248,000 U-verse TV net adds to >2 million in service
• 31.8% growth in wireline consumer IP revenues
(U-verse and broadband)
• 17.0% growth in strategic business revenues
Disciplined Execution on Cost Initiatives
• Sequential stability in already strong wireline margins
• Improved wireless margins, continuing opportunities
for further expansion
Strong Cash Flow• Cash from operations and free cash flow up substantially
• Strong dividend — 26 consecutive years of increases
• Debt reduction — total debt net of cash down $10.2 billion
over past six quarters
5
AT&T Profile:
• Leader in Mobile
Broadband
• Premier BusinessCapabilities
• Powerful IP-Based
Platforms
• Financial Strength
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6
4Q09 Revenue Mix
Wireless
100% owned
Wireline Data/
Managed Services
Wireline Voice
Advertising
Solutions/Other
45%
25%
25%
5%
Third consecutive quarter of sequential improvement inconsolidated revenues reflecting:
Revenue mix increasingly weightedto wireless and wireline data andmanaged services:
• 70% of revenues in 4Q09 with6.5% year-over-year growth
• 60% of revenues in 4Q07
2Q09 3Q09 4Q094Q08 1Q09
• Strong wireless growth
• U-verse growth
• Improved business comparisons
Consolidated Revenue Trends
AT&T Consolidated Revenues
$30.9
($ in billions)
$31.1 $30.7$30.6 $30.9
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$12.4
$11.7
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Continued Strong Wireless Service Revenue
Growth, Up 9.2%
AT&T Wireless Service Revenues
2Q09 3Q09 4Q094Q08 1Q09
77.0
81.6
78.279.6
2.7 million total wireless net addsin 4Q09 — second-highest quarterly
total in company’s history
Best-ever fourth-quarter churn
levels — sixth consecutive quarter of year-over-year improvement in both
total and postpaid churn
2.6% growth in postpaid wirelesssubscriber ARPU — eighth consecutive
quarter with a year-over-year increase
Total
Postpaid
Emerging Devices
2.7
0.9
>1.0
7.3
4.3
>2.0
4Q09 2009Net Adds (in millions)
Postpaid ARPU
$59.59 1.20%$61.13
4Q09 4Q09
1.19%
4Q084Q08
Postpaid Churn
($ in billions)
Total Wireless Subscribers (in millions)
$12.6
$12.0$11.5 85.1
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26.3% Wireless Data Revenue Growth,
Continued Strength in Mobile Broadband
4Q08 4Q09
16.2
Total PostpaidIntegratedDevices(in millions)
30.2
4Q094Q08
$3.1
$16.30
Wireless DataRevenues($ in billions)
Postpaid Data ARPU
$3.9
$19.16
Wireless data revenues up $805 million,or 26.3%, driven by integrated device
adoption, 3G growth, rich applications
Strong volume growth
• Text messages up 70%
• Multimedia messages >doubledover past year
Robust integrated device growth
• 3G integrated devices up more than
4 million in 4Q09, more than 15 millionfor the full year 2009
• Average ARPU for integrated devices
continues to be 1.8X nonintegrated-device base
• Significant upside ahead, postpaidpenetration still below 50%
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• Strong revenue growth
• High-quality subscriber base
• Continuing operational
improvements in network
and support functions
Even with high integrated-device volumes, wireless OIBDAservice margin up sequentially
and year over year, driven by:
OIBDA service margin is operating income before depreciationand amortization, divided by total service revenues.
9
Wireless Margin Expansion
AT&T Wireless OIBDA
Service Margin
38.8%
35.8%
38.5%
Longer-termexpectation
Mid-40%Range
4Q08 4Q093Q09
Trends reinforce confidencein longer-term margin target
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AT&T Wireless Network Capabilities
Voice and data service to97 percent of the U.S. population
United States’ fastest 3G
network today
United States’ broadest Wi-Ficoverage with ~20,000hotspots nationwide
GSM/UMTS technology:
• Predominant global network
standard for the next few years;
broad R&D, wide range of devices• Simultaneous voice and data
connectivity
• Natural precursor to LTE with
backward compatibility
AT&T’s network supports twice thenumber of smartphones versusany of its competitors
AT&T is managing unprecedented
mobile broadband growth —
up more than 5,000% over the
past 3 years
AT&T Total Mobile
Broadband Usage >200%in 2009
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Wireless Network Initiatives Drive Improved
Voice and Data Performance
National 3G Voice CompositeQuality Index up 22% in 2009
Jan Dec
Dec08 Dec09
3G Blocked CallsDown 25% YOY
1.41%
1.05%
Nov09
Dec08 Dec09
3G Dropped CallsDown 22% YOY
1.16%1.08%
1.01%
Nov09
Jan Dec
Broadband Data Throughputup more than 19% in 2009
2009 Investments
• ~1,900 new cell sites
• >100,000 new circuits
for backhaul, 4X 2008deployment
• Doubled number of
fiber-served cell sites
• Completed 850 MHz
spectrum conversion
to the 3G platform
0.91%
• 3G coverage expanded
by >4,100 sites, now
covers >360 cities
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Closing the Gap: Aggressive Program of Network
Enhancements for High-Usage Markets
• 21% improvement in 3G VoiceComposite Quality Index in 4Q09
• Adding RNC capacity
• Three consecutive months of improvementin 3G Voice Composite Quality Index
• RNC change-outs
Next 90 Days: Continued Enhancements to Drive Further Improvement
• Additional third- and fourth-carrier implementation
• Deploy Ethernet to the cell site to improve network backhaul
• Projects are under way, expect significant improvement in both markets
over the coming months
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Sept Dec Sept Dec
San Francisco3G Voice Composite Quality Index
San Francisco
New York City3G Voice Composite Quality Index
New York Metro
PerformanceObjective
PerformanceObjective
Manhattan
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HSPA 7.2 Deployment: Step Up in Speed,
Major Competitive Differentiator
AT&T’s 3G Cell Sites Enabled Nationwide, Ahead of Schedule
• Improves consistency in accessing data sessions
• Prepares the network for faster speeds
• Increases network efficiency
• Immediate benefit to millions of AT&T customers
Aggressive Backhaul Program Under Way
• Supports doubling of theoretical peak speeds
• Expect majority of AT&T’s mobile data traffic on fiber-based backhaul
by end of 2010
• Prepares network for LTE deployment: testing under way, nearing
vendor selection
Immediate Benefit to Millions of AT&T Customers
• AT&T currently offers 10 HSPA 7.2 enabled devices, including iPhone 3GS
Early Results Are Promising
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2010 Capital Plan Includes Substantial
Increase in Wireless Investment
AT&T Total CapitalExpenditures
$17.3B
2009
$18 – $19B
2010Plan
Total Capital Expenditures expected to beup 5% – 10% from 2009. Top priorities:
Wireless and Backhaul:
• ~$2B increase in 2010, which includeswireless spend and wireline backhaul in
support of wireless networks• Focus on HSPA 7.2, groundwork for LTE,
overall capacity and performance, intenseprogram for high-volume metros
AT&T U-verse: on track to pass 30 million
living units by the end of 2011
Enterprise: world-class service platform,
applications ecosystem
One AT&T: better customer experience and
more efficient operations — unified supportsystems, converged customer experience,common care portal
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Improving Wireline Consumer Trends
• AT&T U-verse revenues nearly tripledover past year, now approaching
$3 billion annualized
• >90% AT&T U-verse broadband attachrate, VoIP attach rate approaches 70%
• >75% of U-verse subscribers have4Q08 1Q09
1.0
1.3
1.6
AT&T U-verse TV Subscribers(in millions)
1.8
2.1
2Q09 3Q09 4Q09
(372)
4Q094Q08(504)
Revenue PerHousehold
$65.68
$63.32
Change inTotal ConsumerConnections
4Q08 4Q09
31.8% fourth-quarter growth inrevenues from consumer IP services
— AT&T U-verse and broadband
• Third consecutive quarter of improvedyear-over-year comparisons for overallwireline consumer revenues
a triple or quad play
Positive impacts on consumer trends:
• Eighth consecutive quarter of year-over-year growth in consumer revenues
per household
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Sequential Year-Over-
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AT&T Business Solutions
Consistent fundamental businesstrends reflecting economicactivity and continued strengthin strategic service, IP data
• 17.0% strategic business servicesrevenue growth
• 7.3% growth in business
IP revenues
– VPN revenues up >20%
– Two-thirds of frame customers
have transitioned to IP
• Largest economic impacts onvolumes in voice and legacy
data products
• Operational cost efficienciescontinue to support businessmargins
AT&T Business Solutions Revenues($ in billions)
Change Year Change
Total (0.4)% (5.5)%
(0.4)%
1.8%
4.1%
$1,058
4Q08 1Q09 2Q09 3Q09 4Q09
Strategic business services include the new-generation capabilities that
lead AT&T’s most advanced solutions – including Ethernet, VPNs, hosting,IP conferencing and application services.
Services (excludes CPE)
IP Data
Strategic Services
Strategic BusinessServices Revenues($ in millions)
$969
$1,006
$941
(4.9)%
7.3%
17.0%
$1,101
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Stable Consolidated Margins
Sharp focus on cost discipline,
operational improvements
18.6%
AT&T ConsolidatedOperating Income Margin
2008 2009
across the business
• Major cost initiatives on track
• Total force down ~20,000 forthe year
• 4Q wireline operating expensesdown 2.7% year over year
• Continuing cost-improvement
opportunities, including areas
such as organizational andsystems integration, order
and billing center consolidation
18.6%
17.5%
Year-Over-YearNoncashPension/RetireeBenefit Pressure
Reported margins are in blue.
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Strong Cash Flow
Cash FromOperations($ in billions)
$33.7
$34.4
Free cash flow is cash from operations less capitalexpenditures.
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20092008
Free CashFlow($ in billions)
$13.3
$17.1
$34.4
Capital Expenditures
Free Cash Flow
$17.3
$17.1
Dividends Paid $9.7
2009 Cash Profile
Cash from Operating Activities
Debt Reduction
Debt net of cash on hand reduced
by $10.2 billion over past six quarters
20092008
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4Q09 Summary, 2010 Outlook
Premier Growth Platforms, Financial Strength Set AT&T Apart
• Leader in Wireless Broadband and Innovation — HSPA 7.2 deploymentunder way, investing for next generation of growth
• Premier Business Capabilities — great networks, expanding productportfolio, strength in strategic services
• AT&T U-verse Gaining Scale — changing consumer revenue profile
• Financial Strength — stable margins, strong cash flow, significant wireline
contribution, full financial exposure to wireless with 100% ownership
Positive Outlook
• Stable consolidated revenues, with opportunities for stronger resultsas the economy rebounds
• Stable-to-improved margins and EPS
• Expand full-year wireless OIBDA margins to low 40% range with a longer-termexpectation of reaching the mid-40% range
• Capital expenditures in the $18 to $19 billion range, with substantial increasein wireless to further expand capacity and coverage
• Continued strong free cash flow generally in line with 2008 results
• Maintain financial strength while returning cash to shareowners
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AT&T Sales Presentation-Title TBD
4Q09 Earnings Conference CallJanuary 28, 2010
© 2010 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other markscontained 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.