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AT&T (T) Q3 2018 Results - Earnings Call Transcript

Oct. 24, 2018 1:00 PM ETAT&T Inc. (T)31 Comments
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AT&T, Inc. (NYSE:T) Q3 2018 Earnings Call October 24, 2018 8:30 AM ET


Michael J. Viola - AT&T, Inc.

Randall L. Stephenson - AT&T, Inc.

John J. Stephens - AT&T, Inc.

John M. Donovan - AT&T, Inc.


Simon Flannery - Morgan Stanley & Co. LLC

John C. Hodulik - UBS Securities LLC

Philip A. Cusick - JPMorgan

Amy Yong - Macquarie Capital (USA), Inc.

David Barden - Bank of America Merrill Lynch

Matthew Niknam - Deutsche Bank Securities, Inc.


Ladies and gentlemen, thank you for standing by. Welcome to AT&T's Third Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time.

I would now like to turn the conference over to our host, Mr. Michael Viola, Senior Vice President, Investor Relations. Please go ahead, sir.

Michael J. Viola - AT&T, Inc.

Okay. Thanks, John. Good morning, everyone, and welcome to the Third Quarter Conference Call. As John had mentioned, I'm Mike Viola. I'm Head of Investor Relations here at AT&T. Joining me on the call today is, first, Randall Stephenson, AT&T's Chairman and CEO; John Stephens, AT&T's Chief Financial Officer; John Donovan, Chief Executive Officer of AT&T Communications; and John Stankey, the CEO of WarnerMedia.

Randall is going to provide some opening comments, turn it over to John Stephens, who is going to cover the consolidated segment results. Also he'll provide an update on our deleveraging plans. J.D. will give a business update for the Communications segment, including comments on FirstNet and 5G. And John Stankey is going to join us for the Q&A part of the call.

I'd also like to just update quickly on our upcoming analyst event. We now plan to do a video webcast, a single sell-side, buy-side

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Comments (31)

Why is the stock down? Compare Verizon's strategy and share price performance year to date vs. AT&T's strategy and price performance year to date. That may answer the question. AT&T is banking on a vision of the future that may or may not come to fruition. Verizon is banking on what they know to be profitable here and now. As for the future, choose your side.
A lot of change is coming who knows the eventual outcome.
Retired and no time for piddly SA profile picture
DirecTV subscriptions are going to continue to decline every quarter, and the stock will get punished when they announce this on earnings release....every quarter. How can this be stopped? I can't see it being stopped.
Unless there's a huge correction in the industry itself, the only approach is to just sell off DirecTV. If the future of television is streaming, does AT&T really need DirecTV? Whereas most folks were looking at spinning off the Turner unit for some dumb reason, the alternative of spinning-off DirecTV was the other choice. Since the Turner units still generate revenue, create IPs, and shows signs of future growth in the SOTT market, perhaps keeping that division instead of DirecTV would be advantageous to AT&T and would get the DoJ off their back after the agency's humiliating loss back June.
the real bob profile picture
They probably need to sell Direct TV off and cut their losses at this point. Perhaps even the landline based businesses.

Then, pay down their massive debt burden and focus on being a media content company.
Retired and no time for piddly SA profile picture
I'm hoping that what they are thinking is that they'll get DirecTV NOW going with all the DVR features and everything and then notify all DirecTV customers that they are not supporting the Sattelite based business anymore and customers have the option to move to DTV now at a preferred rate OR just cancel service. This stock will move if they get the Sattelite businss OFF of their quarterly reports.
Pencil Pusher Powell is single highhandedly causing a recession. The deep state must have something that they are blackmailing him over? his BS data is obsolete because we have 3 times the debt of his historical normal rates. FIRE The Coward that is afraid to admit he is wrong Now!
rhythmbreakdown2 profile picture
just like Alan g. recall 2000?
ScooterTheCat profile picture
Picked up 200 more shares today. Am I crazy? Maybe, but I suspect I will make some money eventually.
nealyohara profile picture
Your key word, of course, is eventually. I await a turnaround, too. Waiting, waiting, waiting while collecting that sweet dividend.
If you chase dividend yield, you’ll be burned.
I don’t know but I used it as a buying opportunity
Thanks for making it not drop more. I hope all T fans provide some floor.
Does anyone know (or have an opinion) on why the stock is down -6% today.
cemanuel profile picture
Only thing I can figure is that there are a lot of folks (by folks I also mean MFs and ETFs) who bought it thinking of how undervalued it was and believing the price would pop. With a relatively "blah" ER, they decided to get out.

I really don't know if this is true - it's just the only logical reason I can think of. If you bought it for the dividend or even for a long, slow price appreciation, nothing in the ER changes anything.

Could it have anything to do with this being the first ER after the sector changes? Just throwing an idea out there - with this kind of drop institutions are selling, this isn't retail investors driving the bus.

I've bought T in mid-August for, as you've posted "...the dividend and long, slow price appreciation"....and covered calls.

With today's -8% drop (so far), I am hanging on but disappointed.

I like seeing your "nothing in the ER changes anything."
the real bob profile picture
Likely because the company is up to its eyeballs in debt and completely mismanaged. Direct TV, another acquisition the company never should have made and contrary to T's expectations, is losing customers left and right.

Meanwhile, core businesses are being abandoned and left to rot while T focuses its time and financial resources on becoming a media company.

And instead of focusing on paying down it's gigantic debt burden, T keeps upping the dividend to maintain 'dividend aristocrat' status. If T wants to grow aggressively through acquisitions it shouldn't be paying so much, if anything on dividends.
Stefan Redlich profile picture
I don't see the catastrophe the bears are seeing here. FCF run-rate is around $25B and less dividends T has enough FCF to pay down all its maturing debt comfortably over the next four years as management stated and as I have recently pointed out here as well: seekingalpha.com/...

At this stage it is clearly not about debt but rather by how much streaming services will erode T's Entertainment business and how its own TWX-driven streaming content will help keep the segment at least stable. That is super difficult to answer and only the next quarters will show.
Sure Dividend profile picture
Your article on T's debt was fantastic: seekingalpha.com/...

Agreed, it's more about the future of the business than debt at this point. This was a good quarter, I'm surprised to see such a steep decline. It looks like a buying opportunity to me. Long T.
gametv profile picture
actually the whole telecomm industry is facing a huge threat -5G. in the near future, 5G will be so fast and have so much bandwidth that it is likely most households wont need to have a mobile plan and a wired access plan to their office. small businesses might also be able to go 100% mobile plan and cut the wired services to their offices.

the telecomm industry has revenues that are much too large. it has survived on monopolies and those monopolies might be faltering in the near future. this industry can only survive at its current size if it gets washington to screw the consumer. of course, that doesnt sound too difficult, since DC likes screwing its citizens to help entrenched interests.
Good cash flow! Buy back?
cemanuel profile picture
Pay down debt first IMO.
pauliedeuce profile picture
No buy back. Using it to pay down debt. Goal is to have it at 2.5x by end of 2019
g.dimit profile picture
Excellent Quarter for the Aristocrat, and should continue Getting Better in the Future

Outstanding Opportunity for Accumulation and Lockin 6% Dividends.
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