AT&T Inc. (T)

FORM 8-K | Current report
Jul. 24, 2018 4:10 PM
|
About: AT&T Inc. (T)View as PDF
AT&T INC. (Form: 8-K, Received: 07/24/2018 16:11:53)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549
 

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934


Date of report (Date of earliest event reported) July 24, 2018

AT&T INC.
(Exact Name of Registrant as Specified in Charter)


Delaware
1-8610
43-1301883
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)

                       208 S. Akard St., Dallas, Texas
75202
                        (Address of Principal Executive Offices)
(Zip Code)

Registrant's telephone number, including area code (210) 821-4105


__________________________________
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))
☐  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Item 8.01  Other Events.

Throughout this document, AT&T Inc. is referred to as "we" or "AT&T." We are a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications, media and entertainment, and technology industry .

On June 14, 2018, we acquired Time Warner Inc. (referred to as "Time Warner or "WarnerMedia"). Our second quarter results include Time Warner's opening balance sheet and operations beginning on June 15, 2018, as well as transaction-related costs.

Overview
We announced on July 24, 2018 that second-quarter 2018 net income attributable to AT&T totaled $5.1 billion, or $0.81 per diluted share, reflecting favorable impacts from U.S. corporate tax reform and new revenue accounting rules, compared to $3.9 billion, or $0.63 per diluted share in the second quarter of 2017. Second-quarter 2018 revenues were $39.0 billion, down 2.1 percent from the second-quarter 2017. Second-quarter revenue declines were primarily driven by our adoption of a new revenue accounting standard, which included our policy election to no longer record Universal Service Fund (USF) fees in revenue. The impact of the USF change was to decrease operating revenues and expenses approximately $900 million in the second quarter of 2018. Revenue declines also reflect continued declines in video and legacy services, partially offset by increased WarnerMedia, wireless equipment, strategic service and advertising revenues. Compared with results for the second quarter of 2018, operating expenses were $32.5 billion, down 2.4 percent; operating income was $6.5 billion, down 0.9 percent; and AT&T's operating income margin was 16.6 percent, compared to 16.4 percent in 2017. Second-quarter 2018 cash from operating activities was $10.2 billion, up $1.5 billion when compared to the second quarter of 2017, due to higher tax receipts and contribution from WarnerMedia.

We reported a net gain of 3.8 million North American wireless subscribers in the second quarter of 2018, of which 3.1 million were domestic. At June 30, 2018, our North American wireless customer base was approximately 163.3 million compared to 149.2 million in the prior year, and our domestic wireless subscribers totaled 146.9 million compared to 136.1 million. During the second quarter, net adds in North America were as follows:
·
Branded net adds (combined postpaid and prepaid) were 1.3 million, of which 526,000 were domestic.
o
Prepaid subscriber net adds were 1.1 million, of which 453,000 were domestic.
o
Postpaid subscriber net adds were 215,000, of which 73,000 were domestic.
·
Total domestic postpaid tablet and computing device net adds were a loss of 173,000.
·
Reseller net adds were a loss of 441,000, with 444,000 in the U.S.
·
Connected device net adds were 3.0 million, 1.9 million of which were primarily attributable to wholesale connected cars.

We offer subscribers the choice to purchase devices on installment (AT&T Next) or to bring their own device (BYOD). During the second quarter of 2018, we sold 3.6 million smartphones under our AT&T Next program and had BYOD gross adds of 409,000. Sales under our equipment installment programs represented nearly 83 percent of all postpaid smartphone gross adds and upgrades, consistent with the prior year. At June 30, 2018, about 53 percent of the postpaid smartphone base is on AT&T Next, consistent with the prior year.

At June 30, 2018, we had 39.2 million video subscribers (including 1.8 million DIRECTV NOW) compared with 38.8 million at June 30, 2017 . Including the impact of gains from our over-the-top (OTT) video service, DIRECTV NOW, total video subscribers increased by 219,000 in the second quarter of 2018, of which 79,000 were in the U.S. (including Entertainment Group and Business Solutions subscribers).

Our total broadband connections were 15.8 million at June 30, 2018, and 15.7 million at June 30, 2017. During the second quarter, we added 72,000 IP broadband subscribers, for a total of 14.7 million at June 30, 2018. Total broadband net adds were a loss of   3,000 in the quarter.


At June 30, 2018, our total switched access lines were 10.8 million compared with 12.8 million at June 30, 2017. The number of U-verse voice connections (which use VoIP technology and therefore are not included in the access line total) decreased by 136,000 in the quarter, totaling 5.4 million at June 30, 2018, compared to 5.9 million at June 30, 2017.

Segment Summary
Due to the proximity of our Time Warner acquisition to quarter-end, we have reported the 16 days of Time Warner in a separate WarnerMedia segment on a historic basis, excluding the effects of purchase accounting, which are reflected as acquisition-related items.

Consumer Mobility
Revenues from our Consumer Mobility segment, which consist of consumer, wholesale and resale subscribers located in the U.S., for the second quarter of 2018 were $14.9 billion, down 1.5 percent versus the year-ago quarter due to the impact of new revenue accounting standards, partially offset by higher wireless equipment revenues. Second-quarter 2018 Consumer Mobility operating expenses totaled $9.9 billion, down 4.5 percent versus the second quarter of 2017, driven by commission deferrals and USF netting resulting from new accounting rules and increased cost efficiencies, partially offset by higher smartphone volumes and increased depreciation expense. The Consumer Mobility operating margin was 33.5 percent, compared to 31.4 percent in the year-earlier quarter.

We had approximately 89.2 million Consumer Mobility subscribers at June 30, 2018 compared to 89.9 million at June 30, 2017. During the second quarter of 2018, we had branded net adds of 307,000 (prepaid net adds were 356,000 and postpaid net adds were a loss of 49,000). Consumer reseller net adds were a loss of 451,000.

Business Solutions
Revenues from our Business Solutions (Business) segment for the second quarter of 2018 were $9.1 billion, down 6.2 percent versus the year-ago quarter driven by our adoption of a new revenue accounting standard, which included changes in our USF policy, and declines in our legacy services. Partially offset the decreases were higher wireless revenues and growth in strategic services. Second-quarter 2018 Business operating expenses totaled $7.1 billion, down 5.7 percent versus the second quarter of 2017, largely due to commission deferrals resulting from new accounting rules and increased cost efficiencies, partially offset by higher FirstNet expenses and wireless sales costs. Business operating margin was 21.6 percent, compared to 22.0 percent in the year-earlier quarter.

We had approximately 57.7 million business wireless subscribers at June 30, 2018 compared to 46.2 million at June 30, 2017. During the second quarter of 2018, business wireless net adds for connected devices were 3.0 million and branded net adds were 219,000 (postpaid net adds were 122,000 and prepaid net adds were 97,000).

During the second quarter of 2018, we lost 4,000 high-speed internet business subscribers, bringing total business IP broadband to 1.0 million subscribers. Total business broadband had a loss of 26,000 subscribers in the quarter.

Entertainment Group
Our Entertainment Group (Entertainment) segment includes U.S. video operations, broadband and wired voice services to domestic residential customers. Entertainment revenues for the second quarter of 2018 were $11.7 billion, down 8.0 percent versus the year-ago quarter reflecting continued pressure in video revenues from declines in linear video subscribers and lower legacy service revenues, partially offset by advertising revenues increases. Our adoption of the new revenue accounting standard, including changes in our USF policy, also pressured revenues in the second quarter of 2018. Second-quarter 2018 Entertainment operating expenses totaled $10.2 billion, down 7.5 percent versus the second quarter of 2017. The decrease was largely driven by commission deferrals resulting from new accounting rules, cost initiatives and lower volumes that were partially offset by content-cost increases. The Entertainment operating margin was 12.5 percent compared to 13.0 percent in the year-earlier quarter.


At June 30, 2018, Entertainment revenue connections included:
·
Approximately 25.4 million video connections (including 1.8 million DIRECTV NOW services) at June 30, 2018 compared to 25.2 million at June 30, 2017. During the second quarter of 2018, including the impact of gains from DIRECTV NOW, total video subscribers grew 80,000. DIRECTV NOW subscribers included approximately 66,000 on free or substantially free trials. At June 30, 2018 and 2017, about 85 percent of traditional video subscribers are on the satellite platform.
·
Approximately 14.5 million broadband connections at June 30, 2018 compared to 14.3 million at June 30, 2017. During the second quarter, we added 76,000 IP broadband subscribers, for a total of 13.7 million at June 30, 2018. Total broadband subscribers increased 23,000 in the quarter.
·
Approximately 9.3 million wired voice connections at June 30, 2018 compared to 10.7 million at June 30, 2017. Voice connections include switched access lines and VoIP connections.

International
Our International segment consists of the Latin American video operations and Mexican wireless operations. Second-quarter 2018 operating revenues were $2.0 billion, down 3.7 percent versus the prior year, largely due to foreign exchange pressures. Video service revenues in Latin America were $1.3 billion, down 7.9 percent versus the prior year, and wireless revenues in Mexico were $697 million, up 4.8 percent when compared to the second quarter of 2017. Our video revenues were down primarily resulting from foreign exchange pressure offset by pricing increases driven by macroeconomic conditions. Our Mexican wireless revenue increases were largely due to gains in equipment revenues and subscriber growth, partially offset by competitive pricing, and our adoption of the new revenue accounting standard. Operating expenses were $2.1 billion compared to $2.1 billion in the second quarter of 2017. The International operating margin was (8.5) percent, compared to (2.8) percent in the year-earlier quarter.

We had approximately 16.4 million Mexican wireless subscribers at June 30, 2018 compared to 13.1 million at June 30, 2017. During the second quarter of 2018, we had branded net adds of 753,000 (prepaid net adds were 611,000 and postpaid net adds were 142,000).

We had approximately 13.7 million Latin America video connections at June 30, 2018 compared to 13.6 million at June 30, 2017. During the second quarter of 2018, video net adds were 140,000.

WarnerMedia
Our WarnerMedia segment consists of our newly acquired media and entertainment company, which has the following businesses:
·
Turner, consisting principally of cable networks and digital media properties.
·
Home Box Office (HBO), consisting principally of premium pay television and OTT services.
·
Warner Bros., consisting principally of television, feature film, home video and game production and distribution.
 
The WarnerMedia segment includes the results of these businesses for the 16-day period ended June 30, 2018, resulting in revenues of $1.3 billion and operating expenses of $824 million. WarnerMedia's operating income margin was 35.4 percent.


Supplemental Discussions
AT&T Mobility
As a supplemental discussion of our operating results, for comparison purposes, we are providing a view of our combined AT&T Mobility operations (domestic only). A reconciliation of the non-GAAP numbers in this supplemental discussion is attached as exhibit 99.2 hereto.

AT&T Mobility revenues for the second quarter of 2018 were $17.3 billion, down 1.0 percent versus the second quarter of 2017, driven by device sales that were partially offset by revenue declines resulting from our election to net USF fees. Wireless service revenues were pressured from customers migrating to the unlimited plan introduced during the second-quarter of 2017. AT&T Mobility's operating income margin was 31.9 percent compared to 30.8 percent in the year-ago quarter reflecting new accounting rules and continued success in driving operating costs out of the business, which were partially offset by pressure from higher smartphone gross adds and upgrades in the quarter.

For the quarter ended June 30, 2018, postpaid phone-only ARPU decreased 7.1 percent versus the year-earlier quarter, primarily due to new revenue accounting rules.

Postpaid phone only churn was 0.82 percent, compared to 0.79 percent in the second quarter of 2017. Total postpaid churn was 1.02 percent, compared to 1.01 percent in the year-ago quarter.

Supplemental Segment Results
As a supplemental presentation of our operating results, we are providing segment results under the comparative historical accounting method prior to our adoption of Financial Accounting Standards Board Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers (Topic 606)," as modified (ASC 606), which is included in Exhibit 99.1 hereto.

Other
Repurchases of our common stock under our previously announced share repurchase authorization by our Board of Directors totaled nearly 13 million shares, or $419 million during the second quarter of 2018. At June 30, 2018, about 376 million shares remain available under approved share repurchase authorizations.

Guidance
Updated 2018 guidance is as follows:
·
Adjusted earnings per share in the high $3.50 range
·
Capital investment, which consists of capital expenditures plus vendor financing payments, of approximately $25 billion, $22 billion net of expected FirstNet reimbursements and vendor financing

Our guidance excludes adjusting items. Adjustments include noncash mark-to-market benefit plan gains and losses, merger-related interest expense, merger integration and amortization costs and other adjustments. Traditionally, the mark-to-market adjustment is the largest item, which is driven by interest rates and investment returns that are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between forecasted adjusted diluted earnings per share and diluted earnings per share without unreasonable effort.

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Information set forth in this filing contains financial estimates and other forward-looking statements that are subject to risks and uncertainties. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this filing based on new information or otherwise.


Item 9.01 Financial Statements and Exhibits.

The following exhibits are filed as part of this report:

(d)   Exhibits








Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
AT&T INC.
   
   
   
Date: July 24, 2018
By: /s/ Debra L. Dial                              
  Debra L. Dial
Senior Vice President and Controller
 
   

 

 

AT&T Inc.                                    

Financial Data

                                   

 

                                   

 

                                   

Consolidated Statements of Income

 

Dollars in millions except per share amounts

 

Three Months Ended

       

Six Months Ended

     

Unaudited

 

June 30,

       

June 30,

     

 

 

2018

 

2017

As Adjusted

 

Percent

Change

 

2018

 

2017

As Adjusted

 

Percent

Change

Operating Revenues

                                   

  Service

 

$

33,773

   

$

36,538

     

-7.6

  %

 

$

67,419

   

$

72,994

     

-7.6

  %

  Equipment

   

4,080

     

3,299

     

23.7

  %

   

8,472

     

6,208

     

36.5

  %

  Media

   

1,133

     

-

     

-

  %

   

1,133

     

-

     

-

  %

    Total Operating Revenues

   

38,986

     

39,837

     

-2.1

  %

   

77,024

     

79,202

     

-2.7

  %

 

                                               

Operating Expenses

                                               

   Cost of revenues

                                               

    Equipment

   

4,377

     

4,138

     

5.8

  %

   

9,225

     

7,986

     

15.5

  %

    Broadcast, programming and operations

   

5,449

     

4,898

     

11.2

  %

   

10,615

     

9,872

     

7.5

  %

    Other cost of revenues (exclusive of depreciation

          and amortization shown separately below)

   

7,632

     

9,569

     

-20.2

  %

   

15,564

     

18,857

     

-17.5

  %

   Selling, general and administrative

   

8,684

     

8,559

     

1.5

  %

   

16,581

     

17,331

     

-4.3

  %

   Depreciation and amortization

   

6,378

     

6,147

     

3.8

  %

   

12,372

     

12,274

     

0.8

  %

    Total Operating Expenses

   

32,520

     

33,311

     

-2.4

  %

   

64,357

     

66,320

     

-3.0

  %

Operating Income

   

6,466

     

6,526

     

-0.9

  %

   

12,667

     

12,882

     

-1.7

  %

Interest Expense

   

(2,023

)

   

(1,395

)

   

45.0

  %

   

(3,794

)

   

(2,688

)

   

41.1

  %

Equity in Net Income (Loss) of Affiliates

   

(16

)

   

14

     

-

  %

   

(7

)

   

(159

)

   

95.6

  %

Other Income (Expense) - Net

   

2,353

     

925

     

-

  %

   

4,055

     

1,413

     

-

  %

Income Before Income Taxes

   

6,780

     

6,070

     

11.7

  %

   

12,921

     

11,448

     

12.9

  %

Income Tax Expense

   

1,532

     

2,056

     

-25.5

  %

   

2,914

     

3,860

     

-24.5

  %

Net Income

   

5,248

     

4,014

     

30.7

  %

   

10,007

     

7,588

     

31.9

  %

 Less: Net Income Attributable to

    Noncontrolling Interest

   

(116

)

   

(99

)

   

-17.2

  %

   

(213

)

   

(204

)

   

-4.4

  %

Net Income Attributable to AT&T

 

$

5,132

     

3,915

     

31.1

  %

   

9,794

     

7,384

     

32.6

  %

 

                                               

Basic Earnings Per Share Attributable to AT&T

 

$

0.81

     

0.63

     

28.6

  %

   

1.56

     

1.19

     

31.1

  %

   Weighted Average Common

       Shares Outstanding (000,000)

   

6,351

     

6,165

     

3.0

  %

   

6,257

     

6,166

     

1.5

  %

 

                                               

Diluted Earnings Per Share Attributable to AT&T

 

$

0.81

     

0.63

     

28.6

  %

   

1.56

     

1.19

     

31.1

  %

   Weighted Average Common 

       Shares Outstanding with Dilution (000,000)

   

6,374

     

6,184

     

3.1

  %

   

6,277

     

6,185

     

1.5

  %


 

AT&T Inc.            

Financial Data

           

 

           

 

           

Consolidated Balance Sheets

 

Dollars in millions

     

Unaudited

 

Jun. 30,

   

Dec. 31,

 

 

 

2018

   

2017

 

Assets

           

Current Assets

           

Cash and cash equivalents

 

$

13,523

   

$

50,498

 

Accounts receivable - net of allowances for doubtful accounts of $804 and $663

   

25,492

     

16,522

 

Prepaid expenses

   

1,966

     

1,369

 

Other current assets

   

14,305

     

10,757

 

Total current assets

   

55,286

     

79,146

 

Noncurrent Inventories and Theatrical Film and Television Production Costs

   

5,849

     

-

 

Property, Plant and Equipment - Net

   

129,556

     

125,222

 

Goodwill

   

143,499

     

105,449

 

Licenses

   

96,802

     

96,136

 

Trademarks and Trade Names - Net

   

24,440

     

7,021

 

Distribution Networks

   

17,403

     

-

 

Other Intangible Assets - Net

   

30,800

     

11,119

 

Investments in and Advances to Equity Affiliates

   

8,007

     

1,560

 

Other Assets

   

23,734

     

18,444

 

Total Assets

 

$

535,376

   

$

444,097

 

 

               

Liabilities and Stockholders' Equity

               

Current Liabilities

               

Debt maturing within one year

 

$

21,672

   

$

38,374

 

Accounts payable and accrued liabilities

   

35,488

     

34,470

 

Advanced billing and customer deposits

   

5,914

     

4,213

 

Accrued taxes

   

1,889

     

1,262

 

Dividends payable

   

3,630

     

3,070

 

Total current liabilities

   

68,593

     

81,389

 

Long-Term Debt

   

168,495

     

125,972

 

Deferred Credits and Other Noncurrent Liabilities

               

Deferred income taxes

   

59,665

     

43,207

 

Postemployment benefit obligation

   

29,476

     

31,775

 

Other noncurrent liabilities

   

25,017

     

19,747

 

Total deferred credits and other noncurrent liabilities

   

114,158

     

94,729

 

Stockholders' Equity

               

Common stock

   

7,621

     

6,495

 

Additional paid-in capital

   

125,960

     

89,563

 

Retained earnings

   

56,555

     

50,500

 

Treasury stock

   

(12,872

)

   

(12,714

)

Accumulated other comprehensive income

   

5,716

     

7,017

 

Noncontrolling interest

   

1,150

     

1,146

 

Total stockholders' equity

   

184,130

     

142,007

 

Total Liabilities and Stockholders' Equity

 

$

535,376

   

$

444,097

 

 

               

AT&T Inc.            

Financial Data

           

 

           

 

           

Consolidated Statements of Cash Flows

 

Dollars in millions

 

Six Months Ended

 

Unaudited

 

June 30,

 

 

 

2018

   

2017

As Adjusted

 

Operating Activities

           

Net income

 

$

10,007

   

$

7,588

 

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation and amortization

   

12,372

     

12,274

 

Amortization of film and television costs

   

168

     

-

 

Undistributed earnings from investments in equity affiliates

   

235

     

167

 

Provision for uncollectible accounts

   

808

     

795

 

Deferred income tax expense

   

2,032

     

964

 

Net (gain) loss from sale of investments, net of impairments

   

(29

)

   

12

 

Actuarial (gain) loss on pension and postretirement benefits

   

(2,726

)

   

(259

)

Changes in operating assets and liabilities:

               

Accounts receivable

   

233

     

119

 

Other current assets, inventories and theatrical file and television production costs

   

1,039

     

470

 

Accounts payable and other accrued liabilities

   

(3,890

)

   

(2,761

)

Equipment installment receivables and related sales

   

490

     

525

 

Deferred customer contract acquisition and fulfillment costs

   

(1,725

)

   

(796

)

Retirement benefit funding

   

(280

)

   

(280

)

Other - net

   

442

     

(1,148

)

Total adjustments

   

9,169

     

10,082

 

Net Cash Provided by Operating Activities

   

19,176

     

17,670

 

 

               

Investing Activities

               

Capital expenditures:

               

Purchase of property and equipment

   

(10,959

)

   

(10,750

)

Interest during construction

   

(267

)

   

(473

)

Acquisitions, net of cash acquired

   

(40,715

)

   

1,224

 

Dispositions

   

59

     

51

 

(Purchases) sales of securities, net

   

(218

)

   

169

 

Advances to and investments in equity affiliates, net

   

(1,035

)

   

-

 

Cash collections of deferred purchase price

   

500

     

382

 

Net Cash Used in Investing Activities

   

(52,635

)

   

(9,397

)

 

               

Financing Activities

               

Net change in short-term borrowings with original maturities of three months or less

   

2,992

     

(2

)

Issuance of other short-term borrowings

   

4,839

     

-

 

Issuance of long-term debt

   

26,478

     

24,115

 

Repayment of long-term debt

   

(30,212

)

   

(6,118

)

Purchase of treasury stock

   

(564

)

   

(458

)

Issuance of treasury stock

   

12

     

24

 

Dividends paid

   

(6,144

)

   

(6,021

)

Other

   

(1,121

)

   

77

 

Net Cash (Used in) Provided by Financing Activities

   

(3,720

)

   

11,617

 

Net (decrease) increase in cash and cash equivalents and restricted cash

   

(37,179

)

   

19,890

 

Cash and cash equivalents and restricted cash beginning of year

   

50,932

     

5,935

 

Cash and Cash Equivalents and Restricted Cash End of Period

 

$

13,753

   

$

25,825

 

 

               

AT&T Inc.

                                       

Consolidated Supplementary Data

                                                 
                                                     
                                                     
Supplementary Financial Data
Dollars in millions except per share amounts
 
Three Months Ended
     
 
   Six Months Ended          
Unaudited
 
 June 30,
 
Percent
 
   June 30,  
Percent
   
2018
 
2017
 
Change
   
2018
   
2017
 
Change
Capital expenditures
                                                  
Purchase of property and equipment
 
$
5,002
   
$
4,966
     
0.7
  %
 
 
$
10,959
 
 
 
$
10,750
     
1.9
  %
Interest during construction
   
106
     
242
     
-56.2
  %
     
267
       
473
     
-43.6
  %
Total Capital Expenditures
 
$
5,108
   
$
5,208
     
-1.9
  %
 
 
$
11,226
 
 
 
$
11,223
     
-
  %
                                                                 
Dividends Declared per Share
 
$
0.50
   
$
0.49
     
2.0
  %
 
 
$
1.00
 
 
 
$
0.98
     
2.0
  %
                                                                 
End of Period Common Shares Outstanding (000,000)
                             
7,261
       
6,140
     
18.3
  %
Debt Ratio
                             
50.8
 
%
   
53.3
  %
   
-250
  BP
Total Employees                               273,210         260,480       4.9   %
                                                                 
                                                                 
Supplementary Operating Data
Subscribers and connections in thousands
                                                              
Unaudited
                       
 
   June 30,  
Percent
                               
2018
     
2017
 
Change
Wireless Subscribers
                                                              
Domestic
                             
146,889
       
136,102
     
7.9
  %
Mexico
                             
16,398
       
13,082
     
25.3
  %
Total Wireless Subscribers
                             
163,287
       
149,184
     
9. 5
  %
                                                                 
Total Branded Wireless Subscribers
                             
109,806
       
104,022
     
5.6
  %
                                                                 
Video Connections
                                                              
Domestic
                             
25,473
       
25,200
     
1.1
  %
Latin America
                             
13,713
       
13,622
     
0.7
  %
Total Video Connections
                             
39,186
       
38,822
     
0.9
  %
                                                                 
Broadband Connections
                                                              
 IP
                             
14,709
       
14,234
     
3.3
  %
 DSL
                             
1,063
       
1,452
     
-26.8
  %
Total Broadband Connections
                             
15,772
       
15,686
     
0.5
  %
                                                                 
Voice Connections
                                                              
Network Access Lines
                             
10,832
       
12,791
     
-15.3
  %
U-verse  VoIP Connections
                             
5,449
       
5,853
     
-6.9
  %
Total Retail Voice Connections
                             
16,281
       
18,644
     
-12.7
  %
                                                                 
                                                                 
 
  Three Months Ended        
 
  Six Months Ended            
 
  June 30,  
Percent
 
  June 30,  
Percent
     
2018 
   
2017 
 
Change
     
2018 
     
2017 
 
Change
Wireless Net Additions
                                                              
Domestic
   
3,064
     
2,298
     
33.3
  %
     
5,694
       
4,376
     
30.1
  %
Mexico
   
756
     
476
     
58.8
  %
     
1,299
       
1,109
     
17.1
  %
Total Wireless Net Additions
   
3,820
     
2,774
     
37.7
  %
     
6,993
       
5,485
     
27.5
  %
                                                                 
Total Branded Wireless Net Additions
   
1,280
     
904
     
41.6
  %
     
2,138
       
1,639
     
30.4
  %
                                                                 
Video Net Additions
                                                              
Domestic
   
79
     
(199
)
   
-
  %
     
203
       
(360
)
   
-
  %
Latin America
   
140
     
(56
)
   
-
  %
     
125
       
35
     
-
  %
Total Video Net Additions
   
219
     
(255
)
   
-
  %
     
328
       
(325
)
   
-
  %
                                                                 
Broadband Net Additions
                                                              
 IP
   
72
     
124
     
-41.9
  %
     
222
       
370
     
-40.0
  %
 DSL
   
(75
)
   
(133
)
   
43.6
  %
     
(169
)
     
(289
)
   
41.5
  %
Total Broadband Net Additions
   
(3
)
   
(9
)
   
66.7
  %
     
53
       
81
     
-34.6
  %
                                                                 
 

 

CONSUMER MOBILITY

 

 

   

 

               

 

           

The Consumer Mobility segment provides nationwide wireless service to consumers and wholesale and resale wireless subscribers located in the U.S. or in U.S. territories. We provide voice and data services, including high-speed internet, and video services.

 

 

   

 

               

 

           

Segment Results

 

Dollars in millions

Three Months Ended

     

Six Months Ended

     

Unaudited

June 30,

 

Percent

June 30,

 

Percent

 

2018

 

 

2017

 

Change

2018

 

 

2017

 

Change

Segment Operating Revenues

   

 

               

 

           

Service

$

11,853

 

 

 

$

12,467

     

-4.9

  %

$

23,465

 

 

 

$

24,932

     

-5.9

  %

Equipment

 

3,016

 

 

   

2,624

     

14.9

  %

 

6,390

 

 

   

4,965

     

28.7

  %

   Total Segment Operating Revenues

 

14,869

 

 

   

15,091

     

-1.5

  %

 

29,855

 

 

   

29,897

     

-0.1

  %

 

     

 

                     

 

               

Segment Operating Expenses

     

 

                     

 

               

Operations and support

 

8,085

 

 

   

8,636

     

-6.4

  %

 

16,609

 

 

   

17,196

     

-3.4

  %

Depreciation and amortization

 

1,806

 

 

   

1,716

     

5.2

  %

 

3,613

 

 

   

3,432

     

5.3

  %

    Total Segment Operating Expenses

 

9,891

 

 

   

10,352

     

-4.5

  %

 

20,222

 

 

   

20,628

     

-2.0

  %

Segment Operating Income

 

4,978

 

 

   

4,739

     

5.0

  %

 

9,633

 

 

   

9,269

     

3.9

  %

Equity in Net Income of Affiliates

 

-

 

 

   

-

     

-

  %

 

-

 

 

   

-

     

-

  %

Segment Contribution

$

4,978

 

 

 

$

4,739

     

5.0

  %

$

9,633

 

 

 

$

9,269

     

3.9

  %

 

     

 

                     

 

               

Segment Operating Income Margin

 

33.5

%

 

   

31.4

  %

    210   BP  

32.3

%

 

   

31.0

  %

    130   BP  

 

     

 

                     

 

               

 

     

 

                     

 

               

Supplementary Operating Data

Subscribers and connections in thousands

                       

Unaudited

           

June 30,

 

Percent

 

     

 

                 

2018 

 

   

2017 

 

Change

Consumer Mobility Subscribers

     

 

                     

 

               

Postpaid

     

 

                 

65,326

 

 

   

65,570

     

-0.4

  %

Prepaid

     

 

                 

15,376

 

 

   

14,187

     

8.4

  %

Branded

     

 

                 

80,702

 

 

   

79,757

     

1.2

  %

Reseller

     

 

                 

8,484

 

 

   

10,182

     

-16.7

  %

Total Consumer Mobility Subscribers

     

 

                 

89,186

 

 

   

89,939

     

-0.8

  %

 

     

 

                     

 

               

 

     

 

                     

 

               

 

Three Months Ended

       

Six Months Ended

       

 

June 30,

 

Percent

June 30,

 

Percent

 

 

2018

 

   

2017

 

Change

 

2018

 

   

2017

 

Change

Consumer Mobility Net Additions

     

 

                     

 

               

Postpaid

 

(49

)

 

   

(28

)

   

-75.0

  %

 

(113

)

 

   

(310

)

   

63.5

  %

Prepaid

 

356

 

 

   

267

     

33.3

  %

 

548

 

 

   

549

     

-0.2

  %

Branded

 

307

 

 

   

239

     

28.5

  %

 

435

 

 

   

239

     

82.0

  %

Reseller

 

(451

)

 

   

(364

)

   

-23.9

  %

 

(841

)

 

   

(951

)

   

11.6

  %

Total Consumer Mobility Net Additions

 

(144

)

 

   

(125

)

   

-15.2

  %

 

(406

)

 

   

(712

)

   

43.0

  %


BUSINESS SOLUTIONS    

 

               

 

           

 

   

 

               

 

           

The Business Solutions segment provides services to business customers, including multinational companies; governmental and wholesale customers. We provide advanced IP-based services including Virtual Private Networks (VPN); Ethernet-related products and broadband, collectively referred to as strategic business services; as well as traditional data and voice products. We provide a complete communications solution to our business customers.

 

 

   

 

               

 

           

Segment Results

 

Dollars in millions

Three Months Ended

     

Six Months Ended

     

Unaudited

June 30,

 

Percent

June 30,

 

Percent

 

2018

 

 

2017

 

Change

2018

 

 

2017

 

Change

Segment Operating Revenues

   

 

               

 

           

Wireless service

$

1,829

 

 

 

$

2,004

     

-8.7

  %

$

3,620

 

 

 

$

4,007

     

-9.7

  %

Strategic services

 

3,039

 

 

   

2,958

     

2.7

  %

 

6,109

 

 

   

5,862

     

4.2

  %

Legacy voice and data services

 

2,723

 

 

   

3,423

     

-20.4

  %

 

5,561

 

 

   

6,971

     

-20.2

  %

Other service and equipment

 

888

 

 

   

922

     

-3.7

  %

 

1,727

 

 

   

1,800

     

-4.1

  %

Wireless equipment

 

584

 

 

   

360

     

62.2

  %

 

1,162

 

 

   

648

     

79.3

  %

  Total Segment Operating Revenues

 

9,063

 

 

   

9,667

     

-6.2

  %

 

18,179

 

 

   

19,288

     

-5.7

  %

 

     

 

                     

 

               

Segment Operating Expenses

     

 

                     

 

               

Operations and support

 

5,616

 

 

   

6,053

     

-7.2

  %

 

11,210

 

 

   

12,051

     

-7.0

  %

Depreciation and amortization

 

1,487

 

 

   

1,483

     

0.3

  %

 

2,945

 

 

   

2,943

     

0.1

  %

    Total Segment Operating Expenses

 

7,103

 

 

   

7,536

     

-5.7

  %

 

14,155

 

 

   

14,994

     

-5.6

  %

Segment Operating Income

 

1,960

 

 

   

2,131

     

-8.0

  %

 

4,024

 

 

   

4,294

     

-6.3

  %

Equity in Net Income (Loss) of Affiliates

 

1

 

 

   

-

     

-

  %

 

-

 

 

   

-

     

-

  %

Segment Contribution

$

1,961

 

 

 

$

2,131

     

-8.0

  %

$

4,024

 

 

 

$

4,294

     

-6.3

  %

 

     

 

                     

 

               

Segment Operating Income Margin

 

21.6

%

 

   

22.0

  %

    -40  BP  

22.1

%

 

   

22.3

  %

    -20   BP  

 

     

 

                     

 

               

 

     

 

                     

 

               

Supplementary Operating Data

Subscribers and connections in thousands

                       

Unaudited

           

June 30,

 

Percent

 

     

 

                 

2018

 

   

2017

 

Change

Business Solutions Wireless Subscribers

     

 

                     

 

               

Postpaid

     

 

                 

12,046

 

 

   

11,432

     

5.4

  %

Prepaid

     

 

                 

841

 

 

   

-

     

-

  %

Branded

     

 

                 

12,887

 

 

   

11,432

     

12.7

  %

Reseller

     

 

                 

98

 

 

   

73

     

34.2

  %