AT&T launches investor day with updates on HBO Max, fiber, spectrum, debt (live updates)

• Updated 10:56 a.m.: AT&T has wrapped up the presentations and headed to Q&A with the stock up considerably, +3.7% on the day. That's its biggest day move since December.
• Updated 10:35 a.m.: Kilar covers the two major catalysts for HBO Max. One is the ad-supported version; he says AVOD is great for consumers (an opportunity to get HBO max for a lower price) and great for marketers (safe, addressable premium ad environment). He also details the planned international expansion: to 39 additional markets in late June, and 21 additional markets in the second half, across Europe. That means going from one market now to 61 over nine months.
• Updated 10:32 a.m.: The presentation gets some media juice as WarnerMedia's Jason Kilar takes the mic. He notes that in October 2019 the company had projected 41M HBO Max subscribers by the end of 2022, but that AT&T exceeded that more than two years ahead of plan. It added more subs in the last seven months of 2020 than HBO had in the previous decade, he says.
• That audience is "considerably" younger, with more than 40% under 35, and 50% of the audience is female vs. HBO's traditional male skew, and HBO Max subs are more than twice as engaged in daily view as traditional linear HBO subs.
• Based on public data, Kilar says the company believes it's already the No. 2 revenue-generating service in the U.S.
• Updated 10:20 a.m.: Two trends are emerging as the company looks at broadband, says AT&T Communications CEO Jeff McElfresh: Demand for uplink capacity is growing faster than downlink, and the company has been seeing more reliance on the fixed network vs. mobile (part of that certainly due to the COVID-19 pandemic). Overall, it expects broadband usage to quintuple by 2025, with a median household using 1.5 TB/month (in part due to such advances as 4K video quality).
• In mobile, McElfresh says the company is happy with its spectrum position, including the 80 MHz it got in the C-band auction. Speaking about its high-frequency holdings (the area where rival Verizon is hanging its 5G hat), he says that the company's millimeter wave spectrum has its purpose, and that's best when there's dense fiber to support it - which is why AT&T believes in a substantial fiber expansion.
• Updated 10:06 a.m.: CEO John Stankey jumps into the significantly higher HBO Max projections. HBO revenues are expected to more than double by 2025, vs. $6.8B last year. The team has been infused with one key priority this year, Stankey says: "Grow customer relationships."
• Original item: AT&T (T +1.5%) is ready to deliver a dive into its financials and strategy with today's analyst/investor day, set to start in just 10 minutes.
• Along the way, AT&T will offer updates and detailed information around topics it's been discussing at media conferences this week.
• Its 2021 guidance is unchanged - the company still expects consolidated revenue growth around 1%, EPS stable with 2020, gross capital investment of $21B (capital expenditures around $18B) and free cash flow in the $26B range, with full-year dividend payout ratio in the high 50% range.
• But the operational updates to come include projections for HBO Max/HBO of securing 120M-150M subscribers worldwide by 2025, up from the 75M-90M projected in October 2019. AT&T should detail its international expansion of HBO Max and a launch of ad-supported video on demand set to come in June.
• This year it's targeting 3M new fiber locations across more than 90 metropolitan areas.
• The company acquired 80 MHz of C-band spectrum in the FCC's record-breaking 5G spectrum auction, and expects to begin deploying the first 40 MHz by the end of the year. Investment via the auction totaled $27.4B, including expected payments of $23B this year. It expects to spend $6B-$8B in capex deploying the spectrum, with most of that spending coming 2022-204.
• To meet the spectrum funding commitment, it expects to have access to cash of at least $30B this year - including cash on hand of $9.7B, commercial paper from January of $6.1B, and a term loan credit agreement covering $14.7B.
• And its end-of-2021 debt ratio target is 3.0x, reflecting an increase of about $6B in net debt for the spectrum. By 2024, it wants to bring that net debt-to-adjusted EBITDA ratio to 2.5x or lower. To help achieve that, all cash flows after dividends will be used for debt paydown, and the company doesn't plan to repurchase shares during that period.
• Follow along here for key updates. And the presentations will be webcast live starting at 10 a.m. ET.