John Stankey, chief executive officer of AT&T Inc. (NYSE:T), spoke Wednesday at the J.P. Morgan Global Technology, Media and Communications Conference, where he provided an update to shareholders. Stankey said that he and AT&T’s board of directors considered a variety of opportunities for the company, and that the strategic separation of its media and communications operations reflects their confidence in the underlying market momentum in both businesses.
Stankey said that the WarnerMedia-Discovery transaction will significantly improve AT&T’s financial flexibility by providing $43 billion (subject to adjustment) for debt reduction through a combination of cash, debt securities and WarnerMedia’s retention of certain debt. This debt reduction allows the company to progress toward the end-of-year 2023 leverage ratio target of less than 2.5×2 while increasing investment in growth areas of 5G and fiber. He said he believes that having a clear ownership separation between AT&T and WarnerMedia gives AT&T the opportunity to align its investor base in the communications business with a focused total return capital allocation strategy. He said he expects that increased investment in 5G and fiber will support longer-term growth and healthy returns for shareholders.
With the AT&T Communications Division, Stankey said over the last three quarters the company has posted the best wireless postpaid net adds in more than a decade. In addition, the carrier recorded its best ever fiber gross adds in the first quarter of 2021, with about 70 percent of those new to AT&T.
“On a net basis,” he said, “fiber subscribers were up more than 1 million, or 25 percent, versus the first quarter of 2020, with penetration more than 35 percent across the company’s fiber base as of the first quarter of 2021.”
AT&T’s expected capital expenditures of around $24 billion per year from 2022 to 2024, Stankey said, builds on its existing position as one of the largest investors in digital infrastructure and connectivity in the United States.
“This investment will allow AT&T to meet substantial, long-term demand for connectivity by delivering broadband access to millions more households with plans to expand the company’s fiber footprint to cover 30 million customer locations by year-end 2025, and expectations for its 5G C-band network to cover 200 million people in the U.S. by year-end 2023. AT&T also believes it will be able to better compete against companies offering alternative technology solutions, some of which lack the proven ability to meet customers’ growing connectivity needs,” he said.
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