AT&T INC. (NYSE:T) Files An 8-K Other Events
Item 8.01 Other Events.
Throughout this document, ATT Inc. is referred to as “we” or
“ATT.” We are a holding company whose subsidiaries and
affiliates operate in the communications and digital
entertainment services industry. Our subsidiaries and affiliates
provide services and equipment that deliver wireless, video and
broadband services both domestically and internationally, as well
as traditional telephony services.
“ATT.” We are a holding company whose subsidiaries and
affiliates operate in the communications and digital
entertainment services industry. Our subsidiaries and affiliates
provide services and equipment that deliver wireless, video and
broadband services both domestically and internationally, as well
as traditional telephony services.
Overview
We announced on April 25, 2017, that first-quarter 2017 net
income attributable to ATT totaled $3.5 billion, or $0.56 per
diluted share, compared to $3.8 billion, or $0.61 per diluted
share in the first quarter of 2016. First-quarter 2017 revenues
were $39.4 billion, down 2.9 percent from first-quarter 2016.
First quarter revenues reflect continued declines in our legacy
voice and data services, lower equipment revenues from fewer
wireless upgrades and pressure in wireless service revenues from
the adoption of unlimited and Mobile Share plans. These declines
were partially offset by growth in video, fixed strategic service
and high-speed internet revenues. Compared with results for the
first quarter of 2016, operating expenses were $32.5 billion,
down 2.7 percent; operating income was $6.9 billion, down 3.7
percent; and ATT’s operating income margin was 17.4 percent,
compared to 17.6 percent. First-quarter 2017 cash from operating
activities was $9.2 billion, up from $7.9 billion in 2016, due
primarily to the timing of tax and working capital improvements.
income attributable to ATT totaled $3.5 billion, or $0.56 per
diluted share, compared to $3.8 billion, or $0.61 per diluted
share in the first quarter of 2016. First-quarter 2017 revenues
were $39.4 billion, down 2.9 percent from first-quarter 2016.
First quarter revenues reflect continued declines in our legacy
voice and data services, lower equipment revenues from fewer
wireless upgrades and pressure in wireless service revenues from
the adoption of unlimited and Mobile Share plans. These declines
were partially offset by growth in video, fixed strategic service
and high-speed internet revenues. Compared with results for the
first quarter of 2016, operating expenses were $32.5 billion,
down 2.7 percent; operating income was $6.9 billion, down 3.7
percent; and ATT’s operating income margin was 17.4 percent,
compared to 17.6 percent. First-quarter 2017 cash from operating
activities was $9.2 billion, up from $7.9 billion in 2016, due
primarily to the timing of tax and working capital improvements.
Many of our products, including ATT Mobility and ATT U-verse
(U-verse), are offered to subscribers in multiple segments.
Accordingly, to aid in understanding subscriber trends, we are
presenting an overall discussion of these customer metrics. We
reported a net gain of 2.7 million North American wireless
subscribers in the first quarter of 2017, of which 2.1 million
were domestic. At March 31, 2017, our North American wireless
customer base was approximately 146.8 million compared to 139.7
million in the prior year, and our domestic wireless subscribers
totaled 134.2 million compared to 130.4 million. During the first
quarter, net adds were as follows:
(U-verse), are offered to subscribers in multiple segments.
Accordingly, to aid in understanding subscriber trends, we are
presenting an overall discussion of these customer metrics. We
reported a net gain of 2.7 million North American wireless
subscribers in the first quarter of 2017, of which 2.1 million
were domestic. At March 31, 2017, our North American wireless
customer base was approximately 146.8 million compared to 139.7
million in the prior year, and our domestic wireless subscribers
totaled 134.2 million compared to 130.4 million. During the first
quarter, net adds were as follows:
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North American branded net adds (combined postpaid and
prepaid) were 738,000, of which 91,000 were domestic. North American prepaid subscriber net adds were 799,000, of which 282,000 were domestic. North American postpaid subscribers had a net loss of 61,000, with 191,000 in our domestic wireless business. Total domestic postpaid tablet and computing device net adds were 105,000. |
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Connected devices were 2.6 million; 1.6 million of which
were attributable to connected cars. |
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North American reseller had a net loss of 596,000, with
582,000 in the U.S. |
We no longer offer subsidized device purchases for the majority
of our U.S. customers, instead allowing subscribers to purchase
devices on installment (ATT Next) or to bring their own device
(BYOD). During 2016, we introduced an integrated offer that
allows for unlimited wireless data when combined with our video
services and, in the first quarter of 2017, we expanded our
unlimited wireless data plans to make them available to customers
that do not subscribe to our video services, ending the first
quarter with more than 12.3 million subscribers on unlimited
offers. At March 31, 2017, Mobile Share plans represented nearly
53.6 million domestic wireless connections and more than 85
percent of our domestic wireless postpaid smartphone base was on
a no-device-subsidy Mobile Share plan.
of our U.S. customers, instead allowing subscribers to purchase
devices on installment (ATT Next) or to bring their own device
(BYOD). During 2016, we introduced an integrated offer that
allows for unlimited wireless data when combined with our video
services and, in the first quarter of 2017, we expanded our
unlimited wireless data plans to make them available to customers
that do not subscribe to our video services, ending the first
quarter with more than 12.3 million subscribers on unlimited
offers. At March 31, 2017, Mobile Share plans represented nearly
53.6 million domestic wireless connections and more than 85
percent of our domestic wireless postpaid smartphone base was on
a no-device-subsidy Mobile Share plan.
Sales under our equipment installment programs, including ATT
Next, represented 82 percent of all postpaid smartphone gross
adds and upgrades, compared to 80 percent in the first quarter of
2016. During the first quarter of 2017, we sold 3.5 million
smartphones under our ATT Next program and had BYOD gross adds of
416,000. More than 92 percent of smartphone transactions in the
quarter were on no-subsidy contracts compared to 90 percent in
the year-ago quarter. At March 31, 2017, about 53 percent of the
postpaid smartphone base is on ATT Next compared to approximately
49 percent at March 31, 2016.
Next, represented 82 percent of all postpaid smartphone gross
adds and upgrades, compared to 80 percent in the first quarter of
2016. During the first quarter of 2017, we sold 3.5 million
smartphones under our ATT Next program and had BYOD gross adds of
416,000. More than 92 percent of smartphone transactions in the
quarter were on no-subsidy contracts compared to 90 percent in
the year-ago quarter. At March 31, 2017, about 53 percent of the
postpaid smartphone base is on ATT Next compared to approximately
49 percent at March 31, 2016.
At March 31, 2017, we had 38.7 million video subscribers
(excluding DIRECTV NOW) compared with 37.8 million at March 31,
2016. Total linear video subscribers decreased by 142,000 in the
first quarter of 2017, of which 233,000 were in the U.S.
(excluding DIRECTV NOW) compared with 37.8 million at March 31,
2016. Total linear video subscribers decreased by 142,000 in the
first quarter of 2017, of which 233,000 were in the U.S.
Our total broadband connections were 15.7 million at March 31,
2017, and 15.8 million at March 31, 2016. During the first
quarter, we added 246,000 IP broadband subscribers, for a total
of 14.1 million at March 31, 2017. Total broadband subscribers
increased 90,000 in the quarter.
2017, and 15.8 million at March 31, 2016. During the first
quarter, we added 246,000 IP broadband subscribers, for a total
of 14.1 million at March 31, 2017. Total broadband subscribers
increased 90,000 in the quarter.
At March 31, 2017, our total switched access lines were 13.4
million compared with 16.0 million at March 31, 2016. The number
of U-verse voice connections (which use VoIP technology and
therefore are not included in the access line total) increased by
71,000 in the quarter to reach 5.9 million at March 31, 2017,
compared to 5.5 million at March 31, 2016.
million compared with 16.0 million at March 31, 2016. The number
of U-verse voice connections (which use VoIP technology and
therefore are not included in the access line total) increased by
71,000 in the quarter to reach 5.9 million at March 31, 2017,
compared to 5.5 million at March 31, 2016.
Segment Summary
Business Solutions
Revenues from our Business Solutions (Business) segment for the
first quarter of 2017 were $16.8 billion, down 4.3 percent versus
the year-ago quarter driven by continued declines in our legacy
services and fewer wireless equipment upgrades, partially offset
by growth in strategic business and wireless service revenues.
Our first-quarter 2017 revenues were also negatively impacted by
the second-quarter 2016 sale of certain hosting operations.
First-quarter 2017 Business operating expenses totaled $12.5
billion, down 6.2 percent versus the first quarter of 2016,
largely due to lower sales volumes, employee-related costs and
depreciation expense. The Business operating margin was 25.9
percent, compared to 24.4 percent in the year-earlier quarter
with growth in wireless and IP revenues and increased operational
efficiencies slightly offsetting declines in higher-margin legacy
services.
first quarter of 2017 were $16.8 billion, down 4.3 percent versus
the year-ago quarter driven by continued declines in our legacy
services and fewer wireless equipment upgrades, partially offset
by growth in strategic business and wireless service revenues.
Our first-quarter 2017 revenues were also negatively impacted by
the second-quarter 2016 sale of certain hosting operations.
First-quarter 2017 Business operating expenses totaled $12.5
billion, down 6.2 percent versus the first quarter of 2016,
largely due to lower sales volumes, employee-related costs and
depreciation expense. The Business operating margin was 25.9
percent, compared to 24.4 percent in the year-earlier quarter
with growth in wireless and IP revenues and increased operational
efficiencies slightly offsetting declines in higher-margin legacy
services.
We had approximately 82.4 million business wireless subscribers
at March 31, 2017 compared to 75.8 million at March 31, 2016.
During the first quarter of 2017, business wireless net adds for
connected devices were 2.6 million and postpaid had a net loss of
125,000. Postpaid business wireless subscriber churn was 1.07
percent, compared to 1.02 percent in the year-ago quarter.
at March 31, 2017 compared to 75.8 million at March 31, 2016.
During the first quarter of 2017, business wireless net adds for
connected devices were 2.6 million and postpaid had a net loss of
125,000. Postpaid business wireless subscriber churn was 1.07
percent, compared to 1.02 percent in the year-ago quarter.
During the first quarter of 2017, we added 4,000 high-speed
internet business subscribers, bringing total business IP
broadband to 980,000 subscribers. Total business broadband had a
loss of 25,000 subscribers in the quarter.
internet business subscribers, bringing total business IP
broadband to 980,000 subscribers. Total business broadband had a
loss of 25,000 subscribers in the quarter.
Entertainment Group
Our Entertainment Group (Entertainment) segment includes the
results of the U.S. satellite-based DIRECTV operations as well as
broadband and wired voice services to domestic residential
customers. Entertainment revenues for the first quarter of 2017
were $12.6 billion, down 0.3 percent versus the year-ago quarter
due to continued declines in legacy voice and data products
partially offset by growth in consumer IP broadband and video
revenues. First-quarter 2017 Entertainment operating expenses
totaled $11.0 billion compared to $11.1 billion in the first
quarter of 2016. The decrease was largely driven by cost
synergies that were partially offset by annual content cost
increases and impacts from storms. The Entertainment operating
margin was 12.7 percent, compared to 12.6 percent in the
year-earlier quarter with video and IP revenue growth and
increased operational cost efficiencies offsetting programming
content cost pressure, declines in legacy services and impacts of
storms on the West Coast.
results of the U.S. satellite-based DIRECTV operations as well as
broadband and wired voice services to domestic residential
customers. Entertainment revenues for the first quarter of 2017
were $12.6 billion, down 0.3 percent versus the year-ago quarter
due to continued declines in legacy voice and data products
partially offset by growth in consumer IP broadband and video
revenues. First-quarter 2017 Entertainment operating expenses
totaled $11.0 billion compared to $11.1 billion in the first
quarter of 2016. The decrease was largely driven by cost
synergies that were partially offset by annual content cost
increases and impacts from storms. The Entertainment operating
margin was 12.7 percent, compared to 12.6 percent in the
year-earlier quarter with video and IP revenue growth and
increased operational cost efficiencies offsetting programming
content cost pressure, declines in legacy services and impacts of
storms on the West Coast.
At March 31, 2017, Entertainment had approximately 50.3 million
revenue connections, compared to 51.7 million at March 31, 2016,
which included:
revenue connections, compared to 51.7 million at March 31, 2016,
which included:
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Approximately 25.0 million linear video connections at
March 31, 2017, compared to 25.3 million at March 31, 2016. During the first quarter of 2017, total linear video subscribers were down 233,000. At March 31, 2017, about 84 percent of linear video subscribers are on the satellite platform. Video connections and net adds exclude DIRECTV NOW subscribers. |
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Approximately 14.3 million broadband connections at March
31, 2017 and March 31, 2016. During the first quarter, we added 242,000 IP broadband subscribers, for a total of 13.1 million at March 31, 2017. Total broadband subscribers increased 115,000 in the quarter. |
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Approximately 11.0 million wired voice connections at
March 31, 2017 compared to 12.1 million at March 31, 2016. Voice connections include switched access lines and VoIP connections. |
Consumer Mobility
Revenues from our Consumer Mobility segment, which consist of
consumer, wholesale and resale subscribers located in the U.S.,
for the first quarter of 2017 were $7.7 billion, down 7.1 percent
versus the year-ago quarter, reflecting fewer phone sales and
upgrades and a $507 million decline in postpaid service revenues
due to migrations of customers to our Business segment. This
decline was partially offset by an increase of $239 million in
prepaid service revenues. First-quarter 2017 Consumer Mobility
operating expenses totaled $5.4 billion, down 7.4 percent versus
the first quarter of 2016 reflecting lower equipment and
commission costs as well as increased operational efficiencies.
The Consumer Mobility operating margin was 30.2 percent, compared
to 29.9 percent in the year-earlier quarter with lower volumes,
fewer subsidized sales and cost efficiencies more than offsetting
service revenue pressure.
consumer, wholesale and resale subscribers located in the U.S.,
for the first quarter of 2017 were $7.7 billion, down 7.1 percent
versus the year-ago quarter, reflecting fewer phone sales and
upgrades and a $507 million decline in postpaid service revenues
due to migrations of customers to our Business segment. This
decline was partially offset by an increase of $239 million in
prepaid service revenues. First-quarter 2017 Consumer Mobility
operating expenses totaled $5.4 billion, down 7.4 percent versus
the first quarter of 2016 reflecting lower equipment and
commission costs as well as increased operational efficiencies.
The Consumer Mobility operating margin was 30.2 percent, compared
to 29.9 percent in the year-earlier quarter with lower volumes,
fewer subsidized sales and cost efficiencies more than offsetting
service revenue pressure.
We had approximately 51.9 million Consumer Mobility subscribers
at March 31, 2017 compared to 54.7 million at March 31, 2016.
During the first quarter of 2017, we had branded net adds of
216,000 (prepaid net adds were 282,000 and consumer postpaid
losses were 66,000). Consumer reseller had a net loss of 588,000.
Our business wireless offerings allow for individual subscribers
to purchase wireless services through employer-sponsored plans
for a reduced price. The migration of these subscribers to the
ABS segment negatively impacted Consumer postpaid subscriber and
service revenues growth.
at March 31, 2017 compared to 54.7 million at March 31, 2016.
During the first quarter of 2017, we had branded net adds of
216,000 (prepaid net adds were 282,000 and consumer postpaid
losses were 66,000). Consumer reseller had a net loss of 588,000.
Our business wireless offerings allow for individual subscribers
to purchase wireless services through employer-sponsored plans
for a reduced price. The migration of these subscribers to the
ABS segment negatively impacted Consumer postpaid subscriber and
service revenues growth.
Total customer churn of Consumer Mobility subscribers was 2.42
percent versus 2.11 percent in the first quarter of 2016,
including postpaid churn of 1.22 percent, compared to 1.24
percent in the year-ago quarter.
percent versus 2.11 percent in the first quarter of 2016,
including postpaid churn of 1.22 percent, compared to 1.24
percent in the year-ago quarter.
International
Our International segment consists of the DIRECTV Latin American
video operations and Mexican wireless operations. First quarter
2017 operating revenues were $1.9 billion, up 15.7 percent versus
the prior year. Video service revenues in Latin America were $1.3
billion, up 18.7 percent versus the prior year, and wireless
revenues in Mexico were $588 million, up 9.5 percent when
compared to the first quarter of 2016. Our international segment
revenues reflect macroeconomic pressure with mixed local
currencies in our DIRECTV Latin America operations and foreign
exchange pressure in our Mexican wireless results. Operating
expenses were $2.0 billion compared to $1.9 billion in the first
quarter of 2016. The International operating margin was (6.2)
percent, compared to (11.9) percent in the year-earlier quarter.
video operations and Mexican wireless operations. First quarter
2017 operating revenues were $1.9 billion, up 15.7 percent versus
the prior year. Video service revenues in Latin America were $1.3
billion, up 18.7 percent versus the prior year, and wireless
revenues in Mexico were $588 million, up 9.5 percent when
compared to the first quarter of 2016. Our international segment
revenues reflect macroeconomic pressure with mixed local
currencies in our DIRECTV Latin America operations and foreign
exchange pressure in our Mexican wireless results. Operating
expenses were $2.0 billion compared to $1.9 billion in the first
quarter of 2016. The International operating margin was (6.2)
percent, compared to (11.9) percent in the year-earlier quarter.
We had approximately 12.6 million International wireless
subscribers at March 31, 2017 compared to 9.2 million at March
31, 2016. During the first quarter of 2017, we had branded net
adds of 647,000 (prepaid net adds were 517,000 and postpaid net
adds were 130,000).
subscribers at March 31, 2017 compared to 9.2 million at March
31, 2016. During the first quarter of 2017, we had branded net
adds of 647,000 (prepaid net adds were 517,000 and postpaid net
adds were 130,000).
We had approximately 13.7 million Latin America video connections
at March 31, 2017 compared to 12.4 million at March 31, 2016.
During the first quarter of 2017, we had video net adds of
91,000.
at March 31, 2017 compared to 12.4 million at March 31, 2016.
During the first quarter of 2017, we had video net adds of
91,000.
Supplemental Discussion
As a supplemental discussion of our operating results, for
comparison purposes, we are providing a view of our combined ATT
Mobility operations (domestic only). ATT Mobility revenues for
the first quarter of 2017 were $17.2 billion, down 4.4 percent
versus the first quarter of 2016, due to decreases in equipment
and service revenues. Wireless service revenues were pressured
from adoption of unlimited and Mobile Share plans, partially
offset by continued growth in branded smartphones. ATT
Mobility’s operating income margin was 30.1 percent compared to
29.4 percent in the year-ago quarter reflecting continuing
adoption of ATT Next, fewer smartphone upgrades and continued
efforts to drive operating costs out of the business.
comparison purposes, we are providing a view of our combined ATT
Mobility operations (domestic only). ATT Mobility revenues for
the first quarter of 2017 were $17.2 billion, down 4.4 percent
versus the first quarter of 2016, due to decreases in equipment
and service revenues. Wireless service revenues were pressured
from adoption of unlimited and Mobile Share plans, partially
offset by continued growth in branded smartphones. ATT
Mobility’s operating income margin was 30.1 percent compared to
29.4 percent in the year-ago quarter reflecting continuing
adoption of ATT Next, fewer smartphone upgrades and continued
efforts to drive operating costs out of the business.
For the quarter ended March 31, 2017, postpaid phone-only ARPU
decreased 2.4 percent versus the year-earlier quarter and 1.3
percent sequentially. Postpaid phone-only ARPU plus ATT Next
decreased 1.0 percent versus both the year earlier quarter and
sequentially.
decreased 2.4 percent versus the year-earlier quarter and 1.3
percent sequentially. Postpaid phone-only ARPU plus ATT Next
decreased 1.0 percent versus both the year earlier quarter and
sequentially.
Postpaid phone-only churn was 0.90 percent, compared to 0.96
percent in the first quarter of 2016. Postpaid churn was 1.12
percent, compared to 1.10 percent in the year-ago quarter. Total
customer churn was 1.46 percent versus 1.42 percent in the first
quarter of 2016.
percent in the first quarter of 2016. Postpaid churn was 1.12
percent, compared to 1.10 percent in the year-ago quarter. Total
customer churn was 1.46 percent versus 1.42 percent in the first
quarter of 2016.
We are updating our 2017 guidance. We are no longer providing
consolidated revenue guidance primarily due to the
unpredictability of wireless handset sales.
consolidated revenue guidance primarily due to the
unpredictability of wireless handset sales.
We are reaffirming our 2017 guidance that we expect:
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Capital expenditures to be in the $22 billion range,
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Adjusted operating margins expansion, and
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Adjusted earnings per share growth in the mid-single
digit range. |
Expectations do not assume any economic improvement. Our guidance
excludes pension and postemployment actuarial gains and losses,
pending acquisitions and dispositions as well as any other
significant items in year-over-year comparisons. Adjustments
include noncash mark-to-market benefit plan gains and losses,
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.
excludes pension and postemployment actuarial gains and losses,
pending acquisitions and dispositions as well as any other
significant items in year-over-year comparisons. Adjustments
include noncash mark-to-market benefit plan gains and losses,
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.
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 ATT’s filings with the Securities and
Exchange Commission. ATT disclaims any obligation to update or
revise statements contained in this filing based on new
information or otherwise.
and other forward-looking statements that are subject to risks
and uncertainties. A discussion of factors that may affect future
results is contained in ATT’s filings with the Securities and
Exchange Commission. ATT 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
99.1 ATT Inc. selected financial statements and operating data.
About AT&T INC. (NYSE:T)
AT&T Inc. is a holding company. The Company offers communications and digital entertainment services in the United States and the world. It operates through four segments: Business Solutions, Entertainment Group, Consumer Mobility and International. The Business Solutions segment includes various categories, including wireless service, fixed strategic services, legacy voice and data services, other services and wireless equipment. The Entertainment Group segment provides video, Internet and voice communication services to residential customers in the United States and the United States territories. The Consumer Mobility segment provides wireless service to consumers, and wireless wholesale and resale subscribers located in the United States or in the United States territories. The International segment provides video entertainment services to residential customers in Latin America, and wireless data and voice communication services to consumer and business customers in Mexico. AT&T INC. (NYSE:T) Recent Trading Information
AT&T INC. (NYSE:T) closed its last trading session down -0.08 at 39.94 with 24,033,786 shares trading hands.
