Company Announcements

3Q16 Earnings 8K

Source: RNS
RNS Number : 5102P
AT & T Inc.
17 November 2016
 

 

 

 

 

 

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) October 22, 2016

 

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))

 

 

 



 

Item 2.02 Results of Operations and Financial Condition.

 

The registrant announced on October 22, 2016, its results of operations for the third quarter of 2016. The text of the press release and accompanying financial information are attached as exhibits and incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

The following exhibits are furnished as part of this report:

(d)          Exhibits


99.1

Press release and Investor Briefing dated October 22, 2016 reporting financial results for the third quarter ended September 30, 2016.

 


99.2

AT&T Inc. selected financial statements and operating data.





99.3

Discussion and reconciliation of non-GAAP measures.

 

 

 

 

 

 

 



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: October 22, 2016

By: /s/ Debra L. Dial

       Debra L. Dial

Senior Vice President and Controller

 

 

 

 

Filed by AT&T Inc.

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a−12

of the Securities Exchange Act of 1934

Subject Company: Time Warner Inc.

Commission File No.: 1-15062

 

 

AT&T Reports Third-Quarter Results

 

Increases Quarterly Dividend by 2.1%,

33rd Consecutive Annual Increase

 


·

  Consolidated revenues of $40.9 billion, up 4.6% with DIRECTV acquisition

 


·

  Operating income up 8.2%

 


·

  Net income attributable to AT&T up 11.2%

 


·

  Cash from operations of $11.0 billion

 


·

  Free cash flow of $5.2 billion

 


·

  Diluted EPS of $0.54 as reported and $0.74 as adjusted,  compared to $0.50 and $0.74 in the

  year-ago quarter

 

 


·

  2.3 million wireless net adds driven by connected devices, Mexico and Cricket

 


·

  U.S. wireless postpaid churn of 1.05%, down 11 basis points year over year

 


·

  Strong U.S. wireless operating margin of 29.6%; best-ever U.S. wireless service EBITDA margin of 50.1%

 


·

  700,000 branded smartphones added to U.S. subscriber base

 


·

  323,000 U.S. DIRECTV net adds with TV subscriber base stable

 


·

  171,000 IP broadband net adds

 


·

  Full-year guidance on track to meet or exceed expectations

 

DALLAS, October 22, 2016 - AT&T Inc. (NYSE:T) today reported growing revenues and net income with solid margins and earnings for the third quarter.  Detailed results, including financial tables, are included in the accompanying Investor Briefing and SEC Form 8-K.  These materials and associated slide presentation of third-quarter results are available on the  AT&T Investor Relations website .

 

AT&T also announced that its board of directors has approved a 2.1% increase in the company's quarterly dividend. AT&T's quarterly dividend will increase from $0.48 to $0.49 per share. The annual dividend will increase from $1.92 to $1.96 per share. The dividend will be payable on Feb. 1, 2017 to common stockholders of record on Jan. 10, 2017.

 

October 23, 2016

© 2016 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property.

 

 

 



 

 

 

AT&T will host a webcast presentation on Monday, October 24, 2016, at 8:30 a.m. ET to discuss the Time Warner transaction and third-quarter results.  Links to the webcast and accompanying documents will be available on the  AT&T Investor Relations website .  The third-quarter earnings conference call previously scheduled for Tuesday, October 25, 2016, at 4:30 p.m. ET is cancelled.

 

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.

 

About AT&T

AT&T Inc. (NYSE:T) helps millions around the globe connect with leading entertainment, mobile, high speed internet and voice services. We're the world's largest provider of pay TV. We have TV customers in the U.S. and 11 Latin American countries. We offer the best global coverage of any U.S. wireless provider.* And we help businesses worldwide serve their customers better with our mobility and highly secure cloud solutions.

Additional information about AT&T products and services is available at http://about.att.com. Follow our news on Twitter at @ATT, on Facebook at  http://www.facebook.com/att  and YouTube at  http://www.youtube.com/att.

© 2016 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

*Global coverage claim based on offering discounted voice and data roaming; LTE roaming; voice roaming; and world-capable smartphone and tablets in more countries than any other U.S. based carrier. International service required. Coverage not available in all areas. Coverage may vary per country and be limited/restricted in some countries.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. 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 and revise statements contained in this news release based on new information or otherwise.

This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's website at www.att.com/investor.relations .  

The "quiet period" for FCC Spectrum Auction 1000 (also known as the 600 MHz incentive auction) is now in effect. During the quiet period, auction applicants are required to avoid discussions of bids, bidding strategy and post-auction market structure with other auction applicants.

 

October 23, 2016

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Additional Information and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.  This communication may be deemed to be solicitation material in respect of the proposed merger between AT&T Inc. and Time Warner Inc.  In connection with the proposed merger, AT&T Inc. intends to file a registration statement on Form S-4, containing a proxy statement/prospectus with the Securities and Exchange Commission ("SEC").  STOCKHOLDERS OF TIME WARNER INC. ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.  Investors and security holders will be able to obtain copies of the proxy statement/prospectus as well as other filings containing information about AT&T Inc. and Time Warner Inc., without charge, at the SEC's website,  http://www.sec.gov . Copies of documents filed with the SEC by AT&T Inc. will be made available free of charge on AT&T's Investor Relations website,  www.att.com/investor.relations . Copies of documents filed with the SEC by Time Warner Inc. will be made available free of charge on Time Warner's Investor Relations website,  ir.timewarner.com

 

Participants in Solicitatio

AT&T Inc. and its directors and executive officers, and Time Warner Inc. and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of Time Warner common stock in respect of the proposed merger. Information about the directors and executive officers of AT&T is set forth in the proxy statement for AT&T's 2016 Annual Meeting of Stockholders, which was filed with the SEC on March 11, 2016. Information about the directors and executive officers of Time Warner is set forth in the proxy statement for Time Warner's 2016 Annual Meeting of Stockholders, which was filed with the SEC on April 29, 2016. Investors may obtain additional information regarding the interest of such participants by reading the proxy statement/prospectus regarding the proposed merger when it becomes available.

For more information, contact:

Name: Fletcher Cook

AT&T Corporate Communications

Phone: (214) 757-7629

Email: fletcher.cook@att.com

October 23, 2016

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AT&T Reports Third-Quarter Results

Increases Quarterly Dividend by 2.1%, 33rd Consecutive Annual Increase

 


·  

Consolidated revenues of $40.9 billion, up 4.6% with DIRECTV acquisition

 


· 

Operating income up 8.2%

 


· 

Net income attributable to AT&T up 11.2%

 


· 

Cash from operations of $11.0 billion

 


· 

Free cash flow of $5.2 billion

 


· 

Diluted EPS of $0.54 as reported and $0.74 as adjusted, compared to $0.50 and $0.74 in the year-ago quarter

 

HIGHLIGHTS:


· 

2.3 million wireless net adds driven by connected devices, Mexico and Cricket

 


· 

U.S. wireless postpaid churn of 1.05%, down 11 basis points year over year

 


· 

U.S. wireless operating margin of 29.6%; best-ever U.S. wireless service EBITDA margin of 50.1%

 


· 

700,000 branded smartphones added to U.S. subscriber base

 

· 

323,000 U.S. DIRECTV net adds with TV subscriber base stable

 


o  

More than 1.2 million U.S. DIRECTV net adds since acquisition

 


· 

171,000 IP broadband net adds

 


· 

More than 390 million North American 4G LTE POPs

 


· 

Year-to-date cash from operations of $29.2 billion; free cash flow $13.3 billion year to date

 


· 

Full-year guidance on track to meet or exceed expectations

October 23, 2016

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CONSOLIDATED FINANCIAL RESULTS

AT&T's consolidated revenues for the third quarter totaled $40.9 billion, up 4.6% versus the year-earlier period due to the July 24, 2015 acquisition of DIRECTV. Excluding the impact of the DIRECTV acquisition and foreign exchange, revenues were essentially flat, as growth in video and IP-based services mostly offset pressures from declines in wireless and legacy services. Compared with results for the third quarter of 2015, operating expenses were $34.5 billion versus $33.2 billion; operating income was $6.4 billion versus $5.9 billion; and operating income margin was 15.7% versus 15.2%. When adjusting for $0.14 of amortization, $0.03 in merger- and integration-related costs and $0.03 of employee-separation costs, operating income was $8.3 billion versus $7.9 billion; and operating income margin was 20.3%, consistent with the year-ago quarter.

 

Third-quarter net income attributable to AT&T totaled $3.3 billion, or $0.54 per diluted share, compared to $3.0 billion, or $0.50 per diluted share, in the year-ago quarter. Adjusting for $0.20 of amortization, merger- and integration-related costs and other expenses, earnings per diluted share was $0.74 compared to an adjusted $0.74 in the year-ago quarter.

 

Cash from operating activities was $11.0 billion in the third quarter, up 1.8%, and capital investment1 totaled $5.9 billion. Free cash flow - cash from operating activities minus capital expenditures - was $5.2 billion for the quarter, down 6.5%, and $13.3 billion year to date, up 3.7%.

 

AT&T also announced that its board of directors has approved a 2.1% increase in the company's quarterly dividend. AT&T's quarterly dividend will increase from $0.48 to $0.49 per share. The annual dividend will increase from $1.92 to $1.96 per share. The dividend will be payable on Feb. 1, 2017 to common stockholders of record on Jan. 10, 2017.

                                                                                                                                                                                                                                                         

13Q16 includes $87 million in capital purchases in Mexico with favorable vendor payment terms.

 

October 23, 2016

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Business Solutions

 

The Business Solutions segment provides both wireless and wireline services to business customers and to individual subscribers who purchase wireless services through employer-sponsored plans. AT&T's wireless and wired networks provide complete communications solutions to these customers. AT&T's business customer revenues include results from enterprise, public sector, wholesale and small/midsize customers.

 

FINANCIAL HIGHLIGHTS

Total third-quarter revenues from business customers were $17.8 billion, up 0.4% versus the year-earlier quarter. Growth in mobility and strategic business services offset declines in legacy services and a continuing low-growth economy. When adjusting for the transition of certain hosting operations, total revenues would have been even higher. Business Solutions service revenues were $15.6 billion, essentially stable year over year.

Third-quarter operating expenses were $13.5 billion, up 0.5% versus the third quarter of 2015. Operating income totaled $4.3 billion, up 0.1% year over year. Third-quarter operating income margin was 24.2%, stable year over year with declines in higher-margin legacy services offsetting growth in wireless and IP revenue and cost efficiencies.

 

BUSINESS WIRELESS FINANCIAL RESULTS

Business wireless revenues were up 4.0% year over year to $9.9 billion driven by wireless service revenue growth and higher equipment revenues. Wireless service revenues were up 4.1% year over year, reflecting smartphone and tablet gains and continued migration from consumer plans.

 

BUSINESS WIRELINE FINANCIAL RESULTS

In business wireline, declines in legacy products were partially offset by continued growth in strategic business services. Total business wireline revenues were $7.8 billion, down 3.7% year over year. When adjusting for the impact of the transition of certain hosting operations and foreign exchange pressures, wireline revenues would have decreased 2.5%. When adjusting for these same items, data revenues were stable. Data revenues make up nearly 60% of Business Solutions wireline revenues.

 

October 23, 2016

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Revenues from strategic business services, the next-generation wireline capabilities that lead AT&T's most advanced business solutions - including VPNs, Ethernet, cloud, hosting, IP conferencing, voice over IP, dedicated internet, U-verse and security services - grew by $242 million, or 9.1%, versus the year-earlier quarter. These services represent an annualized revenue stream of more than $11 billion.

 

SUBSCRIBER METRICS

At the end of the third quarter, AT&T had 79.4 million business wireless subscribers. The company added 191,000 postpaid subscribers and 1.3 million connected devices in the third quarter. Postpaid business wireless subscriber churn was 0.97% versus 1.05% in the year-ago quarter.

During the quarter, the company also added nearly 15,000 high-speed IP broadband business subscribers. Total business broadband had a loss of 18,000 subscribers in the quarter.

 

BUSINESS INNOVATION

Through its powerful global networks, AT&T provides integrated solutions to business customers and offers a wide variety of wired and wireless products and services to increase businesses' productivity. AT&T serves millions of business customers, from the largest multinational corporations to small businesses, in all major industries. AT&T continually develops products and services to ensure that its business customers have access to the latest technology solutions. In recent business news, AT&T:


·

Announced a multiyear agreement between AT&T and Amazon Web Services (AWS) to deliver integrated solutions that combine the companies' leading cloud and networking capabilities. The collaboration will help customers migrate to and use the AWS Cloud with the AT&T network. The solutions are intended to span cloud networking, mobility, IoT, security and analytics.

 


·

Teamed up with IBM to help businesses manage their networking services. IBM will take advantage of AT&T FlexWare, which makes it easy to set up and manage virtual network functions on a single device. AT&T will also be able to run applications on IBM's cloud, cognitive, analytics and security infrastructure. In addition to making AT&T FlexWare available to clients, IBM is rolling out the solution in many of its own sites.

 


·

Introduced a trial with Qualcomm Technologies Inc. to test how drones can connect more safely and securely on commercial 4G LTE. The research will look at coverage, signal strength and how drones function in flight.

 


·

Collaborated with VeloCloud to deliver AT&T Software-defined Wide Area Network (AT&T SD-WAN), a key step in helping businesses evolve their networks from hardware to software. The AT&T SD-WAN portfolio will include a network-based solution combining hybrid networking with multiple types of network access. The network-based solution will be available in 2017. The AT&T SD-WAN premises-based, over-the-top solution will be available later this year.

 


·

Closed significant business deals with Live Nation, State of Wisconsin and Waste Management.

October 23, 2016

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Entertainment Group

 

AT&T's Entertainment Group provides entertainment, high-speed internet and communications services predominantly to residential customers in the United States.

 

FINANCIAL HIGHLIGHTS

Total revenues were $12.7 billion, up 17.1% versus the year-earlier quarter mostly due to the acquisition of DIRECTV. Also contributing to the gain was continued growth in consumer IP services.

Broadband revenues were up 5% in the quarter with IP broadband growing by 12%. AdWorks has grown to a $1.5 billion annualized revenue stream with double-digit revenue growth year to date and strong margins.

Third-quarter operating expenses were $11.2 billion, up 14.2% from a year ago due to the acquisition of DIRECTV and higher content costs. Operating income totaled $1.5 billion, up from the year-ago $1.0 billion. Third-quarter operating income margin was 11.7%, up from 9.4% in the year-earlier quarter with satellite and IP revenue growth and cost efficiencies offsetting TV content cost pressure and declines in legacy services. In the fourth quarter, on a sequential basis, margins will be pressured by a full quarter of NFL Sunday Ticket costs, annual content cost increases and start-up costs for DIRECTV NOW.

 

SUBSCRIBER METRICS

Total video subscribers were essentially flat in the quarter as competition increases. The company added 323,000 satellite subscribers in the third quarter. U-verse TV subscribers declined 326,000 as the company continued to focus on profitability and increasingly emphasized satellite sales. For the second straight quarter, gross additions increased on a year-over-year basis even when excluding IPTV customers transitioning to DIRECTV.

The Entertainment Group ended the quarter with 25.3 million video subscribers. While the company expects positive video net adds in the fourth quarter, it expects total video net adds for the year to decline slightly. At the end of the third quarter, about 100,000 pending video customers had the capability to watch TV on their mobile devices; however, these customers were not included in third-quarter subscriber numbers since the video service had not yet been installed at their homes.

The Entertainment Group had a net gain of 156,000 IP broadband subscribers in the third quarter. Total Entertainment Group broadband subscribers decreased 5,000 in the quarter. IP broadband subscribers at the end of the quarter totaled 12.8 million.

 

October 23, 2016

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ENTERTAINMENT GROUP INNOVATION

In recent news, the company:


·

Launched an updated DIRECTV App that allows customers to watch live and recorded programs virtually anywhere.

 


·

Premiered a new "Data Free TV" feature that lets AT&T wireless customers stream AT&T DIRECTV and U-verse SM  content without counting it against their data allowance.

 


·

Entered into 10 key DIRECTV NOW content agreements with program providers whose premium brands will be part of the company's new streaming platform, planned to launch in the fourth quarter of 2016. As publicly announced HBO, , Disney, Turner, Discovery Networks, NBCU, Scripps Networks, STARZ, AMCN (AMC Networks), AETN (A+E Networks) and Viacom will be among the more than 100 channels included on DIRECTV NOW.

 


·

Since the end of the second quarter, announced the launch of our 100% fiber network under the AT&T Fiber brand in 14 additional metro areas - Augusta, Ga.; Bakersfield, Calif.; Cleveland; Columbus, Ohio; Detroit; Greater New Orleans; Huntsville, Ala.; Indianapolis; Louisville, Ky.; Lubbock, Texas; Memphis, Tenn.; Mobile, Ala.; Sacramento, Calif. and St. Louis - bringing the total to 39 major metros where AT&T's gigabit connection is available.

 


·

Expanded live 4K broadcast offerings with premier content from the Olympics, MLB, UFC, PGA, College Football and the World Series of Beach Volleyball.

 


·

Received top honors in several J.D. Power studies:

 


o

AT&T outscored all other full-service wireless providers for the top overall ranking in the J.D. Power 2016 Full-Service Wireless Purchase Experience Study SM  Volume 2.

 


o

AT&T also earned the top ranking among full-service wireless providers in the J.D. Power 2016 Full Service Wireless Customer Performance Care Study SM Volume 2. AT&T scored significantly higher than the industry average - by 16 points - and increased its overall score by 20 points over the prior 6-month period.

 


o

AT&T ranked "Highest In Customer Satisfaction with Small/Medium Business Wireline Service, 2 Years in a Row" in the J.D. Power 2016 Business Wireline Satisfaction Study.

October 23, 2016

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Consumer Mobility

 

The Consumer Mobility segment provides nationwide wireless service to consumer and wholesale subscribers located in the United States or in U.S. territories. The company's wireless network powers voice and data services, including high-speed internet, video entertainment and home monitoring services.

 

FINANCIAL HIGHLIGHTS

Total revenues from Consumer Mobility customers totaled $8.3 billion, down 5.9% versus the year-earlier quarter, reflecting declines in equipment revenues from lower handset sales and in postpaid service revenues due to the success of Mobile Share plans and migrations to business plans. Third-quarter operating expenses were $5.7 billion, down 5.7% versus the third quarter of 2015, reflecting lower equipment and commission costs as well as increased operational efficiencies.

AT&T's Consumer Mobility operating income totaled $2.6 billion, down 6.2% versus the third quarter of 2015. Third-quarter operating income margin was 31.1%, down slightly from the year-earlier quarter with lower volumes, fewer subsidized sales and cost efficiencies mostly offsetting service-revenue pressure from customers choosing Mobile Share plans. Consumer Mobility EBITDA margin was 42.5%, compared to 42.3% in the third quarter of 2015. (EBITDA margin is operating income before depreciation and amortization, divided by total wireless revenues.) EBITDA service margin was 50.9%, up from 50.5% in the year-ago quarter. (EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

 

SUBSCRIBER METRICS

At the end of the third quarter, AT&T had 53.9 million Consumer Mobility subscribers. In the quarter, Consumer Mobility gained 50,000 total subscribers with 21,000 postpaid, 304,000 prepaid and 41,000 connected device net adds offsetting a loss of 316,000 reseller subscribers. Consumer Mobility postpaid churn was 1.19%, compared to 1.33% in the year-ago quarter.

 

October 23, 2016

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CONSUMER MOBILITY INNOVATION

AT&T is a leader in mobile internet, delivering expanded choice in devices, services and applications. In recent weeks, AT&T:


·

Introduced Mobile Share Advantage (MSA) plans, which offer more data at a lower cost per megabyte than some of the plans previously offered by AT&T. With the new MSA plans, customers get unlimited talk and text, rollover data and shareable data with no overage charges. In place of overage charges, once a customer uses the data in a plan, data speeds are reduced for the remainder of the billing cycle.

 


·

Reached agreements with Empresa De Telecomunicaciones De Cuba to allow AT&T wireless customers to roam in Cuba and to enable direct interconnection between the U.S. and Cuba. The deal continues to enhance AT&T's global coverage for customers.

 


·

Enhanced the AT&T THANKS program by adding priority presale ticket access to popular Live Nation concerts. The first two presales gave customers early access to tickets to see Panic! At the Disco and Thomas Rhett. The company also introduced new tiers with benefits and offers to complement customers' needs.

 


·

Launched a new smartphone plan for Cricket customers starting at $30/month that includes unlimited talk and text, plus 1GB of high-speed data.

October 23, 2016

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International

 

The International segment includes wireless services in Mexico and satellite entertainment services in Latin America.

Total International revenues totaled $1.9 billion. Third-quarter operating expenses were $1.9 billion. AT&T's International operating loss totaled $54 million. Third-quarter operating income margin was (2.9)%.

 

MEXICO

AT&T owns and operates a wireless network in Mexico. AT&T covered about 74 million people in Mexico with 4G LTE at the end of the third quarter and expects to cover 100 million POPs by the end of 2018.

Total wireless revenues from Mexico totaled $582 million, up 0.2% versus the year-earlier quarter, largely due to subscriber growth offset by foreign exchange and competitive pressures. Third-quarter operating loss was $148 million compared to a loss of $134 million in the year-ago quarter, reflecting continued investment in operations, network and subscriber acquisition. Third-quarter operating expenses benefitted from a few one-time items. Margins in the fourth quarter are expected to be consistent with prior quarters.

In the quarter, AT&T added 163,000 postpaid subscribers and 606,000 prepaid subscribers to reach 10.7 million total wireless subscribers in Mexico, a 32% increase from a year ago.

 

DIRECTV LATIN AMERICA

AT&T is a leading provider of pay television services in Latin America with satellite operations serving Argentina, Brazil, Chile, Colombia, Ecuador, Peru, Uruguay, Venezuela and parts of the Caribbean. It also owns 41% of Sky Mexico. Sky Mexico financial results are accounted for as an equity method investment.

DIRECTV Latin America revenues reflect macroeconomic pressure with weakening local currencies. Total revenues from Latin America were $1.3 billion. Operating income was $94 million.

Third-quarter subscriber net losses were 48,000, driven by declines in Colombia, Argentina and Brazil. Total subscribers at the end of the quarter were 12.5 million. Sky Mexico had approximately 7.8 million subscribers as of June 30, 2016.

 

October 23, 2016

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INTERNATIONAL HIGHLIGHTS

In recent weeks AT&T:


·

Continued to make significant progress in building the company's customer base and deploying a 4G LTE network in Mexico, while expanding distribution to match this expanded network reach.

 


·

Opened additional points of sale throughout the country. The company also completed the rebrand of nearly 2,900 Nextel and Iusacell points of sale to AT&T.

October 23, 2016

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AT&T Mobility

 

AT&T's U.S. mobility operations are divided between the Business Solutions and Consumer Mobility segments. For comparison purposes, the company is providing supplemental information for its total domestic mobility operations.

 

FINANCIAL HIGHLIGHTS

Wireless revenues reflected lower service revenues from the continued adoption of Mobile Share plans and lower equipment revenues primarily from fewer handset upgrades and higher bring-your-own-device subscribers.


·

Total wireless revenues were $18.2 billion, down 0.7% year over year, due to decreases in service and equipment revenues. Wireless service revenues of $15.0 billion were down 0.9% year over year but were up sequentially. Continued growth of smartphones and tablets partially offset adoption of Mobile Share plans. Wireless equipment revenues decreased 0.2% to $3.2 billion.

 


·

Third-quarter wireless operating expenses totaled $12.8 billion, down 0.8% year over year, reflecting operating efficiencies and lower sales volumes, which offset higher promotional costs. Wireless operating income was $5.4 billion, down 0.5% year over year, reflecting continued adoption of Mobile Share plans and increased promotional activity.

 


·

Wireless margins reflect adoption of AT&T NextSM, increases in BYOD customers, lower smartphone upgrade volumes and continued efforts to drive operating costs out of the business. AT&T's reported third-quarter wireless operating income margin was 29.6%, consistent with the year-earlier quarter.

 


·

Wireless EBITDA margin was 41.2%, compared to 40.7% in the third quarter of 2015. Wireless EBITDA service margin was a best-ever 50.1%, up from 49.4% in the year-ago quarter.

 

October 23, 2016

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ARPU

The continued adoption of AT&T Next is reflected in postpaid service ARPU (average revenues per user).


·

Phone-only postpaid ARPU decreased 1.9% versus the year-earlier quarter; however, phone-only postpaid ARPU with AT&T Next monthly billings increased 1.7% year over year. This growth comes even with lower upgrade volumes, promotional offers and an increasing number of customers holding onto their devices after completing Next payments.

 

 

SUBSCRIBER METRICS

In the third quarter, AT&T posted a net increase in total wireless subscribers of 1.5 million to reach more than 133 million in service, up 6.9 million over the past year.


·

The company added 212,000 postpaid subscribers and 304,000 prepaid subscribers with gains in both Cricket and GoPhone.

 


·

AT&T also added 1.3 million connected devices. It lost 315,000 reseller subscribers in the quarter, largely due to disconnects from the company's 2G network. The company added 299,000 postpaid tablet and computing devices in the quarter and lost 268,000 postpaid phone subscribers with the majority of the losses in lower-ARPU feature phones.

 


·

The company had 516,000 branded net adds (both postpaid and prepaid) in the quarter, including 165,000 branded smartphone net adds. About 700,000 total branded smartphones were added to the base.

 


·

The company expects to shut down its 2G network on or around Jan. 1, 2017. At the end of the third quarter, the company had about 4 million 2G subscribers. This includes 2.8 million connected devices, 673,000 reseller, 335,000 postpaid and 210,000 prepaid. This compares to more than 6 million 2G subscribers at the end of the second quarter. The company has had success migrating these subscribers and will continue those efforts in the fourth quarter; however, the 2G shutdown is expected to impact net adds and churn in the fourth quarter.

 

CHURN

Improvements in postpaid and prepaid churn helped offset higher connected device and reseller churn.


·

Postpaid churn was 1.05%, compared to 1.16% in the year-ago quarter, an 11 basis point improvement. That includes about 2 basis points of pressure from the 2G network shutdown. Postpaid phone churn was 0.90%, a 14 basis point improvement from the year-ago quarter. Branded churn was 1.63%, compared to 1.68% in the year-ago quarter. Total churn was 1.45%, up from 1.33% in the year-ago quarter driven by churn from the shutdown of the 2G network. The planned shutdown of the 2G network contributed more than 20 basis points of pressure to total churn.

October 23, 2016

© 2016 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property.                                               Page 15

 

 

 



 

 

 

 

SMARTPHONES

The company's branded smartphone base continued to grow in the quarter, and even more customers moved off the subsidy model - either choosing AT&T Next or bringing their own devices.


·

The company had 7.0 million branded smartphone gross adds and upgrades in the quarter, including 1.9 million from prepaid. The postpaid upgrade rate in the quarter was 5.1%.

 


·

Sales on AT&T Next were 4.3 million, or 83% of all postpaid smartphone gross adds and upgrades. The company also had 595,000 BYOD gross adds, the second most ever. That means about 94% of postpaid smartphone transactions in the quarter were non-subsidy.

 


o

About 50% of the company's postpaid smartphone base is currently on AT&T Next, with almost 80% of postpaid smartphone subscribers on no-device-subsidy plans.

 


·

At the end of the quarter, 90%, or 58.7 million, of AT&T's postpaid phone subscribers had smartphones. Smartphones accounted for 96% of postpaid phone sales during the quarter.

 

DATA PLANS

Customers continue to choose Mobile Share and unlimited wireless with TV plans.


·

The total number of Mobile Share connections was 57.1 million with an average of about 3 devices per account. Nearly 40% of Mobile Share accounts are on 15 gigabyte or larger data plans.

 


·

About 6.7 million postpaid subscribers are on unlimited wireless with TV plans.

 

October 23, 2016

© 2016 AT&T Intellectual Property. All rights reserved. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property.                                               Page 16

 

 

 

 

AT&T Inc.



















 

Financial Data



















 




















 




















 

Consolidated Statements of Income

Dollars in millions except per share amounts


Three Months Ended






Nine Months Ended





 

Unaudited


September 30,



Percent


September 30,



Percent



2016



2015



Change


2016



2015



Change

 

Operating Revenues



















 

  Service


$

37,272



$

35,539




4.9

%


$

111,515



$

94,042




18.6

%

 

  Equipment



3,618




3,552




1.9

%



10,430




10,640




-2.0

%

 

    Total Operating Revenues



40,890




39,091




4.6

%



121,945




104,682




16.5

%

 


























 

Operating Expenses

























 

   Cost of services and sales

























 

    Equipment



4,455




4,501




-1.0

%



13,090




13,400




-2.3

%

 

    Broadcast, programming and operations



4,909




4,081




20.3

%



14,239




6,351




-

%

 

    Other cost of services (exclusive of depreciation

          and amortization shown separately below)



9,526




9,214




3.4

%



28,436




27,604




3.0

%

 

   Selling, general and administrative



9,013




9,107




-1.0

%



26,363




24,535




7.5

%

 

   Depreciation and amortization



6,579




6,265




5.0

%



19,718




15,539




26.9

%

 

    Total Operating Expenses



34,482




33,168




4.0

%



101,846




87,429




16.5

%

 

Operating Income



6,408




5,923




8.2

%



20,099




17,253




16.5

%

 

Interest Expense



1,224




1,146




6.8

%



3,689




2,977




23.9

%

 

Equity in Net Income of Affiliates



16




15




6.7

%



57




48




18.8

%

 

Other Income (Expense) - Net



(7

)



(57

)



87.7

%



154




61




-

%

 

Income Before Income Taxes



5,193




4,735




9.7

%



16,621




14,385




15.5

%

 

Income Tax Expense



1,775




1,657




7.1

%



5,803




4,784




21.3

%

 

Net Income



3,418




3,078




11.0

%



10,818




9,601




12.7

%

 

 Less: Net Income Attributable to

    Noncontrolling Interest



(90

)



(84

)



-7.1

%



(279

)



(262

)



-6.5

%

 

Net Income Attributable to AT&T


$

3,328



$

2,994




11.2

%


$

10,539



$

9,339




12.8

%

 


























 


























 

Basic Earnings Per Share Attributable to AT&T


$

0.54



$

0.50




8.0

%


$

1.70



$

1.71




-0.6

%

 

   Weighted Average Common

       Shares Outstanding (000,000)



6,168




5,924




4.1

%



6,171




5,447




13.3

%

 


























 

Diluted Earnings Per Share Attributable to AT&T


$

0.54



$

0.50




8.0

%


$

1.70



$

1.71




-0.6

%

 

   Weighted Average Common

       Shares Outstanding with Dilution (000,000)



6,189




5,943




4.1

%



6,191




5,463




13.3

%

 

 

 

 

 

 



 

AT&T Inc.







Financial Data















Consolidated Balance Sheets

Dollars in millions




Unaudited


Sep. 30,



Dec. 31,




2016



2015


Assets







Current Assets







Cash and cash equivalents


$

5,895



$

5,121


Accounts receivable - net of allowances for doubtful accounts of $650 and $704



16,855




16,532


Prepaid expenses



1,333




1,072


Other current assets



13,291




13,267


Total current assets



37,374




35,992


Property, Plant and Equipment - Net



123,922




124,450


Goodwill



105,271




104,568


Licenses



94,241




93,093


Customer Lists and Relationships - Net



15,227




18,208


Other Intangible Assets - Net



8,734




9,409


Investments in Equity Affiliates



1,679




1,606


Other Assets



16,527




15,346


Total Assets


$

402,975



$

402,672











Liabilities and Stockholders' Equity









Current Liabilities









Debt maturing within one year


$

7,982



$

7,636


Accounts payable and accrued liabilities



28,849




30,372


Advanced billing and customer deposits



4,637




4,682


Accrued taxes



2,686




2,176


Dividends payable



2,948




2,950


Total current liabilities



47,102




47,816


Long-Term Debt



117,239




118,515


Deferred Credits and Other Noncurrent Liabilities









Deferred income taxes



59,649




56,181


Postemployment benefit obligation



33,483




34,262


Other noncurrent liabilities



20,899




22,258


Total deferred credits and other noncurrent liabilities



114,031




112,701


Stockholders' Equity









Common stock



6,495




6,495


Additional paid-in capital



89,536




89,763


Retained earnings



35,319




33,671


Treasury stock



(12,589

)



(12,592

)

Accumulated other comprehensive income



4,850




5,334


Noncontrolling interest



992




969


Total stockholders' equity



124,603




123,640


Total Liabilities and Stockholders' Equity


$

402,975



$

402,672











 

 

 

 

 

 



 

AT&T Inc.







Financial Data





















Consolidated Statements of Cash Flows

Dollars in millions


Nine Months Ended

Unaudited


September 30,



2016


2015

Operating Activities







Net income


$

10,818



$

9,601


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









Depreciation and amortization



19,718




15,539


Undistributed earnings from investments in equity affiliates



(22

)



(36

)

Provision for uncollectible accounts



1,036




895


Deferred income tax expense



3,011




1,539


Net gain from sale of investments, net of impairments



(88

)



(46

)

Changes in operating assets and liabilities:









Accounts receivable



(1,108

)



737


Other current assets



1,805




546


Accounts payable and accrued liabilities



(1,173

)



1,332


Equipment installment plan receivables and securitizations



207




(1,682

)

Deferred fulfillment costs



(1,883

)



(884

)

Retirement benefit funding



(770

)



(595

)

Other - net



(2,349

)



(251

)

Total adjustments



18,384




17,094


Net Cash Provided by Operating Activities



29,202




26,695











Investing Activities









Capital expenditures:









Purchase of property and equipment



(15,283

)



(13,356

)

Interest during construction



(669

)



(566

)

Acquisitions, net of cash acquired



(2,922

)



(30,694

)

Dispositions



184




79


Sales of securities, net



501




1,490


Net Cash Used in Investing Activities



(18,189

)



(43,047

)










Financing Activities









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



-




(1

)

Issuance of long-term debt



10,140




33,967


Repayment of long-term debt



(10,688

)



(9,962

)

Purchase of treasury stock



(444

)



-


Issuance of treasury stock (excluding acquisition of DIRECTV)



137




133


Dividends paid



(8,850

)



(7,311

)

Other



(534

)



(2,875

)

Net Cash (Used in) Provided by Financing Activities



(10,239

)



13,951


Net increase (decrease) in cash and cash equivalents



774




(2,401

)

Cash and cash equivalents beginning of year



5,121




8,603


Cash and Cash Equivalents End of Period


$

5,895



$

6,202











 

 

 

 

 



 

AT&T Inc.

Consolidated Supplementary Data

















             

 

















             

 

Supplementary Financial Data

Dollars in millions except per share amounts


Three Months Ended




Nine Months Ended


  

 

Unaudited


September 30,

Percent



September 30,

Percent

 



2016



2015


Change



2016



2015


Change

 

Capital expenditures
















           

 

Purchase of property and equipment


$

5,581



$

5,028



11.0

%


$

15,283



$

13,356



14.4

%

 

Interest during construction


$

232



$

227



2.2

%


$

669



$

566



18.2

%

 























             

 

Dividends Declared per Share


$

0.48



$

0.47



2.1

%


$

1.44



$

1.41



2.1

%

 























             

 

End of Period Common Shares Outstanding (000,000)














6,141




6,152



-0.2

%

 

Debt Ratio














50.1

%



50.8

%


-70

BP

 

Total Employees














273,140




281,240



-2.9

%

 























             

 























             

 























             

 

Supplementary Operating Data

Subscribers and connections in thousands






















       

 

Unaudited













September 30,

Percent

 















2016




2015


Change

 

Wireless Subscribers






















           

 

Domestic














133,338




126,406



5.5

%

 

    Mexico














10,698




8,091



32.2

%

 

Total Wireless Subscribers














144,036




134,497



7.1

%

 























             

 

Total Branded Wireless Subscribers














100,821




95,305



5.8

%

 























             

 

Video Connections






















           

 

Domestic














25,321




25,450



-0.5

%

 

PanAmericana














7,139




7,006



1.9

%

 

Brazil














5,337




5,538



-3.6

%

 

Total Video Connections














37,797




37,994



-0.5

%

 























             

 

Broadband Connections






















           

 

IP














13,715




13,076



4.9

%

 

DSL














1,903




2,756



-31.0

%

 

Total Broadband Connections














15,618




15,832



-1.4

%

 























             

 

Voice Connections






















           

 

Network Access Lines














14,603




17,352



-15.8

%

 

    U-verse  VoIP Connections














5,707




5,443



4.9

%

 

Total Retail Consumer Voice Connections














20,310




22,795



-10.9

%

 























             

 























             

 























             

 























             

 



Three Months Ended





Nine Months Ended



  

 



September 30,

Percent



September 30,

Percent

 




2016




2015


Change




2016




2015


Change

 

Wireless Net Additions






















           

 

Domestic



1,532




2,513



-39.0

%



4,674




5,825



-19.8

%

 

Mexico



743




(231

)


-

%



2,014




(689

)


-

%

 

Total Wireless Net Additions



2,275




2,282



-0.3

%



6,688




5,136



30.2

%

 























             

 

Total Branded Wireless Net Additions



1,285




125



-

%



3,881




1,405



-

%

 























             

 

Video Net Additions






















           

 

Domestic



(2

)



(65

)


96.9

%



(103

)



(37

)


-

%

 

PanAmericana



(36

)



16



-

%



73




16



-

%

 

    Brazil



(12

)



(129

)


90.7

%



(107

)



(129

)


17.1

%

 

Total Video Net Additions



(50

)



(178

)


71.9

%



(137

)



(150

)


8.7

%

 























             

 

Broadband Net Additions






















           

 

IP



171




192



-10.9

%



447




871



-48.7

%

 

DSL



(194

)



(321

)


39.6

%



(607

)



(1,067

)


43.1

%

 

Total Broadband Net Additions



(23

)



(129

)


82.2

%



(160

)



(196

)


18.4

%

 

 

 

 

 

 



 

BUSINESS SOLUTIONS
















            

 

















              

 

The Business Solutions segment provides services to business customers, including multinational companies; governmental and wholesale customers; and individual subscribers who purchase wireless services through employer-sponsored plans. 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 utilize our wireless and wired networks (referred to as "wired" or "wireline") to provide a complete communications solution to our business customers.

















              

 

Segment Results

Dollars in millions


Three Months Ended




Nine Months Ended


  

Unaudited


September 30,

Percent


September 30,

Percent




2016 



2015 

Change



2016 



2015 

Change

 

Segment Operating Revenues



















            

 

Wireless service


$

8,049



$

7,732



4.1

%


$

23,867



$

23,003



3.8

%

 

Fixed strategic services



2,888




2,646



9.1

%



8,447




7,745



9.1

%

 

Legacy voice and data services



4,046




4,616



-12.3

%



12,567




14,081



-10.8

%

 

Other service and equipment



908




885



2.6

%



2,652




2,585



2.6

%

 

Wireless equipment



1,876




1,813



3.5

%



5,422




5,499



-1.4

%

 

    Total Segment Operating Revenues



17,767




17,692



0.4

%



52,955




52,913



0.1

%

 























              

 

Segment Operating Expenses






















            

 

Operations and support expenses



10,925




10,921



-

%



32,584




32,966



-1.2

%

 

Depreciation and amortization



2,539




2,474



2.6

%



7,568




7,276



4.0

%

 

    Total Segment Operating Expenses



13,464




13,395



0.5

%



40,152




40,242



-0.2

%

 

Segment Operating Income



4,303




4,297



0.1

%



12,803




12,671



1.0

%

 

Equity in Net Income of Affiliates



-




-



-

%



-




-



-

%

 

Segment Contribution


$

4,303



$

4,297



0.1

%


$

12,803



$

12,671



1.0

%

 























              

 

Segment Operating Income Margin



24.2

%

  


24.3

%






24.2

%

  


23.9

%




 























              

 























              

 























              

 

Supplementary Operating Data

Subscribers and connections in thousands












        

 

Unaudited








September 30,

Percent















2016




2015


Change

 

Business Solutions Wireless Subscribers






















            

 

Postpaid/Branded














50,014




47,414



5.5

%

 

Reseller














58




83



-30.1

%

 

Connected Devices














29,355




24,064



22.0

%

 

Total Business Solutions Wireless Subscribers














79,427




71,561



11.0

%

 























              

 

Business Solutions IP Broadband Connections







963




891



8.1

%

 























              

 























              

 























              

 



Three Months Ended





Nine Months Ended



  



September 30,

Percent


September 30,

Percent




2016 



2015 

Change



2016 



2015 

Change

 

Business Solutions Wireless Net Additions






















            

 

Postpaid/Branded



191




265



-27.9

%



509




850



-40.1

%

 

Reseller



1




8



-87.5

%



(34

)



14



-

%

 

Connected Devices



1,290




1,602



-19.5

%



4,067




4,104



-0.9

%

 

Total Business Solutions Wireless Net Additions



1,482




1,875



-21.0

%



4,542




4,968



-8.6

%

 























              

 

Business Solutions Wireless Postpaid Churn



0.97

%



1.05

%


-8

BP



0.97

%



0.95

%


2

BP

 























              

 

Business Solutions IP Broadband

  Net Additions



15


  

  

20


  

-25.0

%



52



  

70


  

-25.7

%

 

 

 

 

 

 



 

 

ENTERTAINMENT GROUP


















 

The Entertainment Group segment provides video, internet, voice communication, and interactive and targeted advertising services to customers located in the U.S. or in U.S. territories. We utilize our copper and IP-based wired network and/or our satellite technology.

 


















 


















 

Segment Results

Dollars in millions


Three Months Ended



Nine Months Ended



Unaudited


September 30,

Percent


September 30,

Percent



2016


2015

Change


2016


2015

Change

 

Segment Operating Revenues

















 

Video entertainment


$

9,026



$

7,162



26.0

%


$

26,893



$

11,024



-

%

 

High-speed internet



1,892




1,685



12.3

%



5,562




4,861



14.4

%

 

Legacy voice and data services



1,168




1,419



-17.7

%



3,725




4,547



-18.1

%

 

Other service and equipment



634




592



7.1

%



1,909




1,868



2.2

%

 

    Total Segment Operating Revenues



12,720




10,858



17.1

%



38,089




22,300



70.8

%

 
























 

Segment Operating Expenses























 

Operations and support expenses



9,728




8,450



15.1

%



28,875




18,222



58.5

%

 

Depreciation and amortization



1,504




1,389



8.3

%



4,481




3,519



27.3

%

 

    Total Segment Operating Expenses



11,232




9,839



14.2

%



33,356




21,741



53.4

%

 

Segment Operating Income



1,488




1,019



46.0

%



4,733




559



-

%

 

Equity in Net Income (Loss) of Affiliates



-




2



-

%



1




(16

)


-

%

 

Segment Contribution


$

1,488



$

1,021



45.7

%


$

4,734



$

543



-

%

 
























 

Segment Operating Income Margin



11.7

%



9.4

%






12.4

%



2.5

%




 
























 
























 
























 

Supplementary Operating Data

Subscribers and connections in thousands























 

Unaudited













September 30,

Percent

 















2016 



2015 

Change

 

Video Connections























 

Satellite














20,777




19,570



6.2

%

 

U-verse














4,515




5,854



-22.9

%

 

Total Video Connections














25,292




25,424



-0.5

%

 
























 

Broadband Connections























 

IP














12,752




12,185



4.7

%

 

DSL














1,424




2,137



-33.4

%

 

Total Broadband Connections














14,176




14,322



-1.0

%

 
























 

Voice Connections























 

Retail Consumer Switched Access Lines














6,155




7,675



-19.8

%

 

U-verse Consumer VoIP Connections














5,378




5,216



3.1

%

 

Total Retail Consumer Voice Connections














11,533




12,891



-10.5

%

 
























 
























 
























 



Three Months Ended





Nine Months Ended




 



September 30,

Percent


September 30,

Percent




2016 



2015 

Change



2016 



2015 

Change

 

Video Net Additions























 

Satellite



323




26



-

%



993




26



-

%

 

U-verse



(326

)



(92

)


-

%



(1,099

)



(66

)


-

%

 

Total Video Net Additions



(3

)



(66

)


95.5

%



(106

)



(40

)


-

%

 
























 

Broadband Net Additions























 

IP



156




172



-9.3

%



396




802



-50.6

%

 

DSL



(161

)



(278

)


42.1

%



(506

)



(922

)


45.1

%

 

Total Broadband Net Additions



(5

)



(106

)


95.3

%



(110

)



(120

)


8.3

%

 

 

 

 

 

 



 

 

 

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 utilize our U.S. wireless network to provide voice and data services, including high-speed internet, video, and home monitoring services.

















              

 

Segment Results

Dollars in millions


Three Months Ended




Nine Months Ended


  

 

Unaudited


September 30,

Percent


September 30,

Percent

 



2016


2015

Change


2016


2015

Change

 

Segment Operating Revenues
















            

 

Service


$

6,914



$

7,363



-6.1

%


$

20,805



$

22,019



-5.5

%

 

Equipment



1,353




1,421



-4.8

 %



3,976




4,298



-7.5

%

 

    Total Segment Operating Revenues



8,267




8,784



-5.9

 %



24,781




26,317



-5.8

%

 























              

 

Segment Operating Expenses






















            

 

Operations and support expenses



4,751




5,065



-6.2

 %



14,343




15,808



-9.3

%

 

Depreciation and amortization



944




976



-3.3

 %



2,798




2,912



-3.9

%

 

    Total Segment Operating Expenses



5,695




6,041



-5.7

 %



17,141




18,720



-8.4

%

 

Segment Operating Income



2,572




2,743



-6.2

 %



7,640




7,597



0.6

%

 

Equity in Net Income of Affiliates



-




-



-

 %



-




-



-

%

 

Segment Contribution


$

2,572



$

2,743



-6.2

 %


$

7,640



$

7,597



0.6

%

 























              

 

Segment Operating Income Margin



31.1

 

%



31.2

%






30.8

 

%



28.9

%



  

 























              

 























              

 























              

 

Supplementary Operating Data

Subscribers and connections in thousands












        

 

Unaudited








September 30,

Percent

 















2016 



2015 

Change

 

Consumer Mobility Subscribers






















            

 

Postpaid














27,374




29,257



-6.4

%

 

Prepaid














13,035




10,988



18.6

%

 

Branded














40,409




40,245



0.4

%

 

Reseller














12,566




13,647



-7.9

%

 

Connected Devices














936




953



-1.8

%

 

Total Consumer Mobility Subscribers














53,911




54,845



-1.7

%

 























              

 























              

 























              

 



Three Months Ended





Nine Months Ended



  

 



September 30,

Percent


September 30,

Percent

 




2016 



2015 

Change



2016 



2015 

Change

 

Consumer Mobility Net Additions






















            

 

Postpaid



21




23



-8.7

%



89




289



-69.2

%

 

Prepaid



304




466



-34.8

%



1,169




895



30.6

%

 

Branded



325




489



-33.5

%



1,258




1,184



6.3

%

 

Reseller



(316

)



149



-

%



(1,140

)



(218

)


-

%

 

Connected Devices



41




-



-

%



14




(109

)


-

%

 

Total Consumer Mobility Net Additions



50




638



-92.2

%



132




857



-84.6

%

 























              

 

Total Churn



2.11

%



1.90

%


21

BP



2.06

%



1.93

%


13

BP

 

Postpaid Churn



1.19

%



1.33

%


-14

BP



1.17

%



1.23

%


-6

BP

 

 

 

 

 

 



 

 

INTERNATIONAL























 

The International segment provides entertainment services in Latin America and wireless services in Mexico. Video entertainment services are provided to primarily residential customers using satellite technology. We utilize our regional and national wireless networks in Mexico to provide consumer and business customers with wireless data and voice communication services. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates.























 

Segment Results

Dollars in millions


Three Months Ended




Nine Months Ended



Unaudited


September 30,

Percent



September 30,

Percent



2016


2015

Change



2016


2015

Change

Segment Operating Revenues





















 

Video entertainment


$

1,297




$

945




37.2

%


$

3,649




$

945




-

%

 

Wireless service



484





494




-2.0

%



1,428





1,153




23.9

%

 

Wireless equipment



98





87




12.6

%



297





155




91.6

%

 

    Total Segment Operating Revenues



1,879





1,526




23.1

%



5,374





2,253




-

%

 




























 

Segment Operating Expenses



























 

Operations and support expenses



1,640





1,384




18.5

%



4,951





2,131




-

%

 

Depreciation and amortization



293





225




30.2

%



868





346




-

%

 

    Total Segment Operating Expenses



1,933





1,609




20.1

%



5,819





2,477




-

%

 

Segment Operating Income (Loss)



(54

)




(83

)



34.9

%



(445

)




(224

)



-98.7

%

 

Equity in Net Income (Loss) of Affiliates



1





(4

)



-

%



24





(4

)



-

%

 

Segment Contribution


$

(53

)



$

(87

)



39.1

%


$

(421

)



$

(228

)



-84.6

%

 




























 

Segment Operating Income Margin



(2.9

)

%



(5.4

)

 %






(8.3

)

%



(9.9

)




 




























 




























 




























 

Supplementary Operating Data

Subscribers and connections in thousands















 

Unaudited









September 30,

Percent

















2016  



2015  

Change

 

Mexican Wireless Subscribers



























 

Postpaid
















4,733





4,159




13.8

%

 

Prepaid
















5,665





3,487




62.5

%

 

Branded
















10,398





7,646




36.0

%

 

Reseller
















300





445




-32.6

%

 

Total Mexican Wireless Subscribers
















10,698





8,091




32.2

%

 




























 

Latin America Satellite Subscribers



























 

PanAmericana
















7,139





7,006




1.9

%

 

SKY Brazil
















5,337





5,538




-3.6

%

 

Total Latin America Satellite Subscribers
















12,476





12,544




-0.5

%

 




























 




























 




























 



Three Months Ended





Nine Months Ended




 



September 30,

Percent


September 30,

Percent



2016



2015

Change



2016



2015

Change

Mexican Wireless Net Additions



























 

Postpaid



163





15




-

%



444





47




-

%

 

Prepaid



606





(210

)



-

%



1,670





(677

)



-

%

 

Branded



769





(195

)



-

%



2,114





(630

)



-

%

 

Reseller



(26

)




(36

)



27.8

%



(100

)




(59

)



-69.5

%

 

Total Mexican Wireless Net Additions



743





(231

)



-

%



2,014





(689

)



-

%

 




























 

Latin America Satellite Net Additions



























 

PanAmericana



(36

)




16




-

%



73





16




-

%

 

SKY Brazil



(12

)




(129

)



90.7

%



(107

)




(129

)



17.1

%

 

Total Latin America Satellite Net Additions



(48

)




(113

)



57.5

%



(34

)




(113

)



69.9

%

 

 

 

 

 

 



 

 

 

SUPPLEMENTAL OPERATING INFORMATION - AT&T MOBILITY

















 

As a supplemental discussion of our operating results, for comparison purposes, we are providing a view of our combined domestic wireless operations (AT&T Mobility).

















 

Operating Results

Dollars in millions

Three Months Ended


    


Nine Months Ended



 

Unaudited


September 30,

Percent



September 30,     

Percent

 


2016


2015 

Change


2016 


2015 

Change

 

Operating Revenues
















 

Service



$

14,963



$

15,095



-0.9

%


$

44,673



$

45,022




-0.8

 

Equipment


3,229




3,234



-0.2

%



9,398




9,797




-4.1

 

    Total Operating Revenues


18,192




18,329



-0.7

%



54,071




54,819




-1.4

 
























 

Operating Expenses























 

Operations and support expenses


10,696




10,865



-1.6

%



31,822




33,310




-4.5

 

Depreciation and amortization


2,107




2,046



3.0

%



6,244




6,082




2.7

 

    Total Operating Expenses


12,803




12,911



-0.8

%



38,066




39,392




-3.4

 

Operating Income


5,389




5,418



-0.5

%



16,005




15,427




3.7

 

Equity in Net Income of Affiliates


-




-



-

%



-




-




-

 

Operating Contribution

$

5,389



$

5,418



-0.5

%


$

16,005



$

15,427




3.7

 
























 

Operating Income Margin


29.6

%



29.6

%






29.6

%



28.1

%





 
























 
























 
























 

Supplementary Operating Data

Subscribers and connections in thousands













 

Unaudited





       


September 30,

Percent

 














2016




2015


Change

 

AT&T Mobility Subscribers























 

Postpaid















77,388




76,671




0.9

 

Prepaid













13,035




10,988




18.6

 

Branded













90,423




87,659




3.2

 

Reseller













12,624




13,729




-8.0

 

Connected Devices













30,291




25,018




21.1

 

Total AT&T Mobility Subscribers













133,338




126,406




5.5

 
























 

Domestic Licensed POPs (000,000)













323




321




0.6

 
























 
























 
























 


Three Months Ended



     


Nine Months Ended





 


September 30,

Percent


September 30,

Percent

 



2016




2015


Change



2016




2015


Change

 

AT&T Mobility Net Additions























 

Postpaid




212




289



-26.6

%



598




1,140




-47.5

 

Prepaid


304




466



-34.8

%



1,169




895




30.6

 

Branded


516




755



-31.7

%



1,767




2,035




-13.2

 

Reseller


(315

)



156



-

%



(1,174

)



(205

)



-

 

Connected Devices


1,331




1,602



-16.9

%



4,081




3,995




2.2

 

Total AT&T Mobility Net Additions


1,532




2,513



-39.0

%



4,674




5,825




-19.8

 

M&A Activity, Partitioned Customers and

  Other Adjustments


1




(9

)


-

%



24




27




-11.1

 
























 

Total Churn


1.45

%



1.33

%


12

BP



1.41

%



1.35

%



6

BP 

 

Postpaid Churn


1.05

%



1.16

%


-11

BP



1.04

%



1.06

%



-2

BP 

 

 

 

 

 

 

 



 

 

SUPPLEMENTAL SEGMENT RECONCILIATION
























 























 

Dollars in millions






















 

Unaudited






















 























 

September 30, 2016






















 



Revenues



Operations and Support Expenses



EBITDA



Depreciation and Amortization



Operating Income (Loss)



Equity in Net Income (Loss) of Affiliates



Segment Contribution


 

Business Solutions


$

17,767



$

10,925



$

6,842



$

2,539



$

4,303



$

-



$

4,303


 

Entertainment Group



12,720




9,728




2,992




1,504




1,488




-




1,488


 

Consumer Mobility



8,267




4,751




3,516




944




2,572




-




2,572


 

International



1,879




1,640




239




293




(54

)



1




(53

)

 

Segment Total



40,633




27,044




13,589




5,280




8,309



$

1



$

8,310


 

Corporate and Other



270




270




-




17




(17

)









 

Acquisition-related items



-




290




(290

)



1,282




(1,572

)









 

Certain Significant items



(13

)



299




(312

)



-




(312

)









 

AT&T Inc.


$

40,890



$

27,903



$

12,987



$

6,579



$

6,408










 






























 






























 

September 30, 2015





























 



Revenues



Operations and Support Expenses



EBITDA



Depreciation and Amortization



Operating Income (Loss)



Equity in Net Income (Loss) of Affiliates



Segment Contribution


 

Business Solutions


$

17,692



$

10,921



$

6,771



$

2,474



$

4,297



$

-



$

4,297


 

Entertainment Group



10,858




8,450




2,408




1,389




1,019




2




1,021


 

Consumer Mobility



8,784




5,065




3,719




976




2,743




-




2,743


 

International



1,526




1,384




142




225




(83

)



(4

)



(87

)

 

Segment Total



38,860




25,820




13,040




5,064




7,976



$

(2

)


$

7,974


 

Corporate and Other



316




315




1




3




(2

)









 

Acquisition-related items



(85

)



611




(696

)



1,198




(1,894

)









 

Certain Significant items



-




157




(157

)



-




(157

)









 

AT&T Inc.


$

39,091



$

26,903



$

12,188



$

6,265



$

5,923










 






























 






























 






























 





























 

Nine Months Ended


Dollars in millions





























 

Unaudited





























 






























 

September 30, 2016





























 



Revenues



Operations and Support Expenses



EBITDA



Depreciation and Amortization



Operating Income (Loss)



Equity in Net Income (Loss) of Affiliates



Segment Contribution


 

Business Solutions


$

52,955



$

32,584



$

20,371



$

7,568



$

12,803



$

-



$

12,803


 

Entertainment Group



38,089




28,875




9,214




4,481




4,733




1




4,734


 

Consumer Mobility



24,781




14,343




10,438




2,798




7,640




-




7,640


 

International



5,374




4,951




423




868




(445

)



24




(421

)

 

Segment Total



121,199




80,753




40,44