Company Announcements

1st Quarter Results 2017 8-K

Source: RNS
RNS Number : 0137G
AT & T Inc.
23 May 2017
 

 

 

 

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) April 25, 2017

 

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 April 25, 2017, its results of operations for the first quarter of 2017. 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 dated April 25, 2017 reporting financial results for the first quarter ended March 31, 2017.

 

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: April 25, 2017

By: /s/ Debra L. Dial                                 

       Debra L. Dial 

Senior Vice President and Controller  
 

 


AT&T Reports First-Quarter Results

Updates Guidance Following FirstNet Award

 

·      Consolidated revenues of $39.4 billion

·      Operating income of $6.9 billion

·      Net income attributable to AT&T of $3.5 billion

·      Diluted EPS of $0.56 as reported and $0.74 as adjusted, compared to $0.61 and $0.72 in the year-ago quarter

·      Cash from operations of $9.2 billion

·      Free cash flow of $3.2 billion

 

·      2.7 million wireless net adds

2.1 million U.S., driven by prepaid and connected devices

633,000 Mexico

·      U.S. wireless first-quarter results:

Best-ever first-quarter postpaid phone churn of 0.90%

Wireless postpaid churn of 1.12%, including pressure from tablets

Strong operating margin of 30.1%; best-ever EBITDA margin of 41.8%; EBITDA wireless service margin of 49.3%

·      Entertainment Group first-quarter results:

Strong broadband gains with 242,000 IP broadband net adds; 115,000 total broadband net adds

4.6 million AT&T Fiber customer locations with plans to add 2 million in 2017

DIRECTV NOW gains help offset linear TV subscriber decline

 

Note: AT&T's first-quarter earnings conference call will be webcast at 4:30 p.m. ET on Tuesday, April 25, 2017. The webcast and related materials will be available on AT&T's Investor Relations website at www.att.com/investor.relations.

 



 

dALLAS, April 25, 2017 - AT&T Inc. (NYSE:T) today announced continued adjusted margin expansion and solid adjusted earnings growth for the first quarter. The quarter also was marked by several decisive strategic moves that helped broaden the company's spectrum portfolio.

 

"In a very competitive quarter, we continued to execute on our goals of driving efficiencies in our business while growing adjusted earnings per share. But just as important, the strategic moves we've made over the last few months to expand our wireless capacity and fortify our 5G leadership will be felt for years to come," said Randall Stephenson, AT&T Chairman and CEO. "FirstNet gives us access to 20 megahertz of valuable, low-band spectrum and allows us to deploy our spectrum assets more efficiently as we build a high-quality, mobile broadband network for our first responders. And our planned acquisitions of Fiber Tower and Straight Path will add valuable millimeter wave spectrum assets to our 5G tool kit as we lead the way to the next generation of wireless technology." 

 

Consolidated Financial Results

AT&T's consolidated revenues for the first quarter totaled $39.4 billion versus $40.5 billion in the year-ago quarter, primarily due to record-low equipment sales in wireless. Compared with results for the first quarter of 2016, operating expenses were $32.5 billion versus $33.4 billion; operating income was $6.9 billion versus $7.1 billion; and operating income margin was 17.4% versus 17.6%. When adjusting for amortization, merger- and integration-related and other items, operating income was $8.2 billion versus $8.1 billion; and operating income margin was 20.7%, up 80 basis points versus the year-ago quarter.

 

First-quarter net income attributable to AT&T totaled $3.5 billion, or $0.56 per diluted share, compared to $3.8 billion, or $0.61 per diluted share, in the year-ago quarter. Adjusting for $0.18 of costs for amortization, merger- and integration-related and other items, earnings per diluted share was $0.74 compared to an adjusted $0.72 in the year-ago quarter.

 

Cash from operating activities was $9.2 billion in the first quarter, and capital expenditures were $6.0 billion. Free cash flow - cash from operating activities minus capital expenditures - was $3.2 billion for the quarter.

 

Updated 2017 Outlook

The company is updating its 2017 guidance. On a business as usual basis without the impact of Time Warner, AT&T expects:

 

·      Adjusted EPS growth in the mid-single digit range

·      Adjusted operating margin expansion

·      Capital expenditures in the $22 billion range

·      Free cash flow in the $18 billion range



 

The company is no longer providing consolidated revenue guidance primarily due to the unpredictability of wireless handset sales.

 

Adjustments include non-cash mark-to-market benefit plan gain/loss, 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.  We expect amortization to be lower in 2017 compared to 2016.

 

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, business, mobile and high speed internet services. We offer the nation's best data network* and the best global coverage of any U.S. wireless provider.** We're one of the world's largest providers of pay TV. We have TV customers in the U.S. and 11 Latin American countries. Nearly 3.5 million companies, from small to large businesses around the globe, turn to AT&T for our highly secure smart solutions. 

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

© 2017 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.

*Claim based on the Nielsen Certified Data Network Score. Score includes data reported by wireless consumers in the Nielsen Mobile Insights survey, network measurements from Nielsen Mobile Performance and Nielsen Drive Test Benchmarks for Q3+Q4 2016 across 121 markets.

**Global coverage claim based on offering discounted voice and data roaming; LTE roaming; and voice roaming 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 communication, including financial estimates and statements as to the expected timing, completion and effects of the proposed merger between AT&T Inc. and Straight Path Communications, Inc., constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These estimates and statements are subject to risks and uncertainties, and actual results might differ materially.  Such estimates and statements include, but are not limited to, statements about the benefits of the merger, including future financial and operating results, the combined company's plans, objectives, expectations and intentions, and other statements that are not historical facts.  Such statements are based upon the current beliefs and expectations of the management of AT&T Inc. and Straight Path Communications, Inc. and are subject to significant risks and uncertainties outside of our control.  This presentation 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. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements are the following: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, (2) the risk that Straight Path Communications, Inc. stockholders may not adopt the merger agreement, (3) the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated, and (4) risks that any of the closing conditions to the proposed merger may not be satisfied in a timely manner.  Discussions of additional risks and uncertainties are contained in AT&T Inc.'s and Straight Path Communications, Inc.'s filings with the Securities and Exchange Commission.  Neither AT&T Inc. nor Straight Path Communications, Inc. is under any obligation, and each expressly disclaims any obligation, to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. Persons reading this announcement are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof.

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.

 

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 Straight Path Communications, 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 STRAIGHT PATH COMMUNICATIONS, 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 Straight Path Communications, Inc., without charge, at the SEC's website at 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 Inc.'s investor relations website at http://www.att.com.  Copies of documents filed with the SEC by Straight Path Communications, Inc. will be made available free of charge on Straight Path Communications, Inc.'s investor relations website at http://spathinc.com/investors/.



 

Participants in Solicitation

AT&T Inc. and its directors and executive officers, and Straight Path Communications, Inc. and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of Straight Path Communications, Inc. common stock in respect of the proposed merger.  Information about the directors and executive officers of AT&T Inc. is set forth in the proxy statement for AT&T Inc.'s 2017 Annual Meeting of Stockholders, which was filed with the SEC on March 10, 2017.  Information about the directors and executive officers of Straight Path Communications, Inc. is set forth in the proxy statement for Straight Path Communications, Inc.'s 2017 Annual Meeting of Stockholders, which was filed with the SEC on November 22, 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:                                    

Fletcher Cook - AT&T Global Media Relations

Email: fletcher.cook@att.com            

Phone: (214) 757-7629

 

Eric Ryan - AT&T Global Media Relations

Email: eric.ryan.1@att.com

Phone: (929) 273-8434


 

AT&T Inc.










Financial Data






























Consolidated Statements of Income

Dollars in millions except per share amounts


Three Months Ended




Unaudited


March 31,


Percent



2017


2016


Change

Operating Revenues










  Service


$

36,456



$

37,101




-1.7

%

  Equipment



2,909




3,434




-15.3

%

    Total Operating Revenues



39,365




40,535




-2.9

%














Operating Expenses













   Cost of services and sales













    Equipment



3,848




4,375




-12.0

%

    Broadcast, programming and operations



4,974




4,629




7.5

%

    Other cost of services (exclusive of depreciation

          and amortization shown separately below)



9,065




9,396




-3.5

%

   Selling, general and administrative



8,487




8,441




0.5

%

   Depreciation and amortization



6,127




6,563




-6.6

%

    Total Operating Expenses



32,501




33,404




-2.7

%

Operating Income



6,864




7,131




-3.7

%

Interest Expense



(1,293

)



(1,207

)



-7.1

%

Equity in Net Income (Loss) of Affiliates



(173

)



13




-

%

Other Income (Expense) - Net



(20

)



70




-

%

Income Before Income Taxes



5,378




6,007




-10.5

%

Income Tax Expense



1,804




2,122




-15.0

%

Net Income



3,574




3,885




-8.0

%

 Less: Net Income Attributable to

    Noncontrolling Interest



(105

)



(82

)



-28.0

%

Net Income Attributable to AT&T


$

3,469



$

3,803




-8.8

%



























Basic Earnings Per Share Attributable to AT&T


$

0.56



$

0.62




-9.7

%

   Weighted Average Common

       Shares Outstanding (000,000)



6,166




6,172




-0.1

%














Diluted Earnings Per Share Attributable to AT&T


$

0.56



$

0.61




-8.2

%

   Weighted Average Common

       Shares Outstanding with Dilution (000,000)



6,186




6,190




-0.1

%

 



 

AT&T Inc.







Financial Data





















Consolidated Balance Sheets

Dollars in millions







Unaudited


Mar. 31, 


Dec. 31, 



2017


2016

Assets







Current Assets







Cash and cash equivalents


$

14,884



$

5,788


Accounts receivable - net of allowances for doubtful accounts of $699 and $661



15,078




16,794


Prepaid expenses



1,418




1,555


Other current assets



14,347




14,232


Total current assets



45,727




38,369


Property, Plant and Equipment - Net



125,292




124,899


Goodwill



105,593




105,207


Licenses



94,617




94,176


Customer Lists and Relationships - Net



13,366




14,243


Other Intangible Assets - Net



8,295




8,441


Investments in Equity Affiliates



1,551




1,674


Other Assets



17,462




16,812


Total Assets


$

411,903



$

403,821











Liabilities and Stockholders' Equity









Current Liabilities









Debt maturing within one year


$

12,681



$

9,832


Accounts payable and accrued liabilities



27,120




31,138


Advanced billing and customer deposits



4,493




4,519


Accrued taxes



3,384




2,079


Dividends payable



3,012




3,008


Total current liabilities



50,690




50,576


Long-Term Debt



120,568




113,681


Deferred Credits and Other Noncurrent Liabilities









Deferred income taxes



61,100




60,128


Postemployment benefit obligation



33,404




33,578


Other noncurrent liabilities



21,160




21,748


Total deferred credits and other noncurrent liabilities



115,664




115,454


Stockholders' Equity









Common stock



6,495




6,495


Additional paid-in capital



89,411




89,604


Retained earnings



35,175




34,734


Treasury stock



(12,400

)



(12,659

)

Accumulated other comprehensive income



5,160




4,961


Noncontrolling interest



1,140




975


Total stockholders' equity



124,981




124,110


Total Liabilities and Stockholders' Equity


$

411,903



$

403,821











 



 

 

AT&T Inc.







Financial Data





















Consolidated Statements of Cash Flows

Dollars in millions


Three Months Ended

Unaudited


March 31,



2017


2016

Operating Activities







Net income


$

3,574



$

3,885


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









Depreciation and amortization



6,127




6,563


Undistributed loss (earnings) from investments in equity affiliates



182




(13

)

Provision for uncollectible accounts



393




374


Deferred income tax expense



480




1,346


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



61




(44

)

Changes in operating assets and liabilities:









Accounts receivable



445




43


Other current assets



228




1,319


Accounts payable and other accrued liabilities



(1,778

)



(3,990

)

Equipment installment receivables and related sales



579




454


Deferred fulfillment costs



(436

)



(542

)

Retirement benefit funding



(140

)



(140

)

Other - net



(497

)



(1,355

)

Total adjustments



5,644




4,015


Net Cash Provided by Operating Activities



9,218




7,900











Investing Activities









Capital expenditures:









Purchase of property and equipment



(5,784

)



(4,451

)

Interest during construction



(231

)



(218

)

Acquisitions, net of cash acquired



(162

)



(165

)

Dispositions



6




81


Sales of securities, net



-




445


Net Cash Used in Investing Activities



(6,171

)



(4,308

)










Financing Activities









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



(1

)



-


Issuance of long-term debt



12,440




5,978


Repayment of long-term debt



(3,053

)



(2,296

)

Purchase of treasury stock



(177

)



-


Issuance of treasury stock



21




89


Dividends paid



(3,009

)



(2,947

)

Other



(172

)



471


Net Cash Provided by Financing Activities



6,049




1,295


Net increase in cash and cash equivalents



9,096




4,887


Cash and cash equivalents beginning of year



5,788




5,121


Cash and Cash Equivalents End of Period


$

14,884



$

10,008













 

AT&T Inc.









       

Consolidated Supplementary Data









       










        










        

Supplementary Financial Data

Dollars in millions except per share amounts


Three Months Ended



    

Unaudited


March 31,


Percent



2017


2016


Change

Capital expenditures









       

Purchase of property and equipment


$

5,784



$

4,451




29.9

 %

Interest during construction



231




218




6.0

 %

Total Capital Expenditures


$

6,015



$

4,669




28.8

 %













        

Dividends Declared per Share


$

0.49



$

0.48




2.1

 %













        

End of Period Common Shares Outstanding (000,000)



6,147




6,156




-0.1

 %

Debt Ratio



51.6

%



51.2

%



40

BP

Total Employees



264,530




280,870




-5.8

 %













        













        













        

Supplementary Operating Data

Subscribers and connections in thousands












       

Unaudited


March 31,


Percent




2017 



2016 


Change

Wireless Subscribers












       

Domestic



134,218




130,445




2.9

 %

Mexico



12,606




9,213




36.8

 %

Total Wireless Subscribers



146,824




139,658




5.1

 %













        

Total Branded Wireless Subscribers



103,532




98,158




5.5

 %













        

Video Connections












       

Domestic



25,060




25,372




-1.2

 %

PanAmericana



8,090




7,094




14.0

 %

Brazil



5,588




5,342




4.6

 %

Total Video Connections



38,738




37,808




2.5

 %













        

Broadband Connections












       

 IP



14,110




13,470




4.8

 %

DSL



1,585




2,294




-30.9

 %

Total Broadband Connections



15,695




15,764




-0.4

 %













        

Voice Connections












       

Network Access Lines



13,363




15,975




-16.4

 %

U-verse  VoIP Connections



5,858




5,484




6.8

 %

Total Retail Consumer Voice Connections



19,221




21,459




-10.4

 %














 



 













        



Three Months Ended




    



March 31,


Percent




2017 



2016 


Change

Wireless Net Additions












       

Domestic



2,081




1,781




16.8

%

Mexico



633




529




19.7

%

Total Wireless Net Additions



2,714




2,310




17.5

%













        

Total Branded Wireless Net Additions



738




1,195




-38.2

%













        

Video Net Additions












       

Domestic



(233

)



(52

)



-

%

PanAmericana



52




28




85.7

%

Brazil



39




(101

)



-

%

Total Video Net Additions



(142

)



(125

)



-13.6

%













        

Broadband Net Additions












       

IP



246




202




21.8

%

DSL



(156

)



(216

)



27.8

%

Total Broadband Net Additions



90




(14

)



-

%

 

 

 



 

 

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



    

Unaudited


March 31,


Percent



2017


2016


Change

Segment Operating Revenues









       

Wireless service


$

7,929



$

7,855




0.9

 %

Fixed strategic services



2,974




2,751




8.1

 %

Legacy voice and data services



3,630




4,373




-17.0

 %

Other service and equipment



817




859




-4.9

 %

Wireless equipment



1,498




1,771




-15.4

 %

    Total Segment Operating Revenues



16,848




17,609




-4.3

 %













        

Segment Operating Expenses












       

Operations and support



10,176




10,802




-5.8

 %

Depreciation and amortization



2,312




2,508




-7.8

 %

    Total Segment Operating Expenses



12,488




13,310




-6.2

 %

Segment Operating Income



4,360




4,299




1.4

 %

Equity in Net Income of Affiliates



-




-




-

 %

Segment Contribution


$

4,360



$

4,299




1.4

 %













        

Segment Operating Income Margin



25.9

%



24.4

%



150

 BP













        













        













        

Supplementary Operating Data

Subscribers and connections in thousands












       

Unaudited


March 31,


Percent




2017



2016 


Change

Business Solutions Wireless Subscribers












       

Postpaid/Branded



50,839




48,844




4.1

 %

Reseller



76




64




18.8

 %

Connected Devices



31,439




26,863




17.0

 %

Total Business Solutions Wireless Subscribers



82,354




75,771




8.7

 %













  

Business Solutions IP Broadband Connections



980




928




5.6

 %
















 



Three Months Ended




    



March 31,


Percent




2017 



2016 


Change

Business Solutions Wireless Net Additions1












       

Postpaid/Branded



(125

)



133




-

 %

Reseller



6




(22

)



-

 %

Connected Devices



2,553




1,578




61.8

 %

Total Business Solutions Wireless Net Additions



2,434




1,689




44.1

 %














Business Solutions Wireless Postpaid Churn1



1.07

%



1.02

%



5

 BP














Business Solutions IP Broadband

  Net Additions



4




17




-76.5

%

1 2017 excludes the impact of the 2G shutdown, which was reflected in beginning of period subscriber counts.  

 

 



 

 

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



    

Unaudited


March 31,


Percent



2017



2016


Change

Segment Operating Revenues










       

Video entertainment


$

9,020




$

8,904




1.3

 %

High-speed internet



1,941





1,803




7.7

 %

Legacy voice and data services



1,056





1,313




-19.6

 %

Other service and equipment



606





638




-5.0

 %

    Total Segment Operating Revenues



12,623





12,658




-0.3

 %














        

Segment Operating Expenses













       

Operations and support



9,601





9,578




0.2

 %

Depreciation and amortization



1,419





1,488




-4.6

 %

    Total Segment Operating Expenses



11,020





11,066




-0.4

 %

Segment Operating Income



1,603





1,592




0.7

 %

Equity in Net Income (Loss) of Affiliates



(6

)




3




-

 %

Segment Contribution


$

1,597




$

1,595




0.1

 %














        

Segment Operating Income Margin



12.7

%




12.6

%



10

BP














        














        














        

Supplementary Operating Data

Subscribers and connections in thousands













       

Unaudited


March 31,


Percent




2017 




2016 


Change

Linear Video Connections













       

Satellite



21,012





20,112




4.5

 %

U-verse



4,020





5,232




-23.2

 %

Total Linear Video Connections



25,032





25,344




-1.2

 %














        

Broadband Connections













       

 IP



13,130





12,542




4.7

 %

 DSL



1,164





1,749




-33.4

 %

Total Broadband Connections



14,294





14,291




-

 %














        

Voice Connections













       

Retail Consumer Switched Access Lines



5,533





6,888




-19.7

 %

U-verse Consumer VoIP Connections



5,470





5,225




4.7

 %

Total Retail Consumer Voice Connections



11,003





12,113




-9.2

 %

















 

 



Three Months Ended




    


March 31,


Percent




2017 




2016 


Change

Linear Video Net Additions1













       

Satellite



-





328




-

 %

U-verse



(233

)




(382

)



39.0

 %

Total Linear Video Net Additions



(233

)




(54

)



-

 %














        

Broadband Net Additions













       

 IP



242





186




30.1

 %

 DSL



(127

)




(181

)



29.8

 %

Total Broadband Net Additions



115





5




-

 %

1 Includes the impact of customers that migrated to DIRECTV NOW.

 

 



 

 

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



    

Unaudited


March 31,


Percent



2017


2016


Change

Segment Operating Revenues









       

Service


$

6,609



$

6,943




-4.8

 %

Equipment



1,131




1,385




-18.3

 %

    Total Segment Operating Revenues



7,740




8,328




-7.1

 %













        

Segment Operating Expenses












       

Operations and support



4,528




4,912




-7.8

 %

Depreciation and amortization



873




922




-5.3

 %

    Total Segment Operating Expenses



5,401




5,834




-7.4

 %

Segment Operating Income



2,339




2,494




-6.2

 %

Equity in Net Income of Affiliates



-




-




-

 %

Segment Contribution


$

2,339



$

2,494




-6.2

 %













        

Segment Operating Income Margin



30.2

%



29.9

%



30

 BP













        













        













        

Supplementary Operating Data

Subscribers and connections in thousands












       

Unaudited


March 31,


Percent




2017 



2016 


Change

Consumer Mobility Subscribers












       

Postpaid



26,510




28,294




-6.3

 %

Prepaid



13,844




12,171




13.7

 %

Branded



40,354




40,465




-0.3

 %

Reseller



10,549




13,313




-20.8

 %

Connected Devices



961




896




7.3

 %

Total Consumer Mobility Subscribers



51,864




54,674




-5.1

 %
















 



Three Months Ended




    



March 31,


Percent





2017 



2016 


Change


Consumer Mobility Net Additions1












       

Postpaid



(66

)



(4

)



-

 %

Prepaid



282




500




-43.6

 %

Branded



216




496




-56.5

 %

Reseller



(588

)



(378

)



-55.6

 %

Connected Devices



19




(26

)



-

 %

Total Consumer Mobility Net Additions



(353

)



92




-

 %













        

Total Churn1



2.42

%



2.11

%



31

 BP

Postpaid Churn1



1.22

%



1.24

%



-2

 BP

1 2017 excludes the impact of the 2G shutdown, which was reflected in beginning of period subscriber counts.

 

 



 

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


    

Unaudited


March 31,

Percent



2017


2016

Change

Segment Operating Revenues










       

Video entertainment


$

1,341




$

1,130




18.7

 %

Wireless service



475





455




4.4

 %

Wireless equipment



113





82




37.8

 %

    Total Segment Operating Revenues



1,929





1,667




15.7

 %














        

Segment Operating Expenses













       

Operations and support



1,759





1,588




10.8

 %

Depreciation and amortization



290





277




4.7

 %

    Total Segment Operating Expenses



2,049





1,865




9.9

 %

Segment Operating Income (Loss)



(120

)




(198

)



39.4

 %

Equity in Net Income (Loss) of Affiliates



20





14




42.9

 %

Segment Contribution


$

(100

)



$

(184

)



45.7

%














        

Segment Operating Income Margin



(6.2

)

%



(11.9

)

%


570

BP














        














        














        

Supplementary Operating Data

Subscribers and connections in thousands













       

Unaudited


March 31,

Percent




2017



2016

Change

Mexican Wireless Subscribers













       

Postpaid



5,095





4,404




15.7

 %

Prepaid



7,244





4,445




63.0

 %

Branded



12,339





8,849




39.4

 %

Reseller



267





364




-26.6

 %

Total Mexican Wireless Subscribers



12,606





9,213




36.8

 %














        

Latin America Satellite Subscribers













       

PanAmericana



8,090





7,094




14.0

 %

SKY Brazil



5,588





5,342




4.6

 %

Total Latin America Satellite Subscribers



13,678





12,436




10.0

 %















 



 



Three Months Ended



    



March 31,

Percent




2017



2016

Change

Mexican Wireless Net Additions













       

Postpaid



130





116




12.1

 %

Prepaid



517





450




14.9

 %

Branded



647





566




14.3

 %

Reseller



(14

)




(37

)



62.2

 %

Total Mexican Wireless Net Additions



633





529




19.7

 %














        

Latin America Satellite Net Additions1













       

PanAmericana



52





28




85.7

 %

SKY Brazil



39





(101

)



-

 %

Total Latin America Satellite Net Additions



91





(73

)



-

 %

1 In 2017 we updated the methodology used to account for prepaid video connections. The impact of this change is excluded.

 

 



 

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



    

Unaudited


March 31,


Percent



2017


2016


Change

Operating Revenues









       

Service


$

14,538



$

14,798




-1.8

 %

Equipment



2,629




3,156




-16.7

 %

    Total Operating Revenues



17,167




17,954




-4.4

 %













        

Operating Expenses












       

Operations and support



9,998




10,624




-5.9

 %

Depreciation and amortization



1,997




2,056




-2.9

 %

    Total Operating Expenses



11,995




12,680




-5.4

 %

Operating Income



5,172




5,274




-1.9

 %













        

Operating Income Margin



30.1

%



29.4

%



70

BP













        













        













        

Supplementary Operating Data

Subscribers and connections in thousands












       

Unaudited


March 31,


Percent




2017 



2016 


Change

AT&T Mobility Subscribers












       

Postpaid



77,349




77,138




0.3

 %

Prepaid



13,844




12,171




13.7

 %

Branded



91,193




89,309




2.1

 %

Reseller



10,625




13,378




-20.6

 %

Connected Devices



32,400




27,758




16.7

 %

Total AT&T Mobility Subscribers



134,218




130,445




2.9

 %













        

Domestic Licensed POPs (000,000)



325




322




0.9

 %
















 



Three Months Ended




    



March 31,


Percent




2017 



2016 


Change

AT&T Mobility Net Additions












       

Postpaid



(191

)



129




-

 %

Prepaid



282




500




-43.6

 %

Branded



91




629




-85.5

 %

Reseller



(582

)



(400

)



-45.5

 %

Connected Devices



2,572




1,552




65.7

 %

Total AT&T Mobility Net Additions



2,081




1,781




16.8

 %

M&A Activity, Partitioned Customers and

  Other Adjustments



(2,723

)



24




-

 %













        

Total Churn1



1.46

%



1.42

%



4

 BP

Branded Churn1



1.71

%



1.63

%



8

 BP

Postpaid Churn1



1.12

%



1.10

%



2

 BP

Postpaid Phone Only Churn1



0.90

%



0.96

%



-6

 BP

 1 2017 excludes the impact of the 2G shutdown, which was reflected in beginning of period subscriber counts.

 

 



 

SUPPLEMENTAL SEGMENT RECONCILIATION













































Three Months Ended

Dollars in millions






















Unaudited












































March 31, 2017   



Revenues



Operations and Support Expenses



EBITDA



Depreciation and Amortization



Operating Income (Loss)



Equity in Net Income (Loss) of Affiliates



Segment Contribution


Business Solutions


$

16,848



$

10,176



$

6,672



$

2,312



$

4,360



$

-



$

4,360


Entertainment Group



12,623




9,601




3,022




1,419




1,603




(6

)



1,597


Consumer Mobility



7,740




4,528




3,212




873




2,339




-




2,339


International



1,929




1,759




170




290




(120

)



20




(100

)

Segment Total



39,140




26,064




13,076




4,894




8,182



$

14



$

8,196


Corporate and Other



225




221




4




31




(27

)









Acquisition-related items



-




207




(207

)



1,202




(1,409

)









Certain Significant items



-




(118

)



118




-




118










AT&T Inc.


$

39,365



$

26,374



$

12,991



$

6,127



$

6,864




































































March 31, 2016     



Revenues



Operations and Support Expenses



EBITDA



Depreciation and Amortization



Operating Income (Loss)



Equity in Net Income (Loss) of Affiliates



Segment Contribution


Business Solutions


$

17,609



$

10,802



$

6,807



$

2,508



$

4,299



$

-



$

4,299


Entertainment Group



12,658




9,578




3,080




1,488




1,592




3




1,595


Consumer Mobility



8,328




4,912




3,416




922




2,494




-




2,494


International



1,667




1,588




79




277




(198

)



14




(184

)

Segment Total



40,262




26,880




13,382




5,195




8,187



$

17



$

8,204


Corporate and Other



273




377




(104

)



17




(121

)









Acquisition-related items



-




295




(295

)



1,351




(1,646

)









Certain Significant items



-




(711

)



711




-




711










AT&T Inc

 



 


Discussion and Reconciliation of Non-GAAP Measures

 

We believe the following measures are relevant and useful information to investors as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors.

 

Free Cash Flow

Free cash flow is defined as cash from operations minus Capital expenditures. Free cash flow after dividends is defined as cash from operations minus Capital expenditures and dividends. Free cash flow dividend payout ratio is defined as the percentage of dividends paid to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine business operations, including Capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.

 

Free Cash Flow and Free Cash Flow Dividend Payout Ratio

Dollars in millions

 Three Months Ended


 March 31,



2017


2016

Net cash provided by operating activities

$

9,218

$

7,900

Less: Capital expenditures


(6,015)


(4,669)

Free Cash Flow


3,203

  

3,231






Less: Dividends paid


(3,009)


(2,947)

Free Cash Flow after Dividends

$

194 

$

284

Free Cash Flow Dividend Payout Ratio


93.9%


91.2%

 

 

EBITDA

Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) - net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with U.S. generally accepted accounting principles (GAAP).

 

EBITDA service margin is calculated as EBITDA divided by service revenues.

 

When discussing our segment results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from segment contribution. For our supplemental presentation of our combined domestic wireless operations (AT&T Mobility) and our supplemental presentation of the Mexico Wireless and Latin America operations of our International segment, EBITDA excludes depreciation and amortization from operating income.

 

1

 

 



 

These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing segment performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which segment managers are responsible and upon which we evaluate their performance. Management uses Mexico Wireless EBITDA in evaluating profitability trends after our two Mexico wireless acquisitions in 2015, and our investments in building a nationwide LTE network by end of 2018. Management uses Latin America EBITDA in evaluating the ability of our Latin America operations to generate cash to finance its own operations.

 

We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Consumer Mobility segment operating margin and our supplemental AT&T Mobility operating margin. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.

 

There are material limitations to using these non-GAAP financial measures. EBITDA, EBITDA margin and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA, EBITDA margin and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

 

EBITDA, EBITDA Margin and EBITDA Service Margin

Dollars in millions

Three Months Ended


March 31,



2017


2016

Net Income

$

3,574

$

3,885

Additions:





   Income Tax Expense


1,804


2,122

   Interest Expense


1,293


1,207

   Equity in Net (Income) Loss of Affiliates


173


(13)

   Other (Income) Expense - Net


20


(70)

   Depreciation and amortization


6,127


6,563

EBITDA


12,991


13,694






Total Operating Revenues


39,365


40,535

Service Revenues


36,456


37,101






EBITDA Margin


33.0%


33.8%

EBITDA Service Margin


35.6%


36.9%

 

2

 

 



 

 

Segment EBITDA, EBITDA Margin and EBITDA Service Margin

Dollars in millions

Three Months Ended


March 31,



2017


2016

Business Solutions Segment





Segment Contribution

$

4,360

$

4,299

Additions:





Depreciation and amortization


2,312


2,508

EBITDA


6,672


6,807






Total Segment Operating Revenues


16,848


17,609






Segment Operating Income Margin


25.9%


24.4%

EBITDA Margin


39.6%


38.7%






Entertainment Group Segment





Segment Contribution

$

1,597

$

1,595

Additions:





Equity in Net (Income) Loss of Affiliates


6


(3)

Depreciation and amortization


1,419


1,488

EBITDA


3,022


3,080






Total Segment Operating Revenues


12,623


12,658






Segment Operating Income Margin


12.7%


12.6%

EBITDA Margin


23.9%


24.3%






Consumer Mobility Segment





Segment Contribution

$

2,339

$

2,494

Additions:





Depreciation and amortization


873


922

EBITDA


3,212


3,416






Total Segment Operating Revenues


7,740


8,328

Service Revenues


6,609


6,943






Segment Operating Income Margin


30.2%


29.9%

EBITDA Margin


41.5%


41.0%

EBITDA Service Margin


48.6%


49.2%






International Segment





Segment Contribution

$

(100)

$

(184)

Additions:





Equity in Net (Income) of Affiliates


(20)


(14)

Depreciation and amortization


290


277

EBITDA


170


79






Total Segment Operating Revenues


1,929


1,667






Segment Operating Income Margin


-6.2%


-11.9%

EBITDA Margin


8.8%


4.7%

 

3

 

Supplemental AT&T Mobility EBITDA, EBITDA Margin and EBITDA Service Margin

Dollars in millions

Three Months Ended


March 31,



2017


2016

AT&T Mobility





Operating Income

$

5,172

$

5,274

   Add: Depreciation and amortization


1,997


2,056

EBITDA


7,169


7,330






Total Operating Revenues


17,167


17,954

Service Revenues


14,538


14,798






Operating Income Margin


30.1%


29.4%

EBITDA Margin


41.8%


40.8%

EBITDA Service Margin


49.3%


49.5%

 

Supplemental Latin America EBITDA and EBITDA Margin

Dollars in millions

Three Months Ended


March 31,



2017


2016

International - Latin America





Operating Income

$

77

$

53

   Add: Depreciation and amortization


214


196

EBITDA


291


249






Total Operating Revenues


1,341


1,130






Operating Income Margin


5.7%


4.7%

EBITDA Margin


21.7%


22.0%

 

Supplemental Mexico EBITDA and EBITDA Margin

Dollars in millions

Three Months Ended


March 31,



2017


2016

International - Mexico





Operating Income

$

(197)

$

(251)

   Add: Depreciation and amortization


76


81

EBITDA


(121)


(170)






Total Operating Revenues


588


537






Operating Income Margin


-33.5%


-46.7%

EBITDA Margin


-20.6%


-31.7%

 

Adjusting Items

 

Adjusting items include revenues and costs we consider nonoperational in nature, such as items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often significant impact on our fourth-quarter results (we immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses.) Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income.

 

4

The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude can drive a change in the effective tax rate, reflect the actual tax expense or combined marginal rate of approximately 38%. For years prior to 2017, adjustments related to Mexico operations were taxed at the 30% marginal rate for Mexico.

 

Adjusting Items

Dollars in millions

Three Months Ended


March 31,



2017


2016

Operating Expenses





   DIRECTV and other video merger integration costs

$

127

$

173

   Mexico merger integration costs


39


81

   Time Warner merger costs


41


-

   Wireless merger integration costs


-


42

   Employee separation costs


-


25

   (Gain) loss on transfer of wireless spectrum


(118)


(736)

Adjustments to Operations and Support Expenses


89


(415)

   Amortization of intangible assets


1,202


1,351

Adjustments to Operating Expenses


1,291


936

Other





   Merger related interest expense and exchange fees 1


109


16

   (Gain) loss on sale of assets, impairments and other adjustments


257


4

Adjustments to Income Before Income Taxes


1,657


956

   Tax impact of adjustments


556


331

Adjustments to Net Income

$

1,101

$

625

1 Includes interest expense incurred on the debt issued prior to the close of merger transactions and fees

  associated with the exchange of DIRECTV notes for AT&T notes.

 

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.

 

Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. AT&T's calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.

 

Adjusted Operating Income, Adjusted Operating Income Margin,

Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Service Margin

Dollars in millions

Three Months Ended


March 31,



2017


2016

Operating Income

$

6,864

$

7,131

Adjustments to Operating Expenses


1,291


936

Adjusted Operating Income


8,155


8,067






EBITDA


12,991


13,694

Adjustments to Operations and Support Expenses


89


(415)

Adjusted EBITDA


13,080


13,279






Total Operating Revenues


39,365


40,535

Service Revenues


36,456


37,101






Operating Income Margin


17.4%


17.6%

Adjusted Operating Income Margin


20.7%


19.9%

Adjusted EBITDA Margin


33.2%


32.8%

Adjusted EBITDA Service Margin


35.9%


35.8%

 

5

 



 

 

Adjusted Diluted EPS


Three Months Ended


March 31,



2017


2016

Diluted Earnings Per Share (EPS)

$

0.56

$

0.61

   Amortization of intangible assets


0.13


0.14

   Merger integration and other items1


0.03


0.03

   Asset abandonments, impairments and other adjustments


0.03


0.02

   (Gain) loss on transfer of wireless spectrum


(0.01)


(0.08)

Adjusted EPS

$

0.74

$

0.72

Year-over-year growth - Adjusted


2.8%



Weighted Average Common Shares Outstanding

     with Dilution (000,000)


6,186


6,190

1Includes combined merger integration items, merger-related interest expense and DIRECTV exchange fees.

 

Net Debt to Adjusted EBITDA

 

Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. The Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt by annualized Adjusted EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days, from the sum of debt maturing within one year and long-term debt. Annualized Adjusted EBITDA is calculated by annualizing the year-to-date Adjusted EBITDA.

 

Net Debt to Adjusted EBITDA

Dollars in millions

 Three Months Ended





Mar. 31,

YTD



2017

2017


Adjusted EBITDA

$

13,080

$

13,080


Annualized Adjusted EBITDA




52,320


   End-of-period current debt




12,681


   End-of-period long-term debt




120,568


Total End-of-Period Debt




133,249


   Less: Cash and Cash Equivalents




14,884


Net Debt Balance




118,365


Annualized Net Debt to Adjusted EBITDA Ratio





 

6

 



 

Supplemental Operational Measures

 

We provide a supplemental discussion of our domestic wireless operations that is calculated by combining our Consumer Mobility and Business Solutions segments, and then adjusting to remove non-wireless operations. The following table presents a reconciliation of our supplemental AT&T Mobility results.

 

Supplemental Operational Measure



Three Months Ended



March 31, 2017



March 31, 2016



Consumer Mobility


Business Solutions


Adjustments1


AT&T Mobility



Consumer Mobility


Business Solutions


Adjustments1


AT&T Mobility

Operating Revenues


















   Wireless service

$

6,609

$

7,929

$

-

$

14,538


$

6,943

$

7,855

$

-

$

14,798

   Fixed strategic services


-


2,974


(2,974)


-



-


2,751


(2,751)


-

   Legacy voice and data services


-


3,630


(3,630)


-



-


4,373


(4,373)


-

   Other service and equipment


-


817


(817)


-



-


859


(859)


-

   Wireless equipment


1,131


1,498


-


2,629



1,385


1,771


-


3,156

Total Operating Revenues


7,740


16,848


(7,421)


17,167



8,328


17,609


(7,983)


17,954



















Operating Expenses


















   Operations and support


4,528


10,176


(4,706)


9,998



4,912


10,802


(5,090)


10,624

EBITDA


3,212


6,672


(2,715)


7,169



3,416


6,807


(2,893)


7,330

   Depreciation and amortization


873


2,312


(1,188)


1,997



922


2,508


(1,374)


2,056

Total Operating Expense


5,401


12,488


(5,894)


11,995



5,834


13,310


(6,464)


12,680

Operating Income

$

2,339

$

4,360

$

(1,527)

$

5,172


$

2,494

$

4,299

$

(1,519)

$

5,274

1 Non-wireless (fixed) operations reported in Business Solutions segment.

 

We provide a supplemental presentation of the Latin America and Mexico Wireless operations within our International segment. The following table presents a reconciliation of our International segment.

 

 Supplemental International



Three Months Ended



March 31, 2017



March 31, 2016



Latin America


Mexico


International



Latin America


Mexico


International

Operating Revenues














Video Service

$

1,341

$

-

$

1,341


$

1,130

$

-

$

1,130

Wireless Service


-


475


475



-


455


455

Wireless Equipment


-


113


113



-


82


82

Total Operating Revenues


1,341


588


1,929



1,130


537


1,667















Operating Expenses














   Operations and support


1,050


709


1,759



881


707


1,588

   Depreciation and amortization


214


76


290



196


81


277

Total Operating Expense


1,264


785


2,049



1,077


788


1,865

Operating Income


77


(197)


(120)



53


(251)


(198)

Equity in Net Income of Affiliates


20


-


20



14


-


14

 Segment Contribution

$

97

$

(197)

$

(100)


$

67

$

(251)

$

(184)

 

7


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