AT&T Senior Executive Vice President and CFO John Stephens Updates Shareholders
John Stephens, senior executive vice president and chief financial officer of AT&T Inc.* (NYSE:T), spoke today at the Deutsche Bank Media, Internet & Telecom Conference where he provided an update to shareholders. He addressed the following areas and noted that the company will hold an Analyst & Investor Day on March 12 at 9 a.m. CT.
Mobility. Stephens noted that AT&T believes it has the right approach to the market, providing customers with the best possible wireless offers to reduce churn and maintain a high-quality base. The company has continued to invest strategically in its network, including during the recent C-Band Auction (Auction 107). Stephens said that through its flexible plans and best offers, AT&T is attracting and keeping customers on its higher value plans. AT&T also has the fastest wireless network in the nation,1 which also helps attract and retain customers.
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Stephens reiterated that AT&T continues to expect wireless service revenue growth in the 2% range in 2021 as the company continues to add customers and connected devices on its network, subscribers continue to migrate to higher ARPU unlimited plans, and churn improves. He also expects modest wireless EBITDA growth in 2021.
Fiber. Stephens said fiber is the foundation for AT&T’s network, including broadband connectivity and 5G. He reiterated that the company continues to grow its network, building out the fiber connection directly to consumers and businesses. AT&T currently markets its 100% fiber network to more than 14 million customer locations, which it is actively selling into, with penetration rates increasing the longer the company has fiber in a market. Through its integrated fiber strategy, the company plans to increase its fiber footprint by 3 million customer locations in 2021. Stephens also noted that at the end of 2020, about 80% of its IP broadband customers were using either fiber or VDSL technologies.
Video transaction. Stephens said AT&T’s agreement with TPG to form a new entity named DIRECTV to operate its U.S. video business unit will better position AT&T to maximize the benefits of the long-term strategic trends influencing its business. He reiterated that maintaining a stake in the U.S. video business will allow the company to participate in future value creation opportunities.
Stephens said that the company’s U.S. video business will be classified as “held for sale” beginning with first quarter 2021 results. AT&T will cease depreciating and amortizing long-lived assets associated with this business unit and expects a reduction of about $300 million in depreciation and amortization expense each quarter until the transaction closes. Just under half of the reduction reflects the fourth-quarter 2020 impairment taken on the business. The remainder of the reduction reflects the reclassification of the assets to “held for sale.” The company will be updating the lives of video customers used to determine associated subscriber acquisition costs.