At&t Inc. · NYSE:T
At&t — SBC Communications — Merrill Lynch Global Communications Investor Conference 2004
27 slides from At&t's conference presentation, Mar 16, 2004
Slide 1: SBC Investor Update
SBC Investor Update Merrill Lynch Global Communications Investor Conference March 16, 2004 Randall Stephenson Senior Executive Vice President and Chief Financial Officer
Slide 2: Cautionary Language Concerning Forward-Looking Statements
Cautionary Language Concerning Forward-Looking Statements Information set forth in this presentation contains financial estimates and other forward-looking statements that are subject to risks and uncertainties. A discussion of factors that may affect future results is contained in SBC’s filings wit
Slide 3: Areas To Cover
Areas To Cover 1. Strategy and Execution – Consumer – Business 2. Value Returned to Owners 3. Cingular Wireless + AT&T Wireless 3
Slide 4: Strategy and Execution
Strategy and Execution Growth Products • Ended 2003 with record net adds in both LD and DSL • More than doubled penetration in 2003 Bundles • Launched SBC/DISH Network in March • Over past three quarters, significant Access Lines improvement in retail line losses • Strong, high-quality subscriber gr
Slide 5: Record Long Distance Growth
Record Long Distance Growth In-Service YOY Growth InterLATA PICs Total LD Revenue (in millions) 14.4 27.6% • 2.9 million 11.5 added in 4Q03 9.8 • 8.3 million 7.6 12.5% LD lines added in 2003, 4.1% nearly 60% of LD base (2.2)% 1Q03 2Q03 3Q03 4Q03 1Q03 2Q03 3Q03 4Q03 5
Slide 6: Strong Growth in DSL
Strong Growth in DSL DSL Net Adds (in thousands) 377 365 • 8 consecutive quarters of 304 sequential 245 270 improvement 213 226 in net adds 183 • 3.5 million DLS lines in service, >40% ahead of closest RBOC peer 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 6
Slide 7: Broadband Growth Trends
Broadband Growth Trends Broadband Net Adds (in thousands) DSL/Cable Modem Lines in Service 450 End of 2003, Comcast in Millions 377 365 SBC SBC 3.5 350 Verizon 2.5 304 BellSouth 1.5 270 250 245 Comcast 5.3 Verizon Time Warner 3.3 Time Warner Cox 2.0 150 Cox Cable BellSouth 50 4Q02 1Q03 2Q03 3Q03 4Q0
Slide 8: Growth In Consumer Bundles
Growth In Consumer Bundles Key Product Bundles customers with bundles including one or more key services – LD, DSL and wireless 44% Bundles … 36% • drive customer 31% retention • improve ARPU 23% • help stabilize 19% access lines 4Q02 1Q03 2Q03 3Q03 4Q03 8
Slide 9: Consumer Access Line Trends
Consumer Access Line Trends Net Change By Quarter (in thousands) Southwest West Midwest (62) (55) (61) (43) (90) (91) (71) (49) (84) (83) (97) (78) (55) (66) (57) (67) (15) (62) (76) (110) (199) (126) (104) (239) (296) (301) (106) (112) (128) (133) (184) (217) (289) (323) (379) (398) 1Q03 2Q03 3Q03
Slide 10: Stable Data Revenues
Stable Data Revenues $10 Billion Annual Quarterly Data Revenues & Data Revenue Stream YOY Quarterly Growth Rates (dollars in millions) (dollars in millions) $10,150 $2,576 $2,604 $9,639 $2,479 $2,491 $1,387 $1,832 $1,579 $1,698 9.3% $6,673 $6,620 5.5% 3.7% 2.7% 2002 2003 1Q03 2Q03 3Q03 4Q03 DSL / In
Slide 11: Leader in Data Revenues
Leader in Data Revenues 2003 Total Data Revenues (dollars in billions) $10.2B • Largest data revenue stream among RBOCs $7.3B • 40% higher than closest peer $4.4B BellSouth Verizon SBC 11
Slide 12: Large-Business Opportunity
Large-Business Opportunity $140B Business Telecom Market (voice and data) SBC’s immediate large business target – companies with more than 50% of their locations 10% $14B in footprint – represent SBC Market $34 billion annual Share Today revenue opportunity $140 billion includes voice, data, managed
Slide 13: Expanded Capabilities
Expanded Capabilities Service Network Products Sales Capabilities National ATM Broad range Single 4,300 and Frame of flexible Global advanced data backbone, bandwidth Accounts certifications IP network solutions sales team Single Managed contracts, Services service level agreements
Slide 14: Revenue Trends
Revenue Trends SBC YOY Wireline YOY (1) Revenue Growth Revenue Growth • Two consecutive quarters with (2.0)% improved YOY (3.0)% (3.0)% growth rates (4.2)% • 4Q declines (4.7)% (5.6)% (5.4)% less than half (5.7)% (6.6)% year-earlier levels (8.1)% 4Q02 1Q03 2Q03 3Q03 4Q03 4Q02 1Q03 2Q03 3Q03 4Q03 (1)
Slide 15: Stable Cash Flow
Stable Cash Flow Cash from Capital Free Cash Operations Expenditures Flow Before (dollars in millions) (dollars in millions) Dividends(1) (dollars in millions) $15,210 $15,162 $13,517 $9,943 $8,402 $6,808 $8,298 $5,219 2002 2003 2002 2003 2002 2003 Includes $1,645 million pension and retiree medical
Slide 16: Cash Returned To Owners
Cash Returned To Owners Debt Net of Cash Value Returned & Short-term to Shareowners Investments (dollars in millions) (dollars in millions) • Net debt cut in half over $5,012 $5,028 $25,461 past two years Additional Share Dividends Repurchase Share • Quarterly $18,473 Repurchase dividend $12,755 inc
Slide 17: Cingular Wireless Transaction
Cingular Wireless Transaction
Slide 18: Transaction Overview
Transaction Overview • Industry-leading scale • Broad market coverage • Spectrum to accommodate growth and next-generation services • Sizable synergy opportunities and a proven track record of execution to improve operations • The financial strength to fund the transaction while maintaining strong c
Slide 19: Outstanding Strategic Fit
Outstanding Strategic Fit • Network Technology – Both networks GSM/GPRS – Used by > 70% of world’s digital wireless market – Robust platform for emerging wireless data services • Customer Base – Cingular has broad consumer base – AT&T Wireless has extensive business customer base, providing service
Slide 20: Cingular Today
Cingular Today Licensed Spectrum Seattle Portland Minneapolis Milwaukee Buffalo Boston Cleveland Chicago Pittsburgh Salt Lake New York City Kansas City Denver Cincinnati Baltimore San Sacramento Washington, D.C. St. Louis Louisville Francisco San Jose Norfolk Las Vegas Nashville Greensboro Los Angel
Slide 21: Cingular + AT&T Wireless
Cingular + AT&T Wireless Includes AT&T Wireless Affiliates Seattle Portland Minneapolis Milwaukee Buffalo Boston Cleveland Chicago Pittsburgh Salt Lake New York City Kansas City Denver Cincinnati Baltimore San Sacramento Washington, D.C. St. Louis Louisville Francisco San Jose Norfolk Las Vegas Nash
Slide 22: Proven Ability to Execute: Integrating, Improving Operations
Proven Ability to Execute: Integrating, Improving Operations Billing Platforms • Consolidated 11 separate operations into two scalable systems Customer Care • Consolidated 60 separate call centers into 20 Distribution • Replaced decentralized operations with single, state-of-the-art facility Purchas
Slide 23: Proven Ability to Execute: Reignited Subscriber Growth
Proven Ability to Execute: Reignited Subscriber Growth Cingular Wireless Net Adds (in thousands) 2,116 • Cingular’s best-ever gross add totals in the third and fourth quarter of 2003 • High-quality subscribers with nearly 90% of the 359 base post-paid 2002 2003 23
Slide 24: Proven Ability to Execute: Very Successful GSM Conversion
Proven Ability to Execute: Very Successful GSM Conversion Percent of Cingular Percent of Subscribers Operational POPs with With GSM-Capable GSM/GPRS Coverage Handsets 93% 45% 81% 66% 35% 56% 27% 22% 57% of Cingular’s minutes on GSM network in 4Q03 1Q03 2Q03 3Q03 4Q03 1Q03 2Q03 3Q03 4Q03 24
Slide 25: SBC Impacts: Drives Revenue Growth
SBC Impacts: Drives Revenue Growth Wireless as percent of SBC 2003 revenue SBC 2003 total revenues growth rates … on proportionate basis … With With 60% of 60% of Cingular Reported Cingular + AWE Cingular 19% (2.1)% Cingular + AWE (3.7)% 32% (5.3)% 25
Slide 26: Summary: Expected Financial Impacts
Summary: Expected Financial Impacts • Improves revenue mix, drives growth • Impact on earnings expected to turn positive in 2007 • Modest financing requirements • Will maintain very strong credit metrics, should have no impact on credit ratings 26
Slide 27: SBC Investor Update
SBC Investor Update Merrill Lynch Global Communications Investor Conference March 16, 2004 Randall Stephenson Senior Executive Vice President and Chief Financial Officer
SBC Communications — Merrill Lynch Global Communications Investor Conference 2004 on 6ix