AT&T Inc. · NYSE:T
AT&T — Investor Day (March 2021)
54 slides from AT&T's investor day presentation, Mar 12, 2021
Slide 1: AT&T Analyst and Investor Day 2021
AT&T Analyst and Investor Day 2021
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, and actual results might differ materially. A discussion of factors that may affect futu
Slide 3: AT&T Analyst and Investor Day
AT&T Analyst and Investor Day 2021
Slide 4: John Stankey, Chief Executive Officer
John Stankey Chief Executive Officer
Slide 5: Grow: Market Focus, 2021 Priority, Capital Allocation
Our Our Deliberate Market Focus Shared 2021 Priority Capital Allocation Broadband connectivity Investing in strategic growth – 5G, Fiber 5G, Fiber, HBO Max GROW Committed to sustaining dividend Software-based at current levels entertainment Customer HBO Max Relationships Utilizing cash after dividen
Slide 6: Presenters and Agenda
AT&T Communications Jeff McElfresh WarnerMedia Jason Kilar Financial Overview John Stephens & Pascal Desroches Question & Answer Team 6 AT&T Investor & Analyst Day / March 12, 2021 / © 2021 AT&T Intellectual Property - AT&T Proprietary
Slide 7: AT&T Analyst and Investor Day
AT&T Analyst and Investor Day 2021
Slide 8: Jeff McElfresh, CEO, AT&T Communications
Jeff McElfresh CEO, AT&T Communications
Slide 9: Broadband data usage steadily increases, jumps with pandemic
Broadband data usage steadily increases, jumps with pandemic Uplink and Downlink Broadband Fixed and Mobile Broadband 58 Usage Per Sub (GB) Usage Per Sub (GB) 48 280 38% 317.7 CAGR 39 38 28 Downlink 78 Fixed 18 73.9 5.6 35% Mobile CAGR Uplink 1.3 8 8 Jan-20 May-20 Jan-15 Jan-16 Jan-18 Jan-19 May-15
Slide 10: Customer connectivity usage continues to accelerate
Customer connectivity usage continues to accelerate Expected Monthly Usage (Terabytes) 10:1 ~5:1 4.6 Down / Uplink Today Future Connected devices 13 32 devices Video streaming 3 5 hours Mobile 11 50 GB Percentiles 1.5 90th 0.9 Evolving use cases 50th 0.3 10th 0.04 0.20 4K Content Conferencing AR / V
Slide 11: AT&T optimally positioned to meet customers' connectivity needs
AT&T optimally positioned to meet customers’ connectivity needs Enterprise / Public Sector Home Distributed and remote workers HD streaming / simultaneous viewing ~20K enterprises (>500 emp.)2 ~128M households Small Business Young Adult / Student Simple / transactional Wireless first, gamers ~31.7M
Slide 12: Fiber is foundational
Fiber is foundational Macro Cell Sites Small Cell Sites Wholesale Integrated planning +3M customer locations1 Symmetrical speeds Multi-Gig capable Neighborhood Enterprise Small Business 1. In 2021, we are planning to increase our current fiber footprint by expanding to 3M customer locations in more
Slide 13: Complemented by strong spectrum position
Complemented by strong spectrum position AT&T Spectrum Holdings (MHz) 700 America’s Best Network1 Low 22 7 20 23 72 700DE FN Nation’s Largest Network2 800/850 Mid 38 15 20 20 93 PCS 173Mhz AWS1 Nationwide 5G Mid-Band AWS3 C-band 80 WCS FirstNet C-band High High mmWave 1040 1. GWS awarded AT&T Best N
Slide 14: Wireless: Growing subscribers and EBITDA
Wireless: Growing subscribers and EBITDA 40.0% 1.20% 33.5% 30.0% 1.00% FAST. RELIABLE. SECURE. AT&T share1 20.0% Churn 0.80% 0.76% 10.0% UNLIMITED YOUR WAY SM 0.60% 0.0% Share of 0.40% -10.0% Net Adds COVID-19 Impact 0.20% -20.0% FirstNet in AT&T Retail New Unlimited Unlimited -30.0% to verified res
Slide 15: Broadband: Growing fiber subscribers and revenue
Broadband: Growing fiber subscribers and revenue 20 ARPU 19 $58 18 17 16 15 14 13 14M+ 14.5M 12 11 Penetration1 Symmetrical 10 34% Speeds 9 8 7 8M+ 8.2M Improved 6 5 marginal 4 economics 3 2 Customer Locations Differentiated 1 0 Offer DIRECTV Build 1G Fiber requirements met Pricing 1Q18 4Q20 Launche
Slide 16: Business: Simplified portfolio maintains solid margins
Business: Simplified portfolio maintains solid margins Focus market approach Fiber Wireless Business fiber foundation Edge Secure Voice & Connectivity Collaboration 16 AT&T Investor & Analyst Day / March 12, 2021 / © 2021 AT&T Intellectual Property - AT&T Proprietary
Slide 17: Customer experience focus – consistency and simplicity
Customer experience focus – consistency and simplicity Net Promoter® Score Lift1 Net Promoter Score ~15 points ~10 points ~20 points ~10 points Fiber Postpaid Wireless Unlimited Unlimited Unlimited + HBO Max + HBO Max 2018 2020 OR Fiber + Fiber 1. Net Promoter® is a registered trademark of Bain & Co
Slide 18: AT&T expects continued market momentum
AT&T expects continued market momentum Network Wireless Fiber Business Deploy and optimize Grow subscribers Grow subscribers Simplify portfolio spectrum portfolio Grow service revenue Grow revenue Maintain solid margins Plan to expand fiber to 3M customer locations Grow EBITDA 18 AT&T Investor & Ana
Slide 19: HBO Max
Slide 20: WarnerMedia
Slide 21: 41M domestic HBO Max + HBO subscribers
41M DOMESTIC HBO MAX + HBO SUBSCRIBERS IN THE US BY END OF 2022 OCTOBER 2019 INVESTOR DAY
Slide 22: HBO Max hits subscriber goal two years ahead of schedule
Slide 23: What was in decline is now growing
WHAT WAS IN DECLINE IS NOW GROWING MORE SUBSCRIBERS WERE ADDED IN THE FINAL 7 MONTHS OF 2020 THAN WERE ADDED IN THE PREVIOUS DECADE DOMESTIC HBO MAX & HBO SUBSCRIBERS (MILLIONS) 9/19 12/19 3/20 6/20 9/20 12/20
Slide 24: HBO Max reaches an expanded audience that is younger and more engaged
HBO MAX REACHES AN EXPANDED AUDIENCE THAT IS YOUNGER AND MORE ENGAGED VIEWERS UNDER THE AGE OF 35 AVG HOURS VIEWED PER VIEWER PER DAY 2.8 15% » 43% 15 HBO LINEAR HBO MAX HBO LINEAR HBO MAX HBO MAX VIEWERS ARE NEARLY 2X MORE ENGAGED THAN LINEAR
Slide 25: HBO Max's best-in-class offering is reflected in its price and results
HBO MAX’S BEST-IN-CLASS OFFERING IS REFLECTED IN ITS PRICE AND ITS RESULTS SVOD / AVOD MONTHLY US RETAIL PRICING peacock: discovery+ Basic: $5.99 ( Basic: $4.99 Basic: Free No Ads: $11.99 S No Ads: $6.99
Slide 26: U.S. effective ARPU forecast
HBO MAX’S BEST-IN-CLASS OFFERING IS REFLECTED IN ITS PRICE AND ITS RESULTS U.S. EFFECTIVE ARPU FORECAST $117 $12 2020 2021 2025 ARPU for US, inclusive of wholesale, retail and ad-supported; excludes HBO Commercial Accounts and Cinemax
Slide 27: Judas and the Black Messiah
JUDAS noone AN) [YE ome = BLACK MESSIAH
Slide 28: Up next: An advertising-supported HBO Max
UP NEXT AN ADVERTISING-SUPPORTED HBO MAX GREAT FOR CONSUMERS AN OPPORTUNITY TO GET HBO MAX FOR A LOWER PRICE GREAT FOR MARKETERS AN UNUSUALLY EFFECTIVE ADVERTISING SERVICE OF THE HIGHEST QUALITY
Slide 29: Launching in additional markets in late June
LAUNCHING IN 39 ADDITIONAL MARKETS IN LATE JUNE
Slide 30: Launching in additional markets in second half of this year
LAUNCHING IN 21 ADDITIONAL MARKETS IN SECOND HALF OF THIS YEAR
Slide 31: From market to market over the next months
FROM 1 MARKET TO 61 OVER THE NEXT 9 MONTHS
Slide 32: Stories we get to tell
egg “THE erties WE Sy—GETTOTELL | | 4
Slide 33: A production powerhouse years in the making
A PRODUCTION POWERHOUSE 98 YEARS IN THE MAKING
Slide 34: Creative talent partners
Slide 35: Content library: Wedding Crashers, West Wing
WEDDING CRASHED ” SHEN NG 4 oe | Pres co LRATNING ie WEST WING
Slide 36: October 2019: projection of 75-90M HBO Max global subscribers by 2025
OCTOBER 2019: PROJECTION OF 75-90M HBO MAX GLOBAL SUBSCRIBERS BY 2025 YE
Slide 37: Today: we project 120M in 2025
TODAY: WE PROJECT 120M IN 2025 WITH POTENTIAL BEYOND THAT OF 30M FROM NEW MARKETS
Slide 38: We will invest smartly and boldly; breakeven expected in 2025
WE WILL INVEST OT nee SMARTLY AND os BOLDLY GIVEN THIS UNIQUE an OPPORTUNITY Za BREAKEVEN EXPECTED IN 2025 n020 _
Slide 39: AT&T is a big advantage for HBO Max
AT&T IS A BIG ADVANTAGE FOR HBO MAX AND WILL CONTINUE TO BE 25% OF HBO MAX SUBSCRIBERS VIA AT&T
Slide 40: HBO Max is a big advantage for AT&T
gents available 1-877-491-7863 Order Now | Existing Customers | C ~~ HBO MAXIS ABIGADVANTAGE = FOR AT&T AND internet HBO Max WILLCONTINUETOBE ‘TM u mnload max typical not gt’ HIGHER ARPU; BETTER RETENTION AT&T EXCLUSIVE TELECOM ADVERTISER
Slide 41: Takeaways
TAKEAWAYS TWO YEARS AHEAD OF SCHEDULE CUSTOMERS ARE 2X ENGAGED ADVERTISING ALLOWS FOR LOWER PRICE GROWING TO 61 MARKETS THIS YEAR CONTENT POWERHOUSE
Slide 42: HBO Max
Slide 43: AT&T Analyst and Investor Day
AT&T Analyst and Investor Day 2021
Slide 44: John Stephens and Pascal Desroches
John Stephens Chief Financial Officer Pascal Desroches Senior Executive Vice President, Incoming CFO
Slide 45: 2021 Consolidated financial guidance
2021 Consolidated financial guidance (unchanged from 4Q20 Earnings call) Key Assumptions Wireless service revenue growth of ~2% Revenue Growth 1% range Gradual theatrical improvement in WarnerMedia Modest Mobility EBITDA growth EPS – Adjusted1 Stable with 2020 Increased HBO Max investment Cost trans
Slide 46: AT&T financials proforma (video deconsolidation)
AT&T financials proforma (video deconsolidation) $ in billions Revenue Adjusted EBITDA Video Impact1 Video Impact1 EBITDA Margin Deconsolidation Impact (-7%) $181.2 Expect to close in 2H 21 $171.8 $59.3 $54.5 Revenue trajectory improves $56.3 $153.8 $147.3 ~100 bps $52.1 EBITDA margin improvement ~3
Slide 47: AT&T near-term business expectations
AT&T near-term business expectations Mobility WarnerMedia Growing postpaid base, lower churn Strong HBO Max subscriber and Broadband revenue growth Latin America ARPU stability 9% Increased investment in HBO Max 1% Cost savings from transformation WarnerMedia Improved advertising demand 17% 2H recov
Slide 48: C-band auction purchase financing
C-band auction purchase financing AT&T Estimated Payments1 $23.0B $27.4B $2.5B 2021 Financing Sources Cash YE2020 $9.7B $1.0B Bank Term Loan $14.7B $0.6B $0.3B Commercial paper issuance $6.1B 2020 2021 2022 2023 2024 Total Total >$30B AT&T gross spend $1.05/ Near-nationwide of $27.4B MHz-pop footpri
Slide 49: Debt plan overview
Debt plan overview $ in billions DTV proceeds2 -$8B $177 Other asset sales - $2B Net Vendor financing / Other +$4B Goal Debt Free cash flow & disposition of non-strategic assets Leverage during 2024 at ~2.50x or lower ~$154 $148 $6 $23 $11 2021: Net Debt Increases ~$6B for Spectrum Purchase Continue
Slide 50: Focus on value creation
Focus on value creation Stable Invest in Customer Growth Dividend Broadband (5G, Fiber) HBO Max Revenue Growth Reduced Leverage Cost Transformation Improved Profit Trajectory Efficiencies Restructuring Upside Potential non-core assets in Growth Areas 50 AT&T Investor & Analyst Day / March 12, 2021 /
Slide 51: Expectations: Focused growth, sustainable dividend, debt reduction
Expectations: Focused growth, sustainable dividend, debt reduction Grow Customer Investment in Deliberate Capital Relationships Growth Allocation 120 – 150 M Global HBO + 5G, Fiber Sustain dividend at HBO Max YE 25 current level HBO Max Grow wireless, fiber Reduce debt 51 AT&T Investor & Analyst Day
Slide 52: Appendix
Appendix = Ss
Slide 53: Appendix: Non-GAAP reconciliations
APPENDIX: Non-GAAP reconciliations $ in millions $ 2020 2019 As Reported Video Other1 AT&T Video Other1 AT&T Net Debt to Adjusted EBITDA1 Net Income $ (3,821) $ 14,975 Dec 31, 2020 Jun 30, 2018 Additions: Adjusted Annualized EBITDA $ 54,546 $ 63,414 Income tax (benefit) expense 965 3,493 Total Debt
Slide 54: AT&T
S AT&T