At&t Inc. · NYSE:T
At&t — Q4 2006 Earnings Presentation
21 slides from At&t's earnings presentation, Jan 24, 2007
Slide 1: 4Q06 Wireless Financial and Operational Results
4Q06 Wireless Financial and Operational Results January 24, 2007
Slide 2: Agenda
Agenda Introduction Kent Evans Executive Director – Investor Relations Pete Ritcher Financial Results Chief Financial Officer - Wireless Stan Sigman Operations President and CEO - Wireless Q&A 2 AT&T Inc. 4Q05 Earnings Conference Call
Slide 3: 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 may differ materially. A discussion of factors that may affect future
Slide 4: Pete Ritcher
Pete Ritcher Chief Financial Officer - Wireless AT&T Inc.
Slide 5: Financial Summary
Financial Summary Reported Sequential Annual 4Q06 Change Change Service Revenue (M) $8,795 1.5% 13.1% Total Revenue (M) $9,755 2.1% 10.2% Normalized OIBDA Margin 34.4% -120 bps 340 bps Normalized OI Margin 18.9% -70 bps 450 bps ARPU $49.29 -0.9% 0.9% Postpaid Churn 1.5% 0 bps -40 bps Total Churn 1.8
Slide 6: 4Q06 Normalizing Items
4Q06 Normalizing Items OIBDA Operating Income Amount (M) Margin1 Amount (M) Margin2 Reported $2,909 33.1% $1,327 13.6% Integration Costs $115 1.1% $224 2.3% Non-cash Intangible $0 0.0% $292 3.0% Amortization Costs Normalized $3,024 34.4% $1,843 18.9% 1As a % of Service Revenue. 2As a % of Total Reve
Slide 7: Continued Low Churn
Continued Low Churn Postpaid and Total Network quality continues Average Monthly Churn to be the primary driver Total of rising customer Postpaid satisfaction scores 2.1% 1.9% 1.8% 1.8% • Customer Care continues 1.7% 1.9% to improve 1.6% 1.5% 1.5% 1.5% • Sequentially, overall churn remained flat in
Slide 8: Strong Subscriber Growth
Strong Subscriber Growth Total Net Adds Strength in distribution (in thousands) 2,357 continues to lead the industry 1,820 1,679 as gross adds equaled a 1,498 1,358 record high of 5.5 million Reseller Retail • Churn levels remained low while network migrations continue 4Q05 1Q06 2Q06 3Q06 4Q06 • Pos
Slide 9: Revenue Growth
Revenue Growth Second consecutive quarter Service Revenue Growth of double-digit service revenue Year-over-year Growth Rates growth – driven by solid subscriber gains and strong 13.1% contribution from data 12.2% • Service revenues up more than $1 billion versus 4Q05, more than half of the 8.1% 7.9%
Slide 10: ARPU Growth
ARPU Growth Service ARPU Data ARPU Second consecutive quarter of year-over-year $7.19 ARPU growth $49.76 $49.29 • Stabilizing voice $48.86 $48.48 $48.84 $6.32 • Accelerating data growth $5.77 - Sequential data ARPU $5.22 increase of $.87 $4.71 - Data revenue up 69% year over year 0.9% 53% - More tha
Slide 11: Margin Expansion
Margin Expansion Normalized OIBDA Nearly $600 million increase and OIBDA Margin in normalized OIBDA versus 4Q05 $ in millions and 340 basis point improvement in normalized OIBDA margin $3,024 • Revenue growth continues to expand $2,409 34.4% • Merger synergies coming to fruition • T-Mobile JV unwind
Slide 12: 4Q06 Summary
4Q06 Summary Gross Adds Total Churn Net Adds Normalized millions thousands OIBDA Margin 5.5 2.1% 2,357 34.4% 1.8% 31.0% 5.1 1,820 4Q05 4Q06 4Q05 4Q06 4Q05 4Q06 4Q05 4Q06 • Strong sales momentum continues with record level of gross adds • Record net adds as churn remains low despite migration issues
Slide 13: Stan Sigman
Stan Sigman President and Chief Executive Officer - Wireless AT&T Inc.
Slide 14: Strategic Imperatives
Strategic Imperatives 1 Build the best network 2 Provide great customer service 3 Create unmatched distribution 4 Deliver compelling products and services 14 AT&T Inc. 4Q05 Earnings Conference Call
Slide 15: 1. Build the Best Network
1. Build the Best Network TDMA GSM 2007 Plan Rationalization Integration Complete Complete • Further strengthen network coverage and reliability Best Best Network Network • Continue aggressive 3G deployment • Continue TDMA customer migrations to GSM and UMTS T-Mobile Built new Unwind cell sites • Op
Slide 16: 2. Provide Great Customer Service
2. Provide Great Customer Service Customer Calling First Call Resolution Rate as a % of as a % of 2007 Plan Jan ’05 Rate Jan. ‘05 Rate • Continued steady 100% 136% improvement in customer service metrics 121% • Prepaid platform 71% 100% consolidation 60% • Sunset another 40% 36% 80 systems versus ve
Slide 17: 3. Create Unmatched Distribution
3. Create Unmatched Distribution Industry Leading Gross Adds 2007 Plan 19.2M • Execute the AT&T 18.7M 18.5M brand transition • Expand wireline product offerings • Upgrade company-owned Nearly 12 million stores net adds since AT&T Wireless merger • Expand distribution through Apple relationship • Del
Slide 18: 4. Deliver Compelling Products and Services
4. Deliver Compelling Products and Services 2007 Plan • Innovate and drive continued growth in data services • Expand array of attractive 3G devices • Launch the iPhone with Apple • Introduce new products and offers across the AT&T portfolio 18 AT&T Inc. 4Q05 Earnings Conference Call
Slide 19: Progress Report and Outlook
Progress Report and Outlook Strong Ramp Up ARPU Growing in Revenue Growth as Data Accelerates Service Revenue Growth Service ARPU Growth (year-over-year growth rates, (year-over-year growth rates, 4Q04 and 4Q05 based on pro forma) 4Q04 and 4Q05 based on pro forma) 13.1% 0.9% 8.1% (2.2)% (5.5)% (0.5)
Slide 20: Progress Report and Outlook
Progress Report and Outlook Significant Churn Substantial Margin Reduction Expansion Total Average Normalized OIBDA Margin Monthly Churn 34.4% 2.6% 31.0% 2.1% 1.8% 23.4% 4Q04 4Q05 4Q06 4Q04 4Q05 4Q06 Outlook: continued Outlook: OIBDA margins in improvement in overall and the high 30% range for 2007
Slide 21: Summary
Summary • We have a solid plan and solid execution • Most AT&T Wireless integration activities are complete • Additional synergy opportunities from the AT&T and BellSouth merger • We will continue to focus on our strategic imperatives to achieve industry leadership 21 AT&T Inc. 4Q05 Earnings Confere