At&t Inc. · NYSE:T
At&t — Merger or Acquisition (March 2011)
38 slides from At&t's merger presentation, Mar 21, 2011
Slide 1: AT&T + T-Mobile: A World-Class Platform for the Future of Mobile Broadband
© 2011 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. AT&T + T-Mobile: A World-Class Platform for the Future of Mobile Broadband March 21, 2011
Slide 2: Agenda
Agenda Strategy, Transaction Overview Randall Stephenson Chairman, CEO and President, AT&T Approval Processes Wayne Watts Senior Executive Vice President and General Counsel, AT&T Spectrum and Network Strategy John Stankey President and CEO, AT&T Business Solutions Integration and Future Growth Ralp
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 might differ materially. A discussion of factors that may affect futu
Slide 4: Randall Stephenson, Chairman, CEO and President, AT&T
© 2011 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. Randall Stephenson Chairman, CEO and President, AT&T 4
Slide 5: A World-Class Platform for Innovation and Growth
A World-Class Platform for Innovation and Growth Major commitment by a U.S. company to advance America’s leadership in mobile broadband AT&T is the only major Critical time — at the beginning of transition to LTE U.S. wireless company Critical infrastructure for economic growth with a union • Drives
Slide 6: Transaction Delivers Significant Customer Benefits, Creates Value
Transaction Delivers Significant Customer Benefits, Creates Value Improves network capacity, output and quality Greater network density, compatible spectrum, more efficient network migration Expands 4G LTE deployment to 95% of U.S. population A level neither company would have achieved alone; gives
Slide 7: AT&T Mobile Data Volumes Up 8,000% Over Four Years
AT&T Mobile Data Volumes Up 8,000% Over Four Years PB/month 10B 5B 0 2007 2008 2009 2010 7
Slide 8: 8x–10x Volume Growth Over Next Five Years
150B 8x–10x Volume Growth Over Next Five Years AT&T Expected Total Data Volumes 125B PB/month 100B 75B 50B 25B 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 8
Slide 9: LTE 4G: 8x–10x Volume Growth Over Next Five Years
150B 8x–10x Volume Growth Over Next Five Years AT&T Expected Total Data Volumes 125B PB/month Faster Speeds + Greater Access 100B to Content = Accelerated Growth Rich Media Video Teleconferencing Cloud LTE 4G 75B Accelerating Connected Devices Apps Explosion Increasingly Powerful 50B Wireless Device
Slide 10: This Transaction Brings Together the Building Blocks for This New World
This Transaction Brings Together the Building Blocks for This New World The Foundation that Enables a Virtuous Cycle of Innovation and Growth Spectrum Device Makers Apps and Dense Network Content Assets Developers Customers Sustained Cloud Investment Network Technology Providers 10
Slide 11: Unique Opportunity to Create Value, Accelerate the Future of Mobile Broadband
Unique Opportunity to Create Value, Accelerate the Future of Mobile Broadband Compatible networks and operations • GSM-based with HSPA+ • Logical, straightforward integration path Optimal, efficient use of spectrum • Improves network performance in the near term • Significant expansion of LTE availa
Slide 12: Wayne Watts, Senior Executive Vice President and General Counsel, AT&T
© 2011 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. Wayne Watts Senior Executive Vice President and General Counsel, AT&T 12
Slide 13: Confident in Regulatory Approval
Confident in Regulatory Approval Thorough review by DOJ and FCC • Fully understand and respect the process, work to be done Prepared to demonstrate that facts meet legal standards • Transaction is in the public interest • Wireless competition will continue to flourish 13
Slide 14: Transaction Is in Public Interest
Transaction Is in Public Interest Addresses impending spectrum shortages • AT&T leads in mobile data, needs spectrum sooner • Enables greater capacity, output to meet exploding demand • Improves quality of voice and data service for customers of both Helps achieve federal policy objectives • More ef
Slide 15: Historically, When Carriers Combined, U.S. Wireless Prices Fell
Historically, During Period When Carriers Combined to Achieve Efficiencies, U.S. Wireless Prices Fell 75 U.S. Bureau of Labor Wireless prices declined 50% Statistics Data — from 1999-2009 — a period US CPI Urban Consumers Cellular Telephone Services Index when carriers combined to achieve efficienci
Slide 16: U.S. Wireless Market One of Most Competitive in World
U.S. Wireless Market One of Most Competitive in World and Will Remain Intensely Competitive Numerous successful providers: • Verizon, Sprint, Metro PCS, Leap, US Cellular, Cellular South, and others offer competitive national rate plans and advanced devices, features and services • New players — lik
Slide 17: Confident in Regulatory Approval
Confident in Regulatory Approval Significant public interest benefits • Alleviates impending spectrum exhaust • Enhances network capacity and output • Extends LTE to 95% of the U.S. population, including rural areas, smaller communities • Significant synergies unique to this transaction • Enables U.
Slide 18: John Stankey, President and CEO – AT&T Business Solutions
© 2011 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. John Stankey President and CEO – AT&T Business Solutions 18
Slide 19: Fast, Efficient, Certain — Optimal Combination of Mobile Broadband Network Assets
Fast, Efficient, Certain — Optimal Combination of Mobile Broadband Network Assets Complementary assets to deliver benefits at a level not available with other combinations Mobile • Highly compatible spectrum — 700 MHz, AWS broadband • Common network technology — UMTS, GSM, HSPA+ has become the criti
Slide 20: Greater Density = Better Performance: Significant Customer Benefits
Greater Density = Better Performance: Significant Customer Benefits Typical Major Market Increases Integrated tower grids with compatible Following Transaction in Number technology drives efficiency and adds of Cell Sites Available extra capacity Equivalent to several years of cell-site build in mos
Slide 21: Integration Drives Significant Near-Term and Long-Term Network Improvements
Integration Drives Significant Near-Term and Long-Term Network Improvements Combine 2G and 3G Networks Combine 2G and Rationalize Broad LTE 4G 3G Networks Spectrum Deployment Quickly and Free up high-quality To 95% of U.S. dramatically AWS spectrum population, improve capacity for LTE much more than
Slide 22: High Level of Confidence in Integration Plans
High Level of Confidence in Integration Plans Clear network quality benefits for both companies’ customers History of More robust platform for business solutions leadership • Global network standard developing • Expanded connected-device opportunity • Complementary speed and capacity capabilities in
Slide 23: Ralph de la Vega, President and CEO – Mobility and Consumer Markets, AT&T
© 2011 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. Ralph de la Vega President and CEO – Mobility and Consumer Markets, AT&T 23
Slide 24: Significant Customer, Marketing and Operational Opportunities
Significant Customer, Marketing and Operational Opportunities Improve performance levels across the business: #1 Further Improve the Customer Experience #2 Grow ARPU #3 Reduce Churn #4 Expand Margins #5 Seize New Opportunities 24
Slide 25: #1. Further Improve the Customer Experience
#1. Further Improve the Customer Experience World-class network experience — HSPA+ and LTE Best-in-class device portfolio — smartphones and connected devices Superior value — mobile-to-mobile plus Rollover Focused execution — strong record based on AT&T Wireless integration and others 25
Slide 26: #2. Increase T-Mobile Smartphone Penetration and Data ARPUs
#2. Increase T-Mobile Smartphone Penetration and Data ARPUs Total Subscriber • More than 65% of postpaid sales are Data ARPU 4Q10 Average Monthly smartphones — huge growth opportunity Revenue/Subscriber • Best-in-class portfolio of Apple, Android, $17.50 Microsoft and RIM devices • Attractive tiered
Slide 27: #3. Improve T-Mobile's Subscriber Churn Levels
#3. Improve T-Mobile’s Subscriber Churn Levels Average Monthly • Significant improvement in network performance Postpaid Churn 4Q 2010 — converged networks benefit • Larger mobile-to-mobile calling scope 2.50% • Access to nation’s largest Wi-Fi network with > 24K hot spots • Broadest international c
Slide 28: Strong Record Delivering Customer Value, Reducing Churn
Strong Record Delivering Customer Value, Reducing Churn AT&T Mobility Average Monthly Subscriber • Churn levels nearly Churn Since Cingular Acquisition of AWE cut in half in the first three years Total following Cingular’s 3% Postpaid acquisition of AT&T Wireless • Today, AT&T’s total 2% subscriber
Slide 29: #4. Improve T-Mobile's Margins
#4. Improve T-Mobile’s Margins 2010 Wireless Service Synergy opportunities across marketing, EBITDA Margins customer support and operations: 40.7% • Retail store rationalization • Advertising spend 29.2% • Billing system consolidation • Device portfolio rationalization • Customer acquisition costs •
Slide 30: AT&T Has a Strong Record of Wireless Margin Expansion Following Major Acquisitions
AT&T Has a Strong Record of Wireless Margin Expansion Following Major Acquisitions AT&T Historical Wireless Service EBITDA Margins Since Cingular Acquisition of AWE 40.9% 40.7% 39.9% Achieved 1000 basis 36.5% points of margin 32.7% improvement in the three years after our AT&T Wireless 27.4% 26.2% a
Slide 31: #5. Deliver on New Opportunities with a Broad Array of New Services
#5. Deliver on New Opportunities with a Broad Array of New Services Projected U.S. Sales of WWAN Emerging devices represent Embedded Portable CE Devices ~60M a large growth opportunity: (in millions) • Tablets • eReaders • Connected Homes • Connected Autos • Connected Gaming LTE, HSPA+ and Wi-Fi ~1.
Slide 32: Rick Lindner, Senior Executive Vice President and CFO, AT&T
© 2011 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. Rick Lindner Senior Executive Vice President and CFO, AT&T 32
Slide 33: Transaction Summary
Transaction Summary Terms Timing considerations • $39B purchase price • Review by the FCC and the Department • ~7X 2010 EBITDA of Justice • ~64% cash • ~36% AT&T shares • Expect transaction to close in ~12 months • Stock consideration subject to collar Funding considerations • Customary lock-up peri
Slide 34: Improved Business Mix: Increased Exposure to Mobile Broadband Growth
Improved Business Mix: Increased Exposure to Mobile Broadband Growth Combined 2010 Totals 2010 Combined Revenue Mix AT&T T-Mobile Total Wireless subscribers 96M 34M 130M ~80% from wireless Wireless service + wired data/managed revenues $53.5B $18.7B $72.2B services Total wireless revenues $58.5B $21
Slide 35: Substantial Opportunities, >$3 Billion Run Rate Starting Year Three
Substantial Opportunities, >$3 Billion Run Rate Starting Year Three Expected Synergies, Integration Costs NPV $ in Billions (cash basis) Expense and Revenue Synergies Network >$10B Integration Costs • Redundant cell sites $5.0 • Migration to AT&T transport • Migration to AT&T LD network $4.0 Subscri
Slide 36: Financial Impacts
Financial Impacts Expected EPS Impacts Preliminary view Reported EPS EPS excluding noncash amortization • Purchase accounting with and integration costs amortization of intangibles – Primarily customer lists $0.20 $0.10 – 5-year accelerated basis $(0.00) – Transaction costs expensed $(0.10) $(0.20)
Slide 37: Financial Summary
Financial Summary • Transaction creates substantial shareowner value • Enhances long-term revenue growth and margin potential – Broad LTE mobile broadband combined with existing network capabilities and cloud – Scale and combination of assets provides a path to industry-leading margins • Substantial
Slide 38: Q&A
© 2011 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property. Q&A 38