said its core telecommunications profits are growing even as its Hollywood footprint is about to shrink, underscoring its decision to leave the entertainment business over the coming year.
The media and telecommunications giant said it is focusing on continuing to expand its broadband business and cellphone subscriber base while moving away from satellite-TV and media production. Ahead of that retreat, the company raised its full-year financial projections. The company now expects consolidated revenue growth between 2% and 3%, up from a prior target of about 1% growth.
AT&T in May decided to spin off its media brands—including HBO, CNN, TNT, TBS and the Warner Bros. studio—into a new publicly-traded company with
The move followed a February deal to spin off a 30% stake in AT&T’s pay-TV unit while giving up operational control of the business, which will be called DirecTV upon closing.
“We want to hit a strong exit velocity with both of these businesses, at which point the combination with the right partner only expands to respective opportunities for success,” Chief Executive
said during a call with analysts.
AT&T also put much of its digital advertising business, known as Xandr, on the market in 2020. The company said Wednesday it will sell its remaining satellite-TV operations in Latin America, called Vrio, to Argentina’s Grupo Werthein. The deal, slated to close in 2022, was expected to trigger a $4.6 billion accounting charge for AT&T.
AT&T has boosted its wireless subscriber count over the past year by dangling significant smartphone discounts in exchange for long-term commitments, prompting rivals
Verizon Communications Inc.
T-Mobile US Inc.
to respond with their own promotions.
“We still have a third-place share position in the market,” said
chief of the company’s telecom division. “We’re staying focused on what customers want, and as long as we’re getting a positive response, we’re going to stick with it.”
The discounts, while expensive, helped AT&T post a net gain of 789,000 postpaid phone subscribers during the second quarter. Investors value postpaid plans, which charge customers for service after it is rendered, because account holders tend to provide dependable profits.
Verizon on Wednesday said it gained 275,000 postpaid phone customers during the most recent quarter. T-Mobile is slated to report its results next week.
On the entertainment side, WarnerMedia’s HBO unit ended the quarter with 47 million domestic HBO and HBO Max subscribers, up from 44.2 million three months earlier. Those figures included new subscribers to HBO Max as well as customers paying for traditional HBO service, usually through a cable distributor.
WarnerMedia revenue was up about 31% in the most recent quarter, reflecting a partial recovery from the impact of the pandemic as advertising sales returned. The entertainment company also highlighted higher content sales and more revenue from subscriptions as HBO Max grew.
AT&T in May decided to spin off its media brands—including HBO, CNN, TNT, TBS and the Warner Bros. studio—into a new publicly traded company with Discovery Inc. The move followed a February deal to spin off a 30% stake in AT&T’s pay-TV unit while giving up operational control of the business, which will be called DirecTV upon closing. AT&T also put much of its digital advertising business, known as Xandr, on the market in 2020.
The company said Wednesday that it will sell its remaining satellite-TV operations in Latin America, called Vrio, to Argentina’s Grupo Werthein. The deal, slated to close in 2022, was expected to trigger a $4.6 billion accounting charge for AT&T.
Overall net income attributable to AT&T reached about $1.87 billion, or 21 cents a share, up from $1.23 billion, or 17 cents a share, a year earlier, when write-downs, severance costs and other accounting adjustments hurt earnings. Total revenue rose 7.6% to $44 billion.
The company’s reported net debt fell by nearly $1 billion from about $169 billion at the end of the prior quarter. Chief Financial Officer
said he expects the DirecTV stake sale to close next month, allowing the company to start paying off more debt in the years ahead.
“There’s a lot of noise around the company and in the popular media, but those who really choose to focus on what we’ve done in the last year should come away saying, ‘This a company that’s really focused, they’re executing and the future is much brighter than the past,’ ” Mr. Desroches said.
AT&T also raised its full-year earnings guidance, calling for an adjusted earnings per share growth in the low- to mid-single digits. The company had previously projected unchanged per-share earnings compared with 2020. It also boosted its full-year free cash flow guidance by $1 billion to about $27 billion.
Those projections didn’t account for the pending sale of the DirecTV stake, however. AT&T said the sale would drop 2021 free cash flow back to $26 billion and cut $9 billion of annual revenue off its income statement if the deal closes in the coming weeks. Adjusted earnings would continue to grow as projected.
AT&T became the third-largest U.S. wireless network operator after T-Mobile US took the No. 2 spot last year by acquiring Sprint Corp.
Dish Network Corp.
has made strides through a Justice Department-brokered deal to build a fourth national system. Some of its cell towers are slated to go live later this year.
AT&T earlier this month struck a deal to carry Dish’s cellphone network traffic, which includes Boost Mobile, on its wireless network, as both companies seek to expand in—or, in Dish Network’s case, enter—the 5G realm.
Dallas-based AT&T is doubling down on its core network operations as it prepares to merge WarnerMedia with Discovery next year. Chief Executive John Stankey has said the move will better satisfy a more cautious telecommunications investor base while allowing the hived-off media company to pursue a more aggressive growth strategy abroad.
The split will also allow AT&T to cut its shareholder dividend, which cost it about $15 billion last year.
WarnerMedia is vying with
Walt Disney Co.
and others to amass a streaming media presence that can match the world-wide reach of
Its effort is complicated by deep-pocketed tech companies such as
that are spending tens of billions of dollars a year on media content.
Including accounts abroad, AT&T said global HBO subscriptions reached 67.5 million. The company projected world-wide subscriptions will reach 70 million to 73 million by the end of 2021, driven by its expansion into Latin America and Europe.
Write to Drew FitzGerald at firstname.lastname@example.org
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