John Stankey, president and chief operating officer of AT&T Inc.* (NYSE:T, news, filings), and CEO, Warner Media LLC, spoke today at the UBS Global TMT Conference during which he provided an update to shareholders.
Share retirements. Stankey said that AT&T began retiring shares in the fourth quarter. The company expects these share retirements will help offset the impact to EPS in the fourth quarter from HBO Max investments. Stankey also announced that the company has entered into a $4 billion accelerated share repurchase agreement to retire about 100 million shares in the first quarter of 2020.
Cost initiatives. Stankey said that the company is focused on exceeding its recent typical annual 6% to 8% reduction in network operational costs. Stankey said the company has set a 2020 target of an additional 4% in cost reductions, or about $1.5 billion, driven primarily by lower labor-related costs and corporate overhead.
Capital allocation. In addition to retiring shares, AT&T plans to continue to invest in both capital and content while also continuing modest annual dividend growth.
By the end of 2022, AT&T expects to have retired 100% of the debt it incurred to fund the acquisition of Time Warner, with plans to reach a net debt-to-adjusted EBITDA ratio in the 2.0x to 2.25x range, which it believes should result in an upgrade to its debt ratings.
AT&T will also continue to review its portfolio to achieve its asset monetization target of $5 billion to $10 billion in 2020. Potential sales include AT&T’s regional sports networks, additional real estate transactions and additional tower sales. The company expects the previously announced monetization of its stake in Central European Media and the sale of its Puerto Rico wireless operations to close by the middle of 2020. AT&T also recently raised about $1.2 billion from a preferred equity offering.
2019 Commitments. Stankey said the company expects to deliver on all of its 2019 commitments.