AT&T CFO Updates Shareholders at Deutsche Bank Conference
Desroches reiterated AT&T’s growth strategy — introduced at the company’s Analyst & Investor Day on March 11 — for the standalone company following the pending close of the WarnerMedia transaction. AT&T intends to become America’s best broadband provider, underpinned by a best-in-class network with fiber at its foundation and integrated with wireless.
AT&T has announced that it expects to:
- Drive additional wireless subscriber growth by maintaining its consistent go-to-market strategy, increasing penetration in underserved customer segments and cross-selling wireless services into its expanding fiber footprint.
- Continue to optimize its cost structure via ongoing transformation initiatives, with opportunities to drive an additional $2.5 billion in cumulative cost savings over the next 2 years to reach its previously announced goal of $6 billion in run-rate cost savings by the end of 2023.
- Maintain a total-return oriented capital allocation strategy with a focus on investing for growth — with capital investment in the $24 billion range for 2022 and 2023 — and strengthening its balance sheet. 1 At the same time, AT&T will deliver returns to shareholders via an attractive dividend near the top of the Fortune 500.
In addition to reiterating the company’s 2022 guidance provided last Friday, Desroches discussed near-term business trends. As already stated, the company expects to step up investment in 2022 to support its fiber rollout and mid-band 5G spectrum deployment. This investment in growth, combined with additional investment to support the ongoing rationalization of AT&T’s business wireline portfolio, is expected to drive a corresponding year-over-year increase in capital investment. Additionally, as noted during its analyst day the company expects about $600 million in headwinds to adjusted EBITDA from its 3G shutdown costs and the absence of CAF II credits, weighted to the first half of the year and particularly the first quarter of 2022.2 As these headwinds abate, the company expects its adjusted EBITDA trajectory to improve throughout the year. Desroches also said that AT&T has continued to see healthy trends in wireless sales in the first quarter after leading the industry in postpaid phone net additions in 2021. The company announces first-quarter 2022 earnings on April 21, 2022.