AT&T Inc. · NYSE:T
AT&T — Q2 2007 Earnings Presentation
22 slides from AT&T's earnings presentation, Jul 24, 2007
Slide 1: AT&T Investor Update
AT&T Investor Update 2Q07 Earnings Conference Call July 24, 2007
Slide 2: Agenda
Agenda Introduction Rich Dietz Senior Vice President - Investor Relations Results Rick Lindner Senior Executive Vice President and Chief Financial Officer Qs and As 2 AT&T Inc. 2Q07 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 might differ materially. A discussion of factors that may affect futu
Slide 4: EPS Summary
EPS Summary 2Q07 2Q06 Reported EPS $0.47 $0.46 Adjustments: Adjusted EPS up 20.7% Merger integration and 0.21 0.12 amortization costs 85% of 2Q07 adjustments Advertising & Publishing purchase noncash accounting effect 0.02 0.00 Adjusted EPS $0.70 $0.58 Pretax adjustments to earnings: In 2Q06, merger
Slide 5: Rick Lindner
Rick Lindner Senior Executive Vice President and Chief Financial Officer AT&T Inc.
Slide 6: 2Q07 Highlights
2Q07 Highlights • Further ramp in revenue growth • Accelerated wireless growth • Significant improvement in enterprise trends • U-verse video rollout on schedule • Merger integration and synergies on track • Strong free cash flow • $10 billion share repurchase completed in early July, ahead of sched
Slide 7: EPS Growth, Margin Expansion
EPS Growth, Margin Expansion Adjusted Adjusted Operating EPS Income Margin $0.70 23.9% • Improved margin outlook: expect to 19.0% continue to operate at $0.58 the top end of 23% – 24% margin range for 2007 • Reaffirm adjusted EPS outlook: double-digit growth in 2007 and 2008 2Q06 2Q07 2Q06 2Q07 $0.4
Slide 8: Merger Integration Progressing as Planned
Merger Integration Progressing as Planned AT&T and BellSouth $1.9 billion in merger Merger Cost Synergy Run Rates Expense and Capital integration savings in ($ in billions) the first half of 2007, approximately one-third Incremental Target >$6.0 capital and two-thirds Achieved >$5.0 expense • Suppor
Slide 9: Further Ramp in Revenue Growth
Further Ramp in Revenue Growth Consolidated Adjusted Revenue Growth Rates (Year-Over-Year Pro Forma) 2.0% • Accelerated wireless growth 1.7% 1.3% • Improved enterprise trends • Growth in both regional 0.5% consumer and business • Revenue growth excluding national mass markets (0.5%) at 3.4% 2Q06 3Q0
Slide 10: Accelerated Wireless Revenue Growth
Accelerated Wireless Revenue Growth Wireless Service Revenues (Year-Over-Year Growth Rates) Strong ARPU increases and subscriber gains drive accelerated growth Total wireless 14.9% subscribers 13.5% • 1.5 million net subscriber (in millions) 13.0% gain in 2Q07, up 22% 12.2% from 1Q07 63.7 62.2 • Tot
Slide 11: Wireless Data Growth
Wireless Data Growth Wireless Data Revenues Robust growth: wireless ($ in millions) data revenues up 66.9% year over year $1,651 Active data users • Strong gains across all data $1,456 (in millions) products: messaging, $1,288 e-mail, downloads, media 36.8 bundles, Internet and data $1,106 access $9
Slide 12: Compelling New Wireless Products
Compelling New Wireless Products In the market: • Apple iPhone • Video Share • Blackberry Curve • The most compelling portfolio of devices In the pipeline: • New thin 3G devices • Broadcast TV 12 AT&T Inc. 2Q07 Earnings Conference Call
Slide 13: Continued Reductions in Wireless Churn
Continued Reductions in Wireless Churn Postpaid Average Monthly Churn Network reliability, industry leading coverage, high-quality 1.5% 1.5% 1.5% customer care are reflected 1.3% in higher levels of customer 1.2% satisfaction and lower churn • Total and postpaid churn have 2Q06 3Q06 4Q06 1Q07 2Q07 b
Slide 14: Wireless Operating Income and OIBDA Growth
Wireless Operating Income and OIBDA Growth Adjusted Adjusted OIBDA Operating ($ in billions) Income $3.6 AT&T Wireless Margins ($ in billions) Versus Versus 2Q07 1Q07 2Q06 Operating $2.6 $2.7 Income Reported 15.4% 20bp 440bp $1.5 Adjusted 24.9% (60)bp 850bp Service OIBDA Reported 35.8% (170)bp 420bp
Slide 15: Substantial Improvement in Enterprise Trajectory
Substantial Improvement in Enterprise Trajectory Recurring Enterprise Service Improvement driven by Revenues – YOY Growth Rates continued solid demand, Excludes sold payphone unit, strong double-digit growth USi and CPE sales (0.9)% in IP data services revenues • Growth driven by VPN, managed (3.1)%
Slide 16: Regional Business Growth
Regional Business Growth Regional Business Revenues Regional business 2006 Pro Forma revenue growth of 4.5%; ($ in billions) small/medium business Regional business data revenues up more revenues ($ in millions) $3.07 $3.11 than 6% $3.02 $3.04 $2.97 • Double-digit growth in IP data, $895 led by DSL,
Slide 17: Stable Regional Consumer Revenues
Stable Regional Consumer Revenues Total Consumer Connections Retail Access Lines, High Speed Internet and Video Growth in consumer revenue 2005 and 2006 Pro Forma (in millions) 49.6 connections with increasing 49.3 48.7 48.9 broadband penetration 48.6 supports stable revenues • 946,000 net increase
Slide 18: Bundled Video Growth
Bundled Video Growth Consumer Video Penetration Continued strong video Bundled Satellite and U-verse Video SM net adds, accelerated Subscribers as a Percentage of Consumer Primary Lines 5.9% growth in both bundled satellite and U-verse 5.2% video 4.6% 4.2% • 200,000 net gain 3.8% in total video subs
Slide 19: Accelerated Ramp in AT&T U-verse Video
Accelerated Ramp in AT&T U-verse Video U-verse Services Now Available AT&T U-verse Video in 23 Metro Areas Subscribers In Service (in thousands) 51 Milwaukee Detroit Hartford Stamford Racine Ann Arbor Cleveland San Francisco/ New Haven Oakland Muncie Akron San Jose/ Indianapolis Santa Clara Anderson
Slide 20: Cash Generation, Value Returned to Shareowners
Cash Generation, Value Returned to Shareowners Strong cash from operations Cash Summary provides flexibility to return ($ in billions) 2Q07 1H07 value to shareowners Cash from Operations $10.4 $15.0 • 2007 free cash flow after Capital Expenditures $4.1 $7.5 dividends now expected to be in $5 billion
Slide 21: AT&T 2Q07 Summary
AT&T 2Q07 Summary Merger Integration Further Ramp Strong Earnings, Solidly on Track in Revenue Growth Cash Flow Growth • $1.9 billion in merger • 2.0% consolidated • $0.70 adjusted synergy cost savings pro forma revenue EPS, up 20.7% realized in first half growth, 3.4% growth excluding National • $3
Slide 22: AT&T Investor Update
AT&T Investor Update 2Q07 Earnings Conference Call July 24, 2007