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AT&T (T) Updates on Q3 Expectations; Sees Positive U.S. DIRECTV Net Sub Adds

September 29, 2015 4:42 PM EDT

AT&T (NYSE: T) disclosed the following on Tuesday:

On September 29, 2015, AT&T Inc. provided updated information regarding its third-quarter results in preparation for an analyst conference we will be hosting on September 30.

AT&T reiterated its guidance for full-year adjusted EPS, double-digit revenue growth and continued consolidated margin expansion, even with foreign exchange pressure from the company's international operations. The company also expects capital spending to increase from second-quarter levels and free cash flow (cash from operating activities minus capital expenditures) to be greater than $4.5 billion for the quarter. The Company also reaffirmed all other full-year guidance.

AT&T's wireless performance includes results from both business and consumer customers. AT&T expects more than 2 million total net adds in the third quarter with gains in every customer category (postpaid, prepaid, connected devices and reseller). The Company also expects positive branded voice net adds in the quarter. As a result, and with a continued focus on efficiency initiatives, the Company expects to maintain momentum in wireless service EBITDA margins.

AT&T said its early integration efforts with DIRECTV are going well and are in line or better than expectations. The Company expects to report positive U.S. DIRECTV net adds in the third quarter and positive IP broadband net adds. U-verse TV subscribers are expected to decline as the Company continues to focus on satellite and high-value subscribers.

The Company also said that it is changing the methodology DIRECTV used to count commercial subscribers to conform to AT&T practices. Previously, DIRECTV used a method of counting commercial customers that converted commercial accounts to an equivalent number of residential subscribers based on relative revenues per account. Under the new methodology, the Company will simply count each commercial account as one subscriber. This will reduce DIRECTV's total subscriber count by 918,600 at acquisition close on July 24, 2015. This change has no impact on historical or future revenues, EBITDA or cash flows.

In International, the Company continues to show great progress in its deployment of 4G LTE in Mexico as the Company invests in that country's wireless network. AT&T is on track with reaching its end-of-year goal of covering 40 million POPs. The Company also continues its work on creating operating efficiencies for its Latin America satellite properties, even with foreign exchange pressure.

AT&T will announce its full third-quarter results on Oct. 22.



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