Form 8-K AT&T INC. For: Apr 24

April 24, 2019 6:47 AM

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549
     

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934


Date of report (Date of earliest event reported) April 24, 2019

AT&T INC.
(Exact Name of Registrant as Specified in Charter)


Delaware
1-8610
43-1301883
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)

                      208 S. Akard St., Dallas, Texas
75202
                        (Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number, including area code (210) 821-4105


__________________________________
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 


Item 8.01  Other Events.

Throughout this document, AT&T Inc. is referred to as “we” or “AT&T.” AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications, media and technology industries.

Overview
We announced on April 24, 2019 that first-quarter 2019 net income attributable to AT&T totaled $4.1 billion, or $0.56 per diluted share, compared to $4.7 billion, or $0.75 per diluted share, in the first quarter of 2018. First-quarter 2019 revenues were $44.8 billion, up 17.8 percent from the first quarter of 2018. First-quarter revenues reflect increased revenues primarily from our acquisition of Time Warner Inc. (Time Warner). Compared with results for the first quarter of 2018, current quarter operating expenses were $37.6 billion, up 18.1 percent primarily due to the Time Warner acquisition; first-quarter operating income was $7.2 billion compared to $6.2 billion in the comparable 2018 period; and AT&T’s first-quarter operating income margin was 16.1 percent, compared to 16.3 percent. First-quarter 2019 cash from operating activities was $11.1 billion, up $2.1 billion when compared to 2018, driven by contributions from acquired businesses. Capital expenditures for the first three months of 2019 was $5.2 billion, and when including $820 cash paid for vendor financing, cash paid for capital investment during the first quarter of 2019 was $6.0 billion.

Segment Summary
We analyze our segments based on, among other thing, segment contribution, which consists of operating income, excluding acquisition-related costs and other significant items, and equity in net income (loss) of affiliates for investments managed within each segment. Our reportable segments are: Communications, WarnerMedia, Latin America and Xandr.

Communications
Our Communications segment consists of our Mobility, Entertainment Group and Business Wireline business units. First-quarter 2019 operating revenues were $35.4 billion, down 0.4 percent versus first-quarter 2018, with segment operating contribution of $8.1 billion, up 0.3 percent versus the year-ago quarter. The Communications operating income margin was 22.8 percent, compared to 22.6 percent in the year-earlier quarter.

Mobility
Mobility revenues for the first quarter of 2019 were $17.6 billion, up 1.2 percent versus the first quarter of 2018, with revenue improvement resulting from increased service revenues, partially offset by decreased equipment revenues from lower postpaid smartphone sales. Mobility operating expenses totaled $12.2 billion, up 0.2 percent versus the first quarter of 2018. The increase was driven by higher commission amortization, offset by lower postpaid smartphone volumes and cost efficiencies. Mobility’s operating income margin was 30.5 percent compared to 29.7 percent in the year-ago quarter.

In our Mobility business unit, we reported a net gain of 2.7 million wireless subscribers. At March 31, 2019, wireless subscribers totaled 155.7 million compared to 143.8 million for the prior comparable period. During the first quarter, net adds were as follows:
Prepaid subscriber net adds were 96,000.
Postpaid subscriber net adds were a loss of 204,000.
o
Domestic postpaid phone net adds were 80,000.
Reseller net adds were a loss of 253,000.
Connected device net adds were 3.1 million, 2.0 million of which were primarily attributable to wholesale connected cars.

For the quarter ended March 31, 2019, postpaid phone-only ARPU increased 3.7 percent versus the year-earlier quarter.

Postpaid phone-only churn was 0.93 percent, compared to 0.84 percent in the first quarter of 2018. Total postpaid churn was 1.17 percent, compared to 1.06 percent in the year-ago quarter.


Entertainment Group
Entertainment Group (Entertainment) revenues for the first quarter of 2019 were $11.3 billion, down 0.9 percent versus the year-ago quarter reflecting declines in video subscribers and legacy services. Entertainment operating expenses totaled $9.9 billion, down 2.7 percent versus the first quarter of 2018. The decrease was largely driven by lower marketing costs and volumes, cost initiatives, and a one-time gain from recent content negotiations. Also contributing to expense declines was the impact of a prior update to expected subscriber life on deferral amortization. The Entertainment operating income margin was 13.0 percent compared to 11.5 percent in the year-earlier quarter.

At March 31, 2019, Entertainment revenue connections included:
Approximately 23.9 million video connections (including 1.5 million DIRECTV NOW subscribers) at March 31, 2019 compared to 25.4 million at March 31, 2018. During the first quarter of 2019, including the impact of losses of 83,000 from DIRECTV NOW, total video subscribers decreased 627,000.
Approximately 14.5 million broadband connections at March 31, 2019 compared to 14.4 million at March 31, 2018. During the first quarter, we added 93,000 IP broadband subscribers, for a total of 13.8 million at March 31, 2019.

In the first quarter, we aligned our Entertainment Group billing practices with the industry and AT&T Mobility to extend a customer’s disconnection period to the end of his or her billing cycle, resulting in an increase of a net 38,000 broadband subscribers and a net 117,000 video subscribers in the period. 

Business Wireline
Business Wireline (Business) revenues have been recast to conform to the current period’s presentation, most significantly to combine strategic and managed services, which historically had been reported as “other.” Business revenues for the first quarter of 2019 were $6.5 billion, down 3.7 percent versus the year-ago quarter reflecting continued declines in legacy revenues, partially offset by growth in strategic and managed services. Business operating expenses totaled $5.3 billion, up 1.7 percent versus the first quarter of 2018, largely driven by increased depreciation expense. Business operating income margin was 18.8 percent compared to 23.1 percent in the year-earlier quarter.

At March 31, 2019, our total switched access lines (Entertainment and Business) were 9.6 million compared with 11.3 million at March 31, 2018. The number of U-verse voice connections (which use VoIP technology and therefore are not included in the access line total) decreased by 178,000 in the quarter, totaling 4.9 million at March 31, 2019, compared to 5.6 million at March 31, 2018.

WarnerMedia
Our WarnerMedia segment results are not comparable to the year-ago quarter due to the timing of our June 2018 acquisition of Time Warner. WarnerMedia segment operating revenues for the first quarter of 2019 were $8.4 billion. During the quarter, subscription revenues were $3.4 billion, comprised of $2.0 billion from the Turner properties and $1.3 billion from Home Box Office (HBO), and advertising revenues were $1.3 billion. Content and other revenues were $3.7 billion, with $1.5 billion from theatrical product and $1.6 billion from television product at Warner Bros.

WarnerMedia segment operating expenses were $6.1 billion, which include programming and film costs of $3.6 billion. Programming and film costs were comprised of $1.9 billion of original and sports programming, reflecting National Collegiate Athletic Association (NCAA) and National Basketball Association (NBA) programming costs that are typically more significant in the first half of the year and film and television production costs of $1.7 billion. The WarnerMedia segment operating income margin was 26.8 percent.

Latin America
Our Latin America segment consists of our Vrio and Mexico business units and is subject to foreign currency fluctuations. First-quarter 2019 operating revenues were $1.7 billion, down 15.2 percent versus the prior year, with segment operating contribution of $(173) million, versus $(111) million in the comparable 2018 period. The Latin America operating income margin was (10.1) percent, compared to (5.5) percent in the year-earlier quarter.


Vrio
Video service revenues were $1.1 billion, down 21.2 percent versus the prior year, driven by foreign exchange pressures. Operating expenses were $1.0 billion, down 14.2 percent and Vrio’s operating income margin was 3.0 percent, compared to 10.9 percent in the year-earlier quarter.

We had approximately 13.6 million Latin America video connections at March 31, 2019 and 2018. During the first quarter of 2019, video net adds were a loss of 32,000. Video connections reflect a beginning of period subscriber adjustment of 222,000, resulting from conforming our video credit policy across the region.

Mexico
Wireless revenues were $651 million, down 3.0 percent when compared to the first quarter of 2018. Decreased revenues were primarily due to lower equipment sales resulting from the introduction of our equipment installment purchase program in the prior year, which were partially offset by service revenue growth. Operating expenses were $856 million, down 8.0 percent and Mexico’s operating income margin was (31.5) percent, compared to (38.6) percent in the year-earlier quarter.

We had approximately 17.7 million Mexican wireless subscribers at March 31, 2019 compared to 15.6 million at March 31, 2018. During the first quarter of 2019, we had prepaid net adds of 114,000 and postpaid net adds were a loss of 69,000. Wireless subscribers reflect a beginning of period subscriber adjustment of 692,000, resulting from the churn of customers related to sales by certain third-party distributors and the sunset of 2G services in Mexico.

Xandr
Our Xandr segment provides advertising services utilizing data insights to develop higher-value targeted advertising. Certain revenues in this segment are also reported by the Communications segment and are eliminated upon consolidation. First-quarter 2019 operating revenues were $426 million, up 26.4 percent versus the prior year, reflecting the acquisition of AppNexus. Operating expenses were $173 million, versus $51 in the comparable prior-year, driven by costs associated with scaling the business. Xandr segment operating contribution was $253 million, down 11.5 percent versus first-quarter 2018. The Xandr segment operating income margin was 59.4 percent, compared to 84.9 percent in the year-earlier quarter.

Supplemental Discussions
As a supplemental discussion of our operating results, for comparison purposes, we are providing (1) our AT&T Business Solutions results which include both wireless and wireline operations and (2) a combined view of reported advertising revenues across all segments of AT&T. A reconciliation of the non-GAAP numbers in this supplemental discussion is attached as exhibit 99.2 hereto.

AT&T Business Solutions
Revenues from AT&T Business Solutions for the first quarter of 2019 were $9.0 billion, down 1.2 percent versus the year-ago quarter driven by declines in our legacy voice and data services, partially offset by growth in strategic and managed services and wireless service revenues. Operating expenses totaled $7.2 billion, up 1.8 percent versus the first quarter of 2018, largely due to commission deferrals and increased cost efficiencies, partially offset by wireless sales costs. AT&T Business Solutions operating income margin was 20.3 percent, compared to 22.6 percent in the year-earlier quarter.

AT&T Advertising Revenues
Total AT&T Advertising revenues for the first quarter of 2019 were $1.8 billion compared to $392 million in the year-ago quarter, with the increase primarily driven by our acquisition of Time Warner, specifically Turner.



CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Information set forth in this filing contains financial estimates and other forward-looking statements that are subject to risks and uncertainties. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this filing based on new information or otherwise.


Item 9.01 Financial Statements and Exhibits.

The following exhibits are filed as part of this report:

(d)   Exhibits











Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
AT&T INC.
   
   
   
Date: April 24, 2019
By: /s/ Debra L. Dial                                   
       Debra L. Dial
Senior Vice President and Controller

 

 

 

AT&T Inc.

 

 

 

 

 

 

 

Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income

Dollars in millions except per share amounts

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2019

 

2018

 

Change

Operating Revenues

 

 

 

 

 

 

 

  Service

 

$

40,684

$

33,646

 

20.9

%

  Equipment

 

 

4,143

 

4,392

 

(5.7)

%

    Total Operating Revenues

 

44,827

 

38,038

 

17.8

%

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

   Cost of revenues

 

 

 

 

 

 

 

    Equipment

 

4,502

 

4,848

 

(7.1)

%

    Broadcast, programming and operations

 

7,652

 

5,166

 

48.1

%

    Other cost of revenues (exclusive of depreciation

          and amortization shown separately below)

 

8,585

 

7,932

 

8.2

%

   Selling, general and administrative

 

9,649

 

7,897

 

22.2

%

   Depreciation and amortization

 

7,206

 

5,994

 

20.2

%

    Total Operating Expenses

 

37,594

 

31,837

 

18.1

%

Operating Income

 

7,233

 

6,201

 

16.6

%

Interest Expense

 

2,141

 

1,771

 

20.9

%

Equity in Net Income (Loss) of Affiliates

 

(7)

 

9

 

-

%

Other Income (Expense) - Net

 

286

 

1,702

 

(83.2)

%

Income Before Income Taxes

 

5,371

 

6,141

 

(12.5)

%

Income Tax Expense

 

1,023

 

1,382

 

(26.0)

%

Net Income

 

4,348

 

4,759

 

(8.6)

%

 Less: Net Income Attributable to

    Noncontrolling Interest

 

(252)

 

(97)

 

-

%

Net Income Attributable to AT&T

$

4,096

$

4,662

 

(12.1)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Earnings Per Share Attributable to AT&T

$

0.56

$

0.75

 

(25.3)

%

   Weighted Average Common

       Shares Outstanding (000,000)

 

7,313

 

6,161

 

18.7

%

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share Attributable to AT&T

$

0.56

$

0.75

 

(25.3)

%

   Weighted Average Common 

       Shares Outstanding with Dilution (000,000)

 

7,342

 

6,180

 

18.8

%




 

 

AT&T Inc.

 

 

 

 

 

Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets

Dollars in millions

 

Unaudited

 

Mar. 31,

 

 

Dec. 31,

 

 

 

2019

 

 

2018

Assets

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and cash equivalents

$

6,516

 

$

5,204

Accounts receivable - net of allowances for doubtful accounts of $905 and $907

 

23,863

 

 

26,472

Prepaid expenses

 

1,518

 

 

2,047

Other current assets

 

14,575

 

 

17,704

Total current assets

 

46,472

 

 

51,427

Noncurrent Inventories and Theatrical Film and Television Production Costs

 

10,270

 

 

7,713

Property, Plant and Equipment – Net

 

132,051

 

 

131,473

Goodwill

 

146,434

 

 

146,370

Licenses – Net

 

97,001

 

 

96,144

Trademarks and Trade Names – Net

 

24,218

 

 

24,345

Distribution Networks – Net

 

16,623

 

 

17,069

Other Intangible Assets – Net

 

24,732

 

 

26,269

Investments in and Advances to Equity Affiliates

 

6,230

 

 

6,245

Operating Lease Right-of-Use Assets

 

20,235

 

 

-

Other Assets

 

24,118

 

 

24,809

Total Assets

$

548,384

 

$

531,864

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Debt maturing within one year

$

11,538

 

$

10,255

Accounts payable and accrued liabilities

 

42,306

 

 

43,184

Advanced billings and customer deposits

 

5,956

 

 

5,948

Accrued taxes

 

1,130

 

 

1,179

Dividends payable

 

3,722

 

 

3,854

Total current liabilities

 

64,652

 

 

64,420

Long-Term Debt

 

163,942

 

 

166,250

Deferred Credits and Other Noncurrent Liabilities

 

 

 

 

 

Deferred income taxes

 

59,207

 

 

57,859

Postemployment benefit obligation

 

19,664

 

 

19,218

Operating lease liabilities

 

18,253

 

 

-

Other noncurrent liabilities

 

27,715

 

 

30,233

Total deferred credits and other noncurrent liabilities

 

124,839

 

 

107,310

Stockholders’ Equity

 

 

 

 

 

Common stock

 

7,621

 

 

7,621

Additional paid-in capital

 

125,174

 

 

125,525

Retained earnings

 

59,424

 

 

58,753

Treasury stock

 

(11,452)

 

 

(12,059)

Accumulated other comprehensive income

 

4,345

 

 

4,249

Noncontrolling interest

 

9,839

 

 

9,795

Total stockholders’ equity

 

194,951

 

 

193,884

Total Liabilities and Stockholders' Equity

$

548,384

 

$

531,864

 

 

 

 

 

 

 



 

AT&T Inc.

 

 

 

 

 

Financial Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows

Dollars in millions

 

Unaudited

First Quarter

 

 

 

2019

 

 

2018

Operating Activities

 

 

 

 

 

Net income

$

4,348

 

$

4,759

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

7,206

 

 

5,994

 

Amortization of film and television costs

 

2,497

 

 

-

 

Undistributed earnings from investments in equity affiliates

 

112

 

 

(2)

 

Provision for uncollectible accounts

 

592

 

 

438

 

Deferred income tax expense (benefit)

 

1,069

 

 

1,222

 

Net (gain) loss from investments, net of impairments

 

(175)

 

 

2

 

Actuarial (gain) loss on pension and postretirement benefits

 

432

 

 

(930)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

1,894

 

 

(439)

 

Other current assets, inventories and theatrical film and television production costs

 

(2,510)

 

 

614

 

Accounts payable and other accrued liabilities

 

(3,686)

 

 

(1,962)

 

Equipment installment receivables and related sales

 

652

 

 

505

 

Deferred customer contract acquisition and fulfillment costs

 

(375)

 

 

(826)

Retirement benefit funding

 

-

 

 

(140)

Other - net

 

(1,004)

 

 

(288)

Total adjustments

 

6,704

 

 

4,188

Net Cash Provided by Operating Activities

 

11,052

 

 

8,947

 

 

 

 

 

Investing Activities

 

 

 

 

 

Capital expenditures:

 

 

 

 

 

 

Purchase of property and equipment

 

(5,121)

 

 

(5,957)

 

Interest during construction

 

(61)

 

 

(161)

Acquisitions, net of cash acquired

 

(213)

 

 

(234)

Dispositions

 

10

 

 

56

(Purchases) sales of securities, net

 

(1)

 

 

(116)

Advances to and investments in equity affiliates, net

 

(15)

 

 

(1,007)

Cash collections of deferred purchase price

 

-

 

 

267

Net Cash Used in Investing Activities

 

(5,401)

 

 

(7,152)

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

Net change in short-term borrowings with original maturities of three months or less

 

(256)

 

 

-

Issuance of other short-term borrowings

 

296

 

 

-

Repayment of other short-term borrowings

 

(176)

 

 

-

Issuance of long-term debt

 

9,182

 

 

2,565

Repayment of long-term debt

 

(9,840)

 

 

(4,911)

Purchase of treasury stock

 

(189)

 

 

(145)

Issuance of treasury stock

 

167

 

 

11

Dividends paid

 

(3,714)

 

 

(3,070)

Other

 

109

 

 

2,048

Net Cash Used in Financing Activities

 

(4,421)

 

 

(3,502)

Net increase (decrease) in cash and cash equivalents and restricted cash

 

1,230

 

 

(1,707)

Cash and cash equivalents and restricted cash beginning of year

 

5,400

 

 

50,932

Cash and Cash Equivalents and Restricted Cash End of Period

$

6,630

 

$

49,225

 

 

 

 

 

 

 




 

AT&T Inc.

Consolidated Supplementary Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary Financial Data

Dollars in millions except per share amounts

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2019

 

2018

 

Change

Capital expenditures

 

 

 

 

 

 

 

 

Purchase of property and equipment

$

5,121

$

5,957

 

(14.0)

%

 

Interest during construction

 

61

 

161

 

(62.1)

%

Total Capital Expenditures

$

5,182

$

6,118

 

(15.3)

%

 

 

 

 

 

 

 

 

 

Dividends Declared per Share

$

0.51

$

0.50

 

2.0

%

 

 

 

 

 

 

 

 

 

End of Period Common Shares Outstanding (000,000)

 

7,297

 

6,148

 

18.7

%

Debt Ratio

 

47.4

%

52.6

%

(520)

BP

Total Employees

 

262,290

 

249,240

 

5.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplementary Operating Data

Subscribers and connections in thousands

 

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2019

 

2018

 

Change

Wireless Subscribers

 

 

 

 

 

 

 

 

Domestic

 

155,732

 

143,832

 

8.3

%

 

Mexico

 

17,722

 

15,642

 

13.3

%

Total Wireless Subscribers

 

173,454

 

159,474

 

8.8

%

 

 

 

 

 

 

 

 

 

Video Connections

 

 

 

 

 

 

 

 

Domestic

 

23,891

 

25,394

 

(5.9)

%

 

Latin America

 

13,584

 

13,573

 

0.1

%

Total Video Connections

 

37,475

 

38,967

 

(3.8)

%

 

 

 

 

 

 

 

 

 

Broadband Connections

 

 

 

 

 

 

 

 

IP

 

14,852

 

14,637

 

1.5

%

 

DSL

 

885

 

1,138

 

(22.2)

%

Total Broadband Connections

 

15,737

 

15,775

 

(0.2)

%

 

 

 

 

 

 

 

 

 

Voice Connections

 

 

 

 

 

 

 

 

Network Access Lines

 

9,576

 

11,288

 

(15.2)

%

 

U-verse  VoIP Connections

 

4,935

 

5,585

 

(11.6)

%

Total Retail Voice Connections

 

14,511

 

16,873

 

(14.0)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

Percent

 

 

 

2019

 

2018

 

Change

Wireless Net Additions

 

 

 

 

 

 

 

 

Domestic

 

2,727

 

2,630

 

3.7

%

 

Mexico

 

93

 

543

 

(82.9)

%

Total Wireless Net Additions

 

2,820

 

3,173

 

(11.1)

%

 

 

 

 

 

 

 

 

 

Video Net Additions

 

 

 

 

 

 

 

 

Domestic

 

(626)

 

124

 

-

%

 

Latin America

 

(32)

 

(15)

 

-

%

Total Video Net Additions

 

(658)

 

109

 

-

%

 

 

 

 

 

 

 

 

 

Broadband Net Additions

 

 

 

 

 

 

 

 

IP

 

100

 

150

 

(33.3)

%

 

DSL

 

(64)

 

(94)

 

31.9

%

Total Broadband Net Additions

 

36

 

56

 

(35.7)

%





COMMUNICATIONS SEGMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Communications segment provides wireless and wireline telecom, video and broadband services to consumers located in the U.S. or in U.S. territories and businesses globally. The Communications segment contains three reporting units: Mobility, Entertainment Group, and Business Wireline.

 

 

 

 

 

 

 

 

 

Segment Results

Dollars in millions

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2019

 

2018

 

Change

Segment Operating Revenues

 

 

 

 

 

 

 

 

Mobility

 $  

17,567

 $  

17,355

 

1.2

 %  

 

Entertainment Group

 

11,328

 

11,431

 

(0.9)

%

 

Business Wireline

 

6,498

 

6,747

 

(3.7)

 %  

    Total Segment Operating Revenues

 

35,393

 

35,533

 

(0.4)

%

 

 

 

 

 

 

 

 

 

Segment Operating Contribution

 

 

 

 

 

 

 

 

Mobility

 

5,351

 

5,158

 

3.7

 %  

 

Entertainment Group

 

1,478

 

1,309

 

12.9

%

 

Business Wireline

 

1,223

 

1,560

 

(21.6)

 %  

    Total Segment Operating Contribution

$

8,052

$

8,027

 

0.3

%

 

 

 

 

 

 

 

 

 



Mobility

 

 

 

 

 

 

 

 

 

Mobility provides nationwide wireless service and equipment.

 

 

 

 

 

 

 

 

 

Mobility Results

Dollars in millions

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2019

 

2018

 

Change

Operating Revenues

 

 

 

 

 

 

 

Service

 $  

13,792

 $  

13,403

 

2.9

%

Equipment

 

3,775

 

3,952

 

(4.5)

%

    Total Operating Revenues

 

17,567

 

17,355

 

1.2

%

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Operations and support

 

10,181

 

10,102

 

0.8

%

Depreciation and amortization

 

2,035

 

2,095

 

(2.9)

 %  

    Total Operating Expenses

 

12,216

 

12,197

 

0.2

%

Operating Income

 

5,351

 

5,158

 

3.7

 %  

Equity in Net Income (Loss) of Affiliates

 

-

 

-

 

-

%

Operating  Contribution

$

5,351

$

5,158

 

3.7

 %  

 

 

 

 

 

 

 

 

 

Operating Income Margin

 

30.5

%

29.7

%

80

BP

 

 

 

 

 

 

 

 

 

Supplementary Operating Data

Subscribers and connections in thousands

 

 

 

 

Unaudited

First Quarter

Percent

 

 

 

2019

 

2018

 

Change

Mobility Subscribers

 

 

 

 

 

 

 

Postpaid

 

76,550

 

77,431

 

(1.1)

%

Prepaid

 

17,180

 

15,671

 

9.6

%

Reseller

 

7,574

 

9,002

 

(15.9)

%

Connected Devices

 

54,428

 

41,728

 

30.4

%

Total Mobility Subscribers

 

155,732

 

143,832

 

8.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

Percent

 

 

 

2019

 

2018

 

Change

Mobility Net Additions

 

 

 

 

 

 

 

Postpaid

 

(204)

 

49

 

-

%

Prepaid

 

96

 

241

 

(60.2)

%

Reseller

 

(253)

 

(388)

 

34.8

%

Connected Devices

 

3,088

 

2,728

 

13.2

%

Total Mobility Net Additions

 

2,727

 

2,630

 

3.7

%

 

 

 

 

 

 

 

 

Postpaid Churn

 

1.17

%

1.06

%

11

BP

Postpaid Phone-Only Churn

 

0.93

%

0.84

%

9

BP



Entertainment Group

 

 

 

 

 

 

 

 

 

 

 

Entertainment Group provides video, including over-the-top (OTT) services, broadband and voice communication services primarily to residential customers. This business unit also sells advertising on video distribution platforms.

 
 

 

 

 

 

 

 

 

 

 

 

Entertainment Group Results

 

Dollars in millions

 

 

 

 

Unaudited

First Quarter

Percent

 

 

 

 

2019

 

2018

 

Change

 

 Operating Revenues

 

 

 

 

 

 

 

 

Video entertainment

 $  

8,074

 $  

8,225

 

(1.8)

 %  

 

High-speed internet

 

2,070

 

1,878

 

10.2

%

 

Legacy voice and data services

 

683

 

806

 

(15.3)

 %  

 

Other service and equipment

 

501

 

522

 

(4.0)

%

 

Total Operating Revenues

 

11,328

 

11,431

 

(0.9)

 %  

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

Operations and support

 

8,527

 

8,811

 

(3.2)

%

 

Depreciation and amortization

 

1,323

 

1,310

 

1.0

 %  

 

Total Operating Expenses

 

9,850

 

10,121

 

(2.7)

%

 

Operating Income

 

1,478

 

1,310

 

12.8

 %  

 

Equity in Net Income (Loss) of Affiliates

 

-

 

(1)

 

-

%

 

Operating Contribution

$

1,478

 $  

1,309

 

12.9

 %  

 

 

 

 

 

 

 

 

 

 

 

Operating Income Margin

 

13.0

%

11.5

%

150

BP

 

 

 

 

 

 

 

 

 

 

 

Supplementary Operating Data

 

Subscribers and connections in thousands

 

 

 

 

Unaudited

First Quarter

Percent

 

 

 

 

2019

 

2018

 

Change

 

Video Connections1

 

 

 

 

 

 

 

 

Premium TV

 

22,359

 

23,902

 

(6.5)

%

 

DIRECTV NOW

 

1,508

 

1,467

 

2.8

%

 

Total Video Connections

 

23,867

 

25,369

 

(5.9)

%

 

 

 

 

 

 

 

 

 

 

 

Broadband Connections1

 

 

 

 

 

 

 

 

IP

 

13,822

 

13,616

 

1.5

%

 

DSL

 

632

 

816

 

(22.5)

%

 

Total Broadband Connections

 

14,454

 

14,432

 

0.2

%

 

 

 

 

 

 

 

 

 

 

 

Voice Connections

 

 

 

 

 

 

 

 

Retail Consumer Switched Access Lines

 

3,787

 

4,535

 

(16.5)

%

 

U-verse Consumer VoIP Connections

 

4,393

 

5,105

 

(13.9)

%

 

Total Retail Consumer Voice Connections

 

8,180

 

9,640

 

(15.1)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

First Quarter

Percent

 

 

 

 

2019

 

2018

 

Change

 

Video Net Additions1,2

 

 

 

 

 

 

 

 

Premium TV

 

(544)

 

(187)

 

-

%

 

DIRECTV NOW

 

(83)

 

312

 

-

%

 

Total Video Net Additions

 

(627)

 

125

 

-

%

 

 

 

 

 

 

 

 

 

 

 

Broadband Net Additions1

 

 

 

 

 

 

 

 

IP

 

93

 

154

 

(39.6)

%

 

DSL

 

(48)

 

(72)

 

33.3

%

 

Total Broadband Net Additions

 

45

 

82

 

(45.1)

 %  

 

 

 

 

 

 

 

 

 

 

 

1

2019 includes the impact of conforming our subscriber disconnection policy with that of our wireless business and industry

 

 

practice (to billing cycle basis), resulting in 117 additional video and 38 additional broadband subscribers at March 31, 2019.

 

2

Includes the impact of customers that migrated to DIRECTV NOW.

 


Business Wireline

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Wireline unit provides advanced IP-based services, as well as traditional data services to business customers. Revenues have been recast to conform to the current period's presentation.

 

 

 

 

 

 

 

 

 

Business Wireline Results

Dollars in millions

 

 

 

Unaudited

First Quarter

Percent

 

 

2019

 

2018

 

Change

Operating Revenues

 

 

 

 

 

 

 

 

Strategic and managed services

 $  

3,792

 $  

3,595

 

5.5

 %  

 

Legacy voice and data services

 

2,404

 

2,865

 

(16.1)

%

 

Other service and equipment

 

302

 

287

 

5.2

 %  

    Total Operating Revenues

 

6,498

 

6,747

 

(3.7)

%

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Operations and support

 

4,040

 

4,016

 

0.6

 %  

Depreciation and amortization

 

1,235

 

1,170

 

5.6

%

    Total Operating Expenses

 

5,275

 

5,186

 

1.7

 %  

Operating Income

 

1,223

 

1,561

 

(21.7)

%

Equity in Net Income (Loss) of Affiliates

 

-

 

(1)

 

-

 %  

Operating Contribution

$

1,223

$

1,560

 

(21.6)

%