AT&T Releases Fourth-Quarter, Full-Year Results
Wednesday, January 27, 2021 | Comments

AT&T announced consolidated revenues of $45.7 billion, cash from operations of $10.1 billion and capital expenditures of $2.4 billion in the fourth quarter of 2020. For the quarter, gross capital investment was $4.3 billion, free cash flow was $7.7 billion and the total dividend payout ratio was 49%.

AT&T reported earnings per share (EPS) of negative $1.95 due to non-cash charges compared to $0.33 diluted EPS in the year-ago quarter and adjusted EPS of $0.75 compared to $0.89 in the year-ago quarter.

For the full-year, consolidated revenues were $171.8 billion, cash from operations was $43.1 billion, and capital expenditures were $15.7 billion. Gross capital investment was $19.7 billion, free cash flow was $27.5 billion, and total dividend payout ratio was 55%. Reported EPS was negative $0.75 due to non-cash charges compared to $1.89 diluted EPS in the prior year. Adjusted EPS was $3.18 compared to $3.57 in the prior year.

“We ended the year with strong momentum in our market focus areas of broadband connectivity and software-based entertainment,” said AT&T CEO John Stankey. “By investing in our high-quality wireless customer base, we had our best full year of postpaid phone net adds in a decade and our second lowest postpaid phone churn ever.

In the fourth quarter, the mobility sector had 800,000 postpaid phone net adds, and it had 1.5 million for the full year. The sector also saw 1.2 million postpaid net adds and 2.2 million for the full year.

Sector revenues were up 7.6% for the quarter. Service revenues were up 0.5%, and equipment revenues were up 28.3%.

AT&T’s consolidated revenues for the fourth quarter totaled $45.7 billion versus $46.8 billion in the year-ago quarter. The COVID-19 pandemic impacted revenues across most businesses, particularly WarnerMedia and domestic wireless service revenues, which were pressured from lower international roaming. For the quarter, revenue declines included domestic video, Warner Bros. television and theatrical products, legacy wireline services, and Latin America, which includes foreign exchange pressure. These declines were partly offset by higher domestic wireless revenues, primarily from equipment sales.

Operating expenses were $56.4 billion versus $41.5 billion in the year-ago quarter. Expenses increased due to higher non-cash asset impairments and abandonments, higher domestic wireless equipment costs and higher HBO Max investments. These increases were partially offset by lower video and Warner Bros costs associated with lower revenues and foreign exchange impacts on Latin America expenses.

Operating loss was $10.7 billion versus $5.3 billion in the year-ago quarter due to the non-cash asset impairments in the quarter and the impact of lower revenues. Operating income margin was negative 23.5% versus 11.4% in the year-ago quarter. When adjusted for non-cash asset impairments, merger-amortization costs and other items, operating income was $7.8 billion versus $9.2 billion in the year-ago quarter, and operating income margin was 17.1% versus 19.6% in the year-ago quarter.

Fourth-quarter net loss attributable to common stock was $13.9 billion, or $1.95 per common share, versus net income attributable to common stock of $2.4 billion, or $0.33 per diluted common share, in the year-ago quarter. Adjusting for $2.70, which includes asset impairments, an actuarial loss on benefit plans, merger-amortization costs and other items, earnings per diluted common share was $0.75 compared to an adjusted $0.89 in the year-ago quarter.

Cash from operating activities was $10.1 billion, and capital expenditures were $2.4 billion. Gross capital investment, which consists of capital expenditures, cash payments for vendor payments and excludes First Responder Network Authority (FirstNet) reimbursements, totaled $4.3 billion. Capital investment, which consists of capital expenditures plus cash payments for vendor financing, totaled $3.4 billion, which includes $1 billion of cash payments for vendor financing and $920 million of FirstNet reimbursements. Free cash flow cash from operating activities minus capital expenditures was $7.7 billion for the quarter. Net debt declined by $1.6 billion sequentially in the quarter, and net debt to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) at the end of the fourth quarter was 2.7.

For full year 2020, consolidated revenues were $171.8 billion compared to $181.2 billion in 2019. The COVID-19 pandemic impacted revenues across all businesses, particularly WarnerMedia and domestic wireless service revenues, which were pressured from lower international roaming. Revenues also declined in domestic video, legacy wireline services and Latin America, which was impacted by foreign exchange pressures. Growth from domestic wireless equipment and strategic and managed services partly offset these declines.

Operating expenses were $165.4 billion in 2020 compared with $153.2 billion in 2019, primarily due to non-cash asset impairments and abandonments that were $17.4 billion higher than in 2019, costs relating to launching and operating HBO Max, higher domestic wireless equipment costs, incremental COVID-19 costs, higher severance charges, and higher subscriber acquisition and fulfillment costs. These increases were partially offset by lower video and WarnerMedia costs from lower revenues, foreign exchange impacts on Latin America expenses, a one-time spectrum gain and cost efficiencies.

Compared with results from 2019, operating income was $6.4 billion, down 77.1% primarily due to higher asset impairments and abandonments and COVID-19 impacts. Operating income margin was 3.7% versus 15.4%. With adjustments for both years, operating income was $34.1 billion versus $38.6 billion in 2019, and operating income margin was 19.8% versus 21.3%. 2020 net loss attributable to common stock was $5.4 billion, or $0.75 per common share, versus net income attributable to common stock of $13.9 billion, or $1.89 per diluted common share, in 2019. With adjustments for both years, earnings per diluted common share was $3.18 compared to $3.57 in 2019.

Cash from operating activities was $43.1 billion, and capital expenditures were $15.7 billion. Gross capital investment was $19.7 billion. Capital investment totaled $18.6 billion, including $3 billion of cash payments for vendor financing and $1.1 billion of FirstNet reimbursements. Full-year free cash flow was $27.5 billion compared to $29 billion in 2019. The company’s free cash flow total dividend payout ratio for the full year was 55%. Net debt declined by $3.5 billion in the year.

In 2021, the company expects consolidated revenue growth in the 1% range, adjusted EPS to be stable with 2020, and gross capital investment in the $21 billion range with capital expenditures in the $18 billion range. 2021 free cash flow is expected to be in the $26 billion range, with a full-year total dividend payout ratio in the high 50% range.

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