AT&T Spends $1.2B on FirstNet Capital Costs in 2018, Receives $1.4B in FirstNet Reimbursements
Wednesday, January 30, 2019 | Comments

AT&T reported results for the fourth quarter and full year. For the full year of 2018, capital expenditures, including capitalized interest, totaled $21.3 billion versus $21.6 billion in 2017. 2018 capital investment included about $1.2 billion in First Responder Network Authority (FirstNet) capital costs and $1.4 billion in FirstNet capital reimbursements.

In the fourth quarter, the carrier reported capital expenditures of $4.2 billion. Capital investment included about $270 million in FirstNet capital costs and $1.1 billion in FirstNet capital reimbursements. The company’s third-quarter FirstNet capital costs were $560 million.

“Our top priority for 2018 and 2019 is reducing our debt, and I couldn’t be more pleased with how we closed the year,” said Randall Stephenson, AT&T chairman and CEO. “In 2018, we generated record free cash flow while investing at near-record levels. Our dividend payout as a percent of free cash flow was 46 percent for the quarter and 60 percent for the year, allowing us to increase the dividend for the 35th consecutive year. This momentum will carry us into 2019, allowing us to continue reducing our debt while investing in the business and continuing our strong record for paying dividends.”

In the fourth quarter, AT&T had 3.8 million total wireless net adds in North America with 2.8 million in the United States, driven by connected devices and smartphones, and 1 million in Mexico.

In its communications business, operating income was up 3.1 percent on a comparable basis in the fourth quarter. Mobility service revenues were up 2.9 percent on a comparable basis for the fourth quarter, and operating income increased 18.7 percent. The company had 147,000 phone net adds in the United States with 134,000 postpaid phone net adds and 13,000 prepaid phone net adds. The carrier added 467,000 branded smartphones to its base.

AT&T's consolidated revenues for the fourth quarter totaled $48.0 billion versus $41.7 billion in the year-ago quarter. Declines in legacy wireline services, wireless equipment, domestic video and Vrio were offset by WarnerMedia and growth in domestic wireless services and Xandr.

Operating expenses were $41.8 billion versus $40.4 billion in the year-ago quarter. Versus results from the fourth quarter of 2017, operating income was $6.2 billion versus $1.3 billion, and operating income margin was 12.8 percent versus 3.1 percent.

Fourth quarter net income attributable to AT&T was $4.9 billion versus $19 billion in the year-ago quarter, which reflected the impact of the December 2017 federal Tax Cuts and Jobs Act. Cash from operating activities was $12.1 billion, and free cash flow — cash from operating activities minus capital expenditures — was $7.9 billion for the quarter.

For full-year 2018 when compared with 2017 results, AT&T's consolidated revenues totaled $170.8 billion versus $160.5 billion. Operating expenses were $144.7 billion compared with $140.6 billion. Versus results from 2017, operating income was $26.1 billion, up 30.7 percent. 2018 net income attributable to AT&T was $19.4 billion versus $29.5 billion.

AT&T's full-year cash from operating activities was $43.6 billion versus $38 billion in 2017. Full-year free cash flow was $22.4 billion compared to $16.5 billion in 2017, up 36 percent.

AT&T expects free cash flow in the $26 billion range and gross capital investment in the $23 billion range in 2019.

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