Daily Management Review

AT&T Pledges To Cut About $20 Billion Of Debt In 2019


11/30/2018




AT&T Pledges To Cut About $20 Billion Of Debt In 2019
AT&T Inc has said that it is planning to offset its huge pile of debts and is committed to doing so by next year and for this purpose, the company is already considering a number of measures which includes revisiting the investments and feasibility of all of the non-core assets of the company like its investment in the stake in the video streaming company Hulu. The company is also considering offloading such assets to raise money to reduce its debt pile.
 
These measures would help the company reduce down its debt pile by anywhere between $18 billion and $20 billion the end of 2019, said the company, the second-largest US wireless carrier by subscriber numbers, at an analyst meeting in New York.
 
The news resulted in the shares of AT&T rising by 1 per cent in after-hours trading following the disclosure even though its shares are down by about 21 per cent for the entire year so far. One of the major reasons for that has been a concern among investors about the huge debt that the company bears on its shoulders. The company carries a total debt of $183 billion as of Sept. 30m following its acquiring of the media company Time Warner.
 
According to IBES data from Refinitiv, the company expectations for its free-cash flow for 2019 at about $26 billion which is over the average estimate analysts at $24.84 billion.
 
The company said that the end of year net-debt-to-adjusted-EBITDA ratio would be in the 2.5 times range because of the growth in free cash flow.
 
While analysts are expecting 2019 adjusted earnings per share to rise by about 1.7 per cent, AT&T expects the number to report a growth in low single digits.
 
The company is also expecting to launch a new video streaming channel by WarnerMedia, the new segment that includes the Turner networks and premium channel HBO, by the end of 2019 which would rival Netflix, about which AT&T also provided some details to the investors.
 
There would be three tiers of service that would be included in the new product. They would include an entry-level package which would focus on movies, a second tier of premium segment that would offer viewers original programming and the highest tier that would be composed of licensed content from other software providers.
 
The company is hopeful that the new video streaming service would ultimately be able to attract enough subscribers to offset the continuous drop in the number of subscribers for its linear video service from its satellite TV company DirecTV. AT&T is also anticipating a further continued drop in the number of video subscribers in 2019 based on the trend and pace of decline of the same in the third quarter of 2018.
 
In the third quarter, more satellite TV subscribers were lost by AT&T than was expected by analysts at Wall Street with a net number of 359,000 subscribers because of the shift of subscribers to online streaming services on to online companies like Netflix and Hulu.
 
(Source:www.moneycontrol.com)






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