Summary

• AT&T Inc. is a multinational telecommunication holding company.
• AT&T has a strong presence in the telecommunications, media, and entertainment industries.
• The company's business includes 5G, fiber, and streaming media.
• In 2022 AT&T spins off WarnerMedia into a new company called Warner Bros. Discovery.

AT&T Inc. is a multinational telecommunications holding company headquartered in Dallas, Texas. It is the world's third-largest telecommunications company by revenue and the third-largest provider of mobile telephone services in the U.S. As of 2023, AT&T was ranked 13th on the Fortune 500 rankings of the largest United States corporations, with revenues of $120.7 billion.

Financial Highlights

First-Quarter Results

April 20, 2023; AT&T Inc. reported first-quarter 2023 results.¹

Revenues for the first quarter totaled $30.1 billion versus $29.7 billion in the year-ago quarter, up 1.4%. This increase primarily reflects higher Mobility, Mexico and Consumer Wireline revenues, partly offset by lower Business Wireline revenues. 

Operating expenses were $24.1 billion, essentially stable with $24.2 billion in the year-ago quarter reflecting the benefits of its continued transformation efforts. Operating expenses decreased primarily due to lower domestic wireless equipment and associated selling costs from lower sales volumes; first-quarter 2022 3G network shutdown costs; lower personnel costs and higher returns on benefit-related assets. These decreases were partly offset by higher amortization of deferred customer acquisition costs, higher bad debt expense and increased depreciation. Additionally, business unit costs included year-over-year increases due to inflation.

Operating income was $6.0 billion versus $5.5 billion in the year-ago quarter. When adjusting for certain items, adjusted operating income was $6.0 billion versus $5.8 billion in the year-ago quarter.

Equity in net income of affiliates of $0.5 billion primarily from the DIRECTV investment. With adjustment for its proportionate share of intangible amortization, adjusted equity in net income from the DIRECTV investment was $0.9 billion.

Income from continuing operations was $4.5 billion versus $5.1 billion in the year-ago quarter. Earnings per diluted common share from continuing operations was $0.57 versus $0.65 in the year-ago quarter. Adjusting for $0.03, which includes its proportionate share of intangible amortization from the DIRECTV equity method investment and other items, earnings per diluted common share from continuing operations was $0.60 compared to $0.63 in the year-ago quarter.

Cash from operating activities from continuing operations was $6.7 billion, down nearly $1 billion year over year reflecting timing of working capital, including lower securitizations. Capital expenditures were $4.3 billion in the quarter versus $4.6 billion in the year-ago quarter.  Capital investment, which includes $2.1 billion of cash payments for vendor financing, totaled $6.4 billion.

Free cash flow was $1.0 billion for the quarter. Total debt was $137.5 billion at the end of the quarter, and net debt was $134.7 billion. The company continues to expect to achieve a net debt-to-adjusted EBITDA ratio in the 2.5x range by early 2025.

Full-Year 2022 Results

Revenues from continuing operations for the full year totaled $120.7 billion versus $134.0 billion in 2021, down 9.9% reflecting the impact of the U.S. Video separation in July 2021. Excluding the impact of U.S. Video, operating revenues for standalone AT&T were up 2.1%, from $118.2 billion, primarily driven by higher revenues from Mobility, and, to a lesser extent, Mexico and Consumer Wireline, partially offset by lower Business Wireline revenues.

Operating expenses from continuing operations were $125.3 billion compared with $108.1 billion in 2021 primarily due to higher non-cash asset impairments and abandonments, and restructuring charges, partly offset by the inclusion in the prior year of U.S. Video results for seven months as well as other divested businesses. To a lesser extent, the year-over-year increase reflects higher bad debt expense, the elimination of CAF II government credits and increased wholesale network access charges. Wireless equipment costs were up slightly year over year as the impacts of higher sales volumes and the sale of higher-priced smartphones were largely offset by lower 3G network shutdown costs.

Operating income (loss) from continuing operations was ($4.6) billion versus $25.9 billion in 2021. When adjusting for asset impairments, abandonments, restructuring, and other items, adjusted operating income from continuing operations was $23.5 billion versus $26.2 billion a year ago. When excluding the impacts of prior-year dispositions, standalone AT&T adjusted operating income totaled $22.3 billion for full year 2021.

Equity in net income of affiliates of $1.8 billion primarily from the DIRECTV investment. With adjustment for its proportionate share of intangible amortization, adjusted equity in net income from the DIRECTV investment for full year 2022 was $3.4 billion.

Income (loss) from continuing operations was ($6.9) billion versus $23.8 billion a year ago. Earnings per common share from continuing operations was ($1.10) versus $3.02 for full-year 2021. With adjustments for both years, adjusted earnings per diluted common share from continuing operations was $2.57 versus $2.63 for full-year 2021. On a standalone AT&T comparative basis, adjusted earnings per diluted common share was $2.41 for 2021.

Cash from operating activities from continuing operations was $35.8 billion, down from $37.2 billion in the prior year due to inclusion of U.S. Video in 2021. Capital expenditures from continuing operations were $19.6 billion for the full year, versus $15.5 billion for full-year 2021. Capital investment from continuing operations, which includes $4.7 billion of cash payments for vendor financing, totaled $24.3 billion.

Free cash flow from continuing operations was $14.1 billion for the full year. Total debt was $135.9 billion at the end of the fourth quarter, and net debt was $132.2 billion.

Company Overview

AT&T is a diversified company with a strong presence in the telecommunications, media, and entertainment industries. The company's business segments are well-positioned to benefit from the growth of 5G, fiber, and streaming media.

The Communications segment is the core of AT&T's business. It provides wireless, wireline, video, and broadband services to consumers and businesses. The WarnerMedia segment is a leading media and entertainment company with a portfolio of brands that includes Warner Bros., HBO, Turner, and CNN. The Latin America segment provides entertainment and telecommunications services to customers in Latin America. The Xandr segment collects data and develops digital advertising solutions for businesses.

• Communications is the company's largest segment, accounting for about 73% of its revenue in 2022. This segment includes wireless and wireline telecom, video and broadband services.
• WarnerMedia is the company's second largest segment, accounting for about 24% of its revenue in 2022. This segment includes media and entertainment businesses, such as Warner Bros. and Turner.
• Latin America is the company's third largest segment, accounting for about 3% of its revenue in 2022. This segment offers entertainment services in Latin America and wireless telecom services in Mexico.
• Xandr is the company's smallest segment, accounting for about 1% of its revenue in 2022. This segment collects data for the development of digital advertising.

Company History

In 1876, Alexander Graham Bell invented the telephone. AT&T, formerly known as SBC Communications Inc. (SBC), was formed as one of several regional holding companies created to hold AT&T Corp.’s (ATTC) local telephone companies.²

References

1. ^ https://about.att.com/story/2023/q1-earnings.html
2. ^ https://about.att.com/innovation/ip/brands/history