John Stephens, AT&T Chief Financial Officer, Speaks at Citi Conference

DALLAS–(BUSINESS WIRE)–John Stephens, AT&T chief financial officer, spoke yesterday at the 2019
Global TMT West Conference in Las Vegas. Stephens addressed the
company’s priorities for 2019:

• Growing free cash flow and paying down debt. AT&T (NYSE:T)
  expects gross capital investment in the $23 billion range with free
  cash flow¹ in the $26 billion range with approximately $12
  billion remaining after dividends. The company intends to use the $12
  billion — as well as $6 billion to $8 billion it expects to raise from
  asset monetization — to reduce debt. The company plans to lower its
  net-debt-to-adjusted EBITDA ratio to the 2.5x range by the end of 2019
  and to continue deleveraging through 2022. The vast majority of AT&T’s
  debt is fixed rate, protecting the company against interest rate
  increases.

AT&T has increased its quarterly dividend for 35 consecutive years.
While dividend policy is determined by the company’s board of directors,
AT&T’s leadership plans to give the board the flexibility to continue
its current policy of annual increases. The company expects its 2019
dividend payout ratio will be in the high 50% range.²

• Delivering solid wireless results with growth in service revenues
  and EBITDA. Stephens said AT&T expects wireless service revenue
  growth to continue in 2019. AT&T is also focused on the transition to
  5G technologies and is seeing speeds substantially faster than
  traditional LTE and with ultra-low latency. This will enable a wide
  range of use cases — from IoT to manufacturing, gaming to augmented
  and virtual reality.

AT&T expects 5G will eventually represent a significant revenue stream
for the company but does not expect it to be a significant revenue
stream in 2019. The company expects 5G investment to be managed within
current capital intensity levels.

• Stabilizing Entertainment Group EBITDA. Stephens said AT&T
  remains confident in its ability to keep EBITDA levels in its
  Entertainment Group stable in 2019 as the company focuses on cost
  controls, profitability and retaining customers with offers that meet
  their needs. EBITDA support will come from improving video ARPU as
  promotional pricing expires for about 2 million linear video
  subscribers and as annual price increases help offset content cost
  increases.

The company will also focus on enhancing profitability in its
over-the-top offerings. At the end of the second quarter last year,
about 500,000 DIRECTV NOW subscribers were on $10 per month promotional
pricing plans; By yearend 2018, virtually no subscribers remained on
this plan. The company expects this and the expansion of its cloud DVR
offer for DIRECTV NOW will support ARPU growth in 2019.

AT&T also expects growth in broadband revenues in 2019 driven by
customer additions and ARPU increases as it expands its fiber network,
which offers higher speeds and high reliability. By mid-2019, AT&T
expects to cover 14 million customer locations, a nearly 30% increase
from the end of 2018.

• Integrating WarnerMedia and sustaining growth at Home Box Office,
  Turner and Warner Bros. WarnerMedia’s reputation for creative
  excellence, along with its global scale; portfolio of iconic brands
  and franchises; and deep intellectual property, including the Warner
  Bros. library of content, positions AT&T well for success.

With the addition of WarnerMedia, AT&T has become a modern media company
with a combination of customer data insights and premium content that
sets up a virtuous cycle. AT&T can deliver premium content that drives
consumer engagement, which generates data to drive better advertising
and monetization models. In turn, this generates returns to invest in
better content, which attracts even more viewers. And Xandr, AT&T’s
advertising and analytics unit, gives the company further opportunities
to monetize engagement.

• Accelerating advertising growth at Xandr. Xandr lets AT&T
  combine data with advertising technology to make addressable TV
  advertising more effective and valuable for advertisers. Over time,
  AT&T expects to apply data-powered targeting to significantly improve
  the yield on linear advertising inventory.

As announced earlier this week, Xandr is working with WarnerMedia’s
Turner unit to improve the relevancy of advertising, fueled by data and
content connections. The two organizations bring together a unique set
of assets — valuable consumer data and insights, advanced advertising
capabilities and engaged, passionate fanbases. This will let them better
serve marketers and deliver better experiences to consumers. AT&T
expects to realize $1 billion in revenue-related synergies, including
its advertising operations, by yearend 2021.

AT&T announces fourth-quarter and full-year 2018 results on Wednesday,
January 30. Results will be available before 7 a.m. ET, and the company
will host a call to discuss results at 8:30 a.m. ET the same day. The
earnings release, Investor Briefing and related materials, as well as a
live webcast of the call, will be available at AT&T
Investor Relations.

¹ Free cash flow is cash from operating activities minus
capital expenditures. Gross capital investment excludes expected
FirstNet reimbursement in the $1 billion range; includes potential
vendor financing.
² Free cash flow dividend
payout ratio is dividends divided by free cash flow.

*About AT&T

AT&T Inc. (NYSE:T)
is a diversified, global leader in telecommunications, media and
entertainment, and technology. It executes in the market under four
operating units. WarnerMedia’s HBO, Turner and Warner Bros. divisions
are world leaders in creating premium content, operate one of the
world’s largest TV and film studios, and own a world-class library of
entertainment. AT&T Communications provides more than 100 million U.S.
consumers with entertainment and communications experiences across TV,
mobile and broadband services. Plus, it serves more than 3 million
business customers with high-speed, highly secure connectivity and smart
solutions. AT&T Latin America provides pay-TV services across 11
countries and territories in Latin America and the Caribbean, and is the
fastest growing wireless provider in Mexico, serving consumers and
businesses. Xandr provides marketers with innovative and relevant
advertising solutions for consumers around premium video content and
digital advertising through its AppNexus platform.

AT&T products and services are provided or offered by subsidiaries and
affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.
Additional information is available at about.att.com. © 2019 AT&T
Intellectual Property. All rights reserved. AT&T, the Globe logo and
other marks are trademarks and service marks of AT&T Intellectual
Property and/or AT&T affiliated companies. All other marks contained
herein are the property of their respective owners.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates
and other forward-looking statements that are subject to risks and
uncertainties, and actual results might differ materially. 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 and revise statements contained in this news
release based on new information or otherwise.

This news release may contain certain non-GAAP financial measures.
Reconciliations between the non-GAAP financial measures and the GAAP
financial measures are available on the company’s website at https://investors.att.com.

Contacts

Megan Ketterer
AT&T Inc.
Phone: (972) 467-6537
Email: megan.ketterer@att.com