AT&T Sets 2019 Strategic Priorities; Plans Gross Capital Investment Of $23 Bln

(RTTNews) - AT&T Inc. (T) announced the company plans gross capital investment in the $23 billion range in 2019. AT&T expects to generate free cash flow in the $26 billion range with a dividend payout ratio in the high 50% range. The company plans to use about $12 billion in cash after dividends — along with $6 billion to $8 billion from asset monetization — to reduce debt. The company expects to end 2019 with a net debt-to-adjusted EBITDA ratio in the 2.5x range.

AT&T reaffirmed the company's previously announced guidance, including adjusted EPS growth in the low single digits. The company noted that 2019 quarterly EPS will vary from historical trends, reflecting the addition of Time Warner and the effects of prior accounting standards changes. To achieve its 2019 guidance, AT&T has laid out a number of strategic priorities for the year, including: de-levering by generating strong free cash flow and monetizing non-core assets; and delivering merger synergies, growing WarnerMedia revenues.

AT&T continues to expect wireless service revenue growth in the first quarter of 2019, consistent with fourth-quarter 2018 levels.

AT&T said the company is confident in its ability to stabilize EBITDA in its Entertainment Group in 2019. The company expects a significant improvement in the year-over-year EBITDA growth rate in the first quarter of 2019 even as linear subscriber losses are expected to continue their fourth-quarter 2018 trend. The company expects IP broadband revenues to grow in 2019 driven by increases in both volumes and ARPU from growth in fiber subscribers.

AT&T plans a beta launch of its subscription video on demand service in late 2019 with three tiers of service to meet customers' needs. The SVOD service will complement WarnerMedia's existing business.

AT&T expects nationwide mobile 5G coverage by early 2020 and is currently working with Samsung to offer two 5G smartphones in 2019. AT&T said the company is on track to increase the amount of spectrum it has deployed by about 50% at year-end 2019 versus year-end 2016.

John Stephens, AT&T CFO, said the company was pleased with the decision by the U.S. Court of Appeals to let stand its acquisition of Time Warner, now known as WarnerMedia, which closed in June 2018.