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AT&T Sales Presentation- Title TBD


TBD January 12, 2010

2010 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Agenda
Introduction

Device

Network and Plans

Q and A

Cautionary Language Concerning Forward-Looking Statements


Information set forth in this presentation 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&Ts filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this presentation based on new information or otherwise. This presentation may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the companys Web site at www.att.com/investor.relations.

AT&T 4Q09 Highlights: Solid Execution, Positive Outlook


Solid Progress Across Key Growth Areas AT&T Profile:
Leader in Mobile

Broadband
Premier Business

2.7 million wireless net adds, 9.2% service revenue growth 248,000 U-verse TV net adds to >2 million in service 31.8% growth in wireline consumer IP revenues (U-verse and broadband) 17.0% growth in strategic business revenues Disciplined Execution on Cost Initiatives Sequential stability in already strong wireline margins Improved wireless margins, continuing opportunities for further expansion Strong Cash Flow Cash from operations and free cash flow up substantially Strong dividend 26 consecutive years of increases Debt reduction total debt net of cash down $10.2 billion over past six quarters

Capabilities
Powerful IP-Based

Platforms
Financial Strength

Consolidated Revenue Trends


AT&T Consolidated Revenues
($ in billions) $31.1

$30.6

$30.7

$30.9

$30.9

Third consecutive quarter of sequential improvement in consolidated revenues reflecting: Strong wireless growth U-verse growth Improved business comparisons

4Q08

1Q09

2Q09

3Q09

4Q09

4Q09 Revenue Mix


Wireless 100% owned Wireline Data/ Managed Services Wireline Voice Advertising Solutions/Other

45% 25% 25% 5%

Revenue mix increasingly weighted to wireless and wireline data and managed services: 70% of revenues in 4Q09 with 6.5% year-over-year growth 60% of revenues in 4Q07

Continued Strong Wireless Service Revenue Growth, Up 9.2%


AT&T Wireless Service Revenues
($ in billions) Total Wireless Subscribers (in millions) $12.0 $11.5 $11.7
81.6
79.6 78.2 77.0

$12.4

$12.6
85.1

2.7 million total wireless net adds in 4Q09 second-highest quarterly total in companys history Best-ever fourth-quarter churn levels sixth consecutive quarter of year-over-year improvement in both total and postpaid churn 2.6% growth in postpaid wireless subscriber ARPU eighth consecutive quarter with a year-over-year increase
Net Adds (in millions) Total Postpaid Emerging Devices 4Q09 2.7 0.9 >1.0 2009 7.3 4.3 >2.0

4Q08

1Q09

2Q09

3Q09

4Q09

Postpaid ARPU
$61.13 $59.59

Postpaid Churn
1.20% 1.19%

4Q08

4Q09

4Q08

4Q09

26.3% Wireless Data Revenue Growth, Continued Strength in Mobile Broadband


Total Postpaid Integrated Devices
(in millions)

Wireless Data Revenues


($ in billions) Postpaid Data ARPU

Wireless data revenues up $805 million, or 26.3%, driven by integrated device adoption, 3G growth, rich applications Strong volume growth
$3.9

30.2

Text messages up 70% Multimedia messages >doubled over past year

$3.1
$19.16

Robust integrated device growth 3G integrated devices up more than 4 million in 4Q09, more than 15 million for the full year 2009

16.2

$16.30

Average ARPU for integrated devices continues to be 1.8X nonintegrateddevice base


4Q09

4Q08

4Q09

4Q08

Significant upside ahead, postpaid penetration still below 50%

Wireless Margin Expansion


AT&T Wireless OIBDA Service Margin

Mid-40% Range 38.5% 35.8% 38.8%

Even with high integrateddevice volumes, wireless OIBDA service margin up sequentially and year over year, driven by: Strong revenue growth High-quality subscriber base Continuing operational improvements in network and support functions Trends reinforce confidence in longer-term margin target

4Q08

3Q09

4Q09

Longer-term expectation

OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.

AT&T Wireless Network Capabilities


Voice and data service to 97 percent of the U.S. population United States fastest 3G network today United States broadest Wi-Fi coverage with ~20,000 hotspots nationwide

AT&Ts network supports twice the number of smartphones versus any of its competitors
AT&T is managing unprecedented mobile broadband growth up more than 5,000% over the past 3 years
AT&T Total Mobile Broadband Usage
>200% in 2009

GSM/UMTS technology:
Predominant global network standard for the next few years; broad R&D, wide range of devices Simultaneous voice and data connectivity Natural precursor to LTE with backward compatibility

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Wireless Network Initiatives Drive Improved Voice and Data Performance


2009 Investments
~1,900 new cell sites >100,000 new circuits for backhaul, 4X 2008 deployment

National 3G Voice Composite Quality Index up 22% in 2009

3G Blocked Calls Down 25% YOY


1.41% 1.05%

1.01%

Jan

Dec
Dec08 Nov09 Dec09

Doubled number of fiber-served cell sites


Completed 850 MHz spectrum conversion to the 3G platform 3G coverage expanded by >4,100 sites, now covers >360 cities
Jan Dec

Broadband Data Throughput up more than 19% in 2009

3G Dropped Calls Down 22% YOY


1.16% 1.08% 0.91%

Dec08

Nov09

Dec09

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Closing the Gap: Aggressive Program of Network Enhancements for High-Usage Markets
San Francisco
3G Voice Composite Quality Index
Performance Objective San Francisco New York Metro

New York City


3G Voice Composite Quality Index
Performance Objective

Manhattan

Sept

Dec

Sept

Dec

21% improvement in 3G Voice Composite Quality Index in 4Q09 Adding RNC capacity

Three consecutive months of improvement in 3G Voice Composite Quality Index RNC change-outs

Next 90 Days: Continued Enhancements to Drive Further Improvement


Additional third- and fourth-carrier implementation Deploy Ethernet to the cell site to improve network backhaul Projects are under way, expect significant improvement in both markets over the coming months

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HSPA 7.2 Deployment: Step Up in Speed, Major Competitive Differentiator


AT&Ts 3G Cell Sites Enabled Nationwide, Ahead of Schedule
Improves consistency in accessing data sessions Prepares the network for faster speeds Increases network efficiency Immediate benefit to millions of AT&T customers

Aggressive Backhaul Program Under Way

Supports doubling of theoretical peak speeds Expect majority of AT&Ts mobile data traffic on fiber-based backhaul by end of 2010 Prepares network for LTE deployment: testing under way, nearing vendor selection

Immediate Benefit to Millions of AT&T Customers

AT&T currently offers 10

HSPA 7.2 enabled devices, including iPhone 3GS

Early Results Are Promising

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2010 Capital Plan Includes Substantial Increase in Wireless Investment


AT&T Total Capital Expenditures
Total Capital Expenditures expected to be up 5% 10% from 2009. Top priorities:
Wireless and Backhaul:

$18$19B $17.3B

~$2B increase in 2010, which includes wireless spend and wireline backhaul in support of wireless networks Focus on HSPA 7.2, groundwork for LTE, overall capacity and performance, intense program for high-volume metros AT&T U-verse: on track to pass 30 million living units by the end of 2011 Enterprise: world-class service platform, applications ecosystem One AT&T: better customer experience and more efficient operations unified support systems, converged customer experience, common care portal

2009

2010 Plan

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Improving Wireline Consumer Trends


AT&T U-verse TV Subscribers
(in millions)
1.8 1.6 1.3 1.0 2.1

31.8% fourth-quarter growth in revenues from consumer IP services AT&T U-verse and broadband
AT&T U-verse revenues nearly tripled over past year, now approaching $3 billion annualized >90% AT&T U-verse broadband attach rate, VoIP attach rate approaches 70% >75% of U-verse subscribers have a triple or quad play

4Q08

1Q09

2Q09

3Q09

4Q09

Change in Total Consumer Connections


4Q08 4Q09

Revenue Per Household


$65.68 $63.32

Positive impacts on consumer trends: Eighth consecutive quarter of yearover-year growth in consumer revenues per household Third consecutive quarter of improved year-over-year comparisons for overall wireline consumer revenues

(372) (504) 4Q08 4Q09

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AT&T Business Solutions


AT&T Business Solutions Revenues
($ in billions)

Sequential Change

Year-OverYear Change

Total

(0.4)%

(5.5)%

Consistent fundamental business trends reflecting economic activity and continued strength in strategic service, IP data 17.0% strategic business services revenue growth 7.3% growth in business IP revenues VPN revenues up >20% Two-thirds of frame customers have transitioned to IP Largest economic impacts on volumes in voice and legacy data products Operational cost efficiencies continue to support business margins

Services (excludes CPE)


IP Data Strategic Services

(0.4)%
1.8% 4.1%

(4.9)%
7.3% 17.0%

Strategic Business Services Revenues


($ in millions) $1,058 $1,006 $969

$1,101

$941

4Q08

1Q09

2Q09

3Q09

4Q09

Strategic business services include the new-generation capabilities that lead AT&Ts most advanced solutions including Ethernet, VPNs, hosting, IP conferencing and application services.

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Stable Consolidated Margins


AT&T Consolidated Operating Income Margin
18.6%
Year-Over-Year Noncash Pension/Retiree Benefit Pressure

Sharp focus on cost discipline, operational improvements across the business Major cost initiatives on track

18.6%

17.5%

Total force down ~20,000 for the year


4Q wireline operating expenses down 2.7% year over year Continuing cost-improvement opportunities, including areas such as organizational and systems integration, order and billing center consolidation

2008
Reported margins are in blue.

2009

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Strong Cash Flow


Cash From Operations
($ in billions)

Free Cash Flow


($ in billions)

2009 Cash Profile


Cash from Operating Activities Capital Expenditures Free Cash Flow $34.4 $17.3 $17.1 $9.7

$17.1 $34.4 $33.7 $13.3

Dividends Paid

Debt Reduction

Debt net of cash on hand reduced by $10.2 billion over past six quarters

2008

2009

2008

2009

Free cash flow is cash from operations less capital expenditures.

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4Q09 Summary, 2010 Outlook


Premier Growth Platforms, Financial Strength Set AT&T Apart
Leader in Wireless Broadband and Innovation HSPA 7.2 deployment under way, investing for next generation of growth Premier Business Capabilities great networks, expanding product portfolio, strength in strategic services AT&T U-verse Gaining Scale changing consumer revenue profile Financial Strength stable margins, strong cash flow, significant wireline contribution, full financial exposure to wireless with 100% ownership

Positive Outlook
Stable consolidated revenues, with opportunities for stronger results as the economy rebounds Stable-to-improved margins and EPS

Expand full-year wireless OIBDA margins to low 40% range with a longer-term expectation of reaching the mid-40% range
Capital expenditures in the $18 to $19 billion range, with substantial increase in wireless to further expand capacity and coverage Continued strong free cash flow generally in line with 2008 results Maintain financial strength while returning cash to shareowners

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AT&T Sales Presentation-Title TBD


4Q09 Earnings Conference Call January 28, 2010

2010 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.