AT&T will invest its cash flow in its global network to migrate customers toward expanded IP services faster than competitors, said company chairman and CEO David Dorman, speaking at an investor conference in New York. AT&T estimates it will generate more than $4.5 billion in cash flow, defined as EBITDA less capital expenditures, in 2004. This year, the company also intends to repurchase up to $3 billion in additional debt. Its net debt stood at about $9 billion at the end of 2003.
William J. Hannigan, who recently joined the company as President of AT&T and head of AT&T Business, outlined the following strategic initiative for AT&T Business in 2004:
- continue to expand its hosting business to support storage, customer relationship management and messaging, as well as open four Internet Data Centers in Frankfurt, Paris, Tokyo and London, bringing the total number of its IDCs to 25
- more than double its Wi-Fi footprint, which currently covers more than 2,900 hot spots in 22 countries
- build-out its business VoIP services
- extend its ability to integrate with other carriers’ networks
- launch a new cybersecurity service to protect corporate networks
- introduce AT&T WebService Connect to enable businesses to share critical services and applications with partners and customers easily and securely
- introduce a network-based VPN service on its MPLS core IP network
- extend its global network management and monitoring capabilities to customers’ infrastructure at their premise or their own data centers
John Polumbo, President of and CEO of AT&T Consumer, reiterated the company’s focus on investing in a portfolio of emerging alternate access technologies and models aimed at “changing the game” so that AT&T can provide VoIP over its own platform. AT&T Consumer is testing or supporting a variety of alternatives to bypass the Bell access facilities. These options include broadband over electric power lines, municipal or regional network overbuilds, and renting alternative providers’ copper lines.
The company also announced plans for rolling out an “AT&T CallVantage” VOIP service to the 100 largest U.S. markets during the course of 2004. AT&T’s residential VoIP offering will start to become available to customers next month. The service will provide unlimited local and long distance calling, very competitive rates on international calling, and a number of unique features. Cathy Martine, the company’s Senior Vice President spearheading the VoIP initiative, expects to have more than 1 million business and consumer users across its portfolio of VoIP services by the end of 2005. http://www.att.com
- In February 2004, AT&T launched a new $200 million-plus company wide brand and advertising program aimed at residential, business and government customers. The business advertising campaign profiles AT&T as “The World’s Networking Company,” asking its business and government customers: “Can Your Network Do This?” The business advertising campaign uses a “binary” theme to demonstrate how networking propels people, products and entire economies forward. The consumer advertising campaign positions AT&T as a major provider of bundled services, moving far beyond traditional voice long-distance service to include local, Internet, broadband, wireless and international calling.
- In January 2004, AT&T cited increasing pricing pressures and predicted declining overall revenues for 2004. The company reported Q4 2003 consolidated revenue of $8.1 billion, which included $5.9 billion from AT&T Business and $2.2 billion from AT&T Consumer. This represented a consolidated revenue decline of 12.8% versus Q4 2002, primarily due to continued declines in long distance (LD) voice revenue, partially offset by the continued success of AT&T Consumer’s bundled local and LD offering, as well as growth in several key markets of AT&T Business. Net income from continuing operations was $340 million and earnings per diluted share were $0.43. Free cash flow was $0.7 billion for Q4. The company met its 2003 financial guidance.
