Citing an approximate $600 million impact of COVID-19 on its business, especially on advertising sales and the cancellation of live sports such as March Madness, AT&T reported Q1 2020 consolidated revenues of $42.8 billion, down from $44.8 billion in the year-ago quarter, and below market expectations. Growth in domestic wireless service revenues and strategic and managed business services revenues partially offset declines in revenues from WarnerMedia, domestic video, legacy wireline services, domestic wireless equipment and Vrio.
AT&T suspended its share repurchase program and the company withdrew its financial guidance due to uncertainty related to COVID-19 pandemic and recovery.
“The COVID pandemic had a 5 cents per share impact on our first quarter. Without it, the quarter was about what we expected — strong wireless numbers that covered the HBO Max investment, and produced stable EBITDA and EBITDA margins,” said Randall Stephenson, AT&T Chairman and CEO. We have a strong cash position, a strong balance sheet, and our core businesses are solid and continue to generate good free cash flow — even in today’s environment. In light of the pandemic’s economic impact, we’ve already adjusted our capital allocation plans and suspended all share retirements,” Stephenson said. “As a result, we’re able to continue investing in critical growth areas like 5G, broadband and HBO Max, while maintaining our dividend commitment and paying down debt.”
Some highlights:
- Strong cash position and liquity
- Operating expenses were $35.3 billion versus $37.6 billion in the year-ago quarter, down 6.1% due to a one-time spectrum gain, lower Entertainment Group costs, lower WarnerMedia costs primarily associated with lower revenues, lower domestic wireless equipment costs and cost efficiencies.
- Operating income was $7.5 billion versus $7.2 billion in the year-ago quarter, with operating expense reductions outpacing revenue declines.
- Operating income margin was 17.5% versus 16.1% in the year-ago quarter.
- Capital expenditures were $5.0 billion
- Mobility Service revenues up 2.5%
- Mobility Operating income up 9.0% with EBITDA of $7.8 billion, up 7.0%
- Postpaid phone churn of 0.86%, a 6 basis point improvement
- 163,000 postpaid phone net adds
- Solid video and broadband ARPU gains
- AT&T TV national launch; video subs impacted by focus on long-term value customer base:
- 18.6 million premium TV subscribers – 897,000 net loss
- 209,000 AT&T Fiber net adds; IP broadband revenue growth of nearly 2%
