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AT&T now expects to have up to 150 million subscribers worldwide on HBO and HBO Max by 2025.
Gabby Jones / Bloomberg
AT&T management organized an investor day on Friday morning, following rivals’ events
Verizon Communications
i
T-Mobile USA
Wednesday and Thursday. The highlight was a significant increase in the target of HBO Max subscribers, with few other incremental news that would move the needle for a company the size of AT&T.
Shares of AT&T (ticker: T) jumped 3.8% Friday morning, to about $ 30.65, as the event was underway. The company now expects to have between 120 and 150 million subscribers to HBO Max and HBO by 2025. Its previous forecast, given in late 2019, was 75 to 90 million subscribers that year. By the end of 2020, the services had 61 million subscribers worldwide.
It seems that investors have recently valued transmission companies with satisfaction only for their growth in subscribers.
Netflix
Shares (NFLX) have long been quoted based on this figure after each quarterly result, while the recent ambitious targets of streaming subscribers
ViacomCBS
(VIAC) and Discovery (DISCA) have sent these stocks up.
Growth on HBO Max will accelerate thanks to a new level of publicity, which will be launched this June, and expanded international deployment, Jason Kilar, CEO of WarnerMedia, said Friday. He said the company will expand HBO Max to 60 markets in Latin America and Europe this year. By the end of 2021, AT&T expects to have between 67 and 70 million HBO Max and HBO subscribers worldwide, which would mean growth of 6 to 9 million this year.
AT&T is still expecting several years of strong investment for HBO Max. The maximum losses are expected to occur in 2022, and the service will be balanced for the first time in 2025. HBO’s revenue will be about $ 15 billion that year, Kilar said, above $ 6.8 billion from last year.
This is one of the three key investment areas that AT&T CEO John Stankey highlights to investors whenever the opportunity arises, along with the placement of fiber optic cable and the upgrade of the your 5G wireless network.
In his opening remarks Friday, Stankey summed up the launch for investors as a focus on subscriber growth in AT&T’s media and communications businesses and in a more rational company. “More customer relationships and a more efficient and streamlined company will result in profitability for shareholders,” Stankey said.
AT&T Communications CEO Jeff McElfresh explained the company’s fiber cable push in 2021. It plans to expand its fiber footprint to an additional 3 million potential customers this year, a goal that had previously been discussed. by management before Friday.
Americans have been more dependent than ever on their Internet connections during the Covid-19 pandemic, and broadband has been a major area of growth for the telecommunications industry. And people also want faster, fiber-connected connections to allow faster download and upload speeds than coaxial cable. McElfresh said Friday that when the company first takes its fiber to a street or neighborhood, 70% of the subscribers it adds are new to AT&T and see a 10% higher market share than local competition.
The company expects average-digit broadband sales growth by 2021 and expanding profit margins. This makes sense: it’s a high fixed cost business, with a low marginal cost to add a new customer. Profits should increase faster than sales as the business grows. Just look at it
Comcast‘s
(CMCSA) o
Charter Communications
Broadband Results (CHTR) for 2020.
AT&T spends more than $ 27 billion on C-band spectrum, behind $ 53 billion in Verizon Communications (VZ) and $ 11 billion ahead of T-Mobile. Management said Friday that the company will invest an additional $ 6 billion to $ 8 billion to deploy this new spectrum. AT&T did not adjust its previously given wireless guidelines for 2021: management continues to expect service revenue growth of around 2% with “modest” wireless profit growth.
Overall, AT&T also continues to expect sales growth of approximately 1% in 2021 and earnings per share to continue through 2020. Unlike Verizon and T-Mobile this week, AT&T offered no target. nor longer-term guidance on HBO Max figures.
Following its investments in 5G fiber, HBO Max, Stankey said AT&T’s priorities are to keep the stock dividend at its current level, with a free cash flow after that payment that will allow the debt to be repaid. This year, the company will increase its loans by $ 6 billion to fund its C-band defeat. The DirecTV derivation will provide nearly $ 8 billion in cash, but it will also withdraw part of its profit and loss account before interest, taxes, depreciation and amortization, effectively increasing AT&T’s leverage.
Pascal Desroches, chief financial officer of AT&T, said Friday that he expects the company to end 2021 with a adjusted net debt / Ebitda ratio of 3.0 times. Expect it to drop to 2.5 times by the end of 2024. Meanwhile, more asset sales are on the table, while stock rewards are off, AT&T said Friday.
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