10-QPeriod: Q2 FY2017

AT&T INC. Quarterly Report for Q2 Ended Jun 30, 2017

Filed August 3, 2017For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. reported a net income of $3.915 billion for the second quarter of 2017, a 14.9% increase year-over-year, with diluted EPS of $0.63. For the six months ended June 30, 2017, net income attributable to AT&T was $7.384 billion, a 2.4% increase. Total operating revenues for the quarter slightly decreased by 1.7% to $39.8 billion, reflecting declines in legacy wireline services and equipment sales, partially offset by growth in video and strategic business services. The company's balance sheet showed significant changes, with cash and cash equivalents rising to $25.6 billion from $5.788 billion at the end of 2016, largely due to debt issuances. Long-term debt increased substantially to $132.8 billion from $113.7 billion. The company continues to invest heavily in its networks, with capital expenditures for the six months totaling $10.75 billion. A key strategic development is the pending acquisition of Time Warner Inc., expected to close by year-end 2017, which was partially financed by significant debt issuances during the period.

Financial Highlights

47 data points
Beta

Revenue

$38.99B

Net Income

$5.13B

13.2% Net Margin

EPS (Diluted)

$0.81

Total Assets

$420.80B

Cash & Equivalents

$25.62B

Free Cash Flow

$8.71B

Financial Statements
Beta
Revenue$38.99B
SG&A Expenses$8.56B
Operating Expenses$33.31B
Operating Income$6.47B
Interest Expense$1.40B
Net Income$5.13B
EPS (Basic)$0.81
EPS (Diluted)$0.81
Shares Outstanding (Basic)6.17B
Shares Outstanding (Diluted)6.18B

Key Highlights

  • 1Net income attributable to AT&T increased by 14.9% to $3.915 billion in Q2 2017, with diluted EPS at $0.63.
  • 2Total operating revenues saw a slight decline of 1.7% to $39.8 billion in Q2 2017, primarily due to legacy service declines and lower equipment sales.
  • 3Cash and cash equivalents significantly increased to $25.6 billion as of June 30, 2017, up from $5.788 billion at year-end 2016, driven by debt issuances.
  • 4Long-term debt rose to $132.8 billion, reflecting the company's strategy to finance growth and strategic initiatives, including the pending Time Warner acquisition.
  • 5Capital expenditures for the first six months of 2017 totaled $10.75 billion, underscoring continued investment in network infrastructure.
  • 6The pending acquisition of Time Warner Inc. is a major strategic focus, with the transaction expected to close by year-end 2017.
  • 7The company secured a significant contract with FirstNet to build and manage a nationwide broadband network for first responders, with expected success-based payments over five years.

Frequently Asked Questions

For the second quarter of 2017, AT&T reported a net income attributable to AT&T of $3.915 billion, or $0.63 per diluted share, representing a 14.9% increase compared to the same period in 2016. Total operating revenues were $39.837 billion, a slight decrease of 1.7% year-over-year.

The acquisition of Time Warner is a 50% cash and 50% stock transaction. The cash portion is being financed through new debt issuances and existing cash. The company significantly increased its long-term debt and issued new notes during this period, and also initiated a large debt offering in July 2017 specifically to fund the cash consideration for the Time Warner acquisition.

AT&T's liquidity position strengthened considerably, with cash and cash equivalents increasing to $25.6 billion from $5.788 billion at the end of 2016. This increase was primarily driven by substantial long-term debt issuances during the first six months of 2017.

AT&T operates in four segments: Business Solutions, Entertainment Group, Consumer Mobility, and International. Business Solutions revenue decreased slightly, but saw growth in fixed strategic services. Entertainment Group revenue was relatively flat, with growth in video and high-speed internet offset by legacy services. Consumer Mobility revenues declined due to fewer service and equipment sales, partly from customer migrations to Business Solutions. The International segment showed strong revenue growth driven by video and wireless services in Latin America and Mexico.