8-KRegulation FD

AT&T INC. 8-K Report, Regulation FD Disclosure (Jul 16, 2021)

Filed July 16, 2021For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. (T) filed an 8-K on July 16, 2021, to provide preliminary operational data for the DIRECTV business, which is in the process of being divested. This information is being shared in connection with the Company's efforts to secure debt financing for the transaction, including the potential issuance of senior secured notes. While the data is preliminary and subject to change, it offers investors a near-real-time look at the subscriber trends and churn rates for DIRECTV, AT&T TV, and U-verse TV for the second quarter of 2021. The key takeaways from this preliminary data indicate an improvement in premium video subscriber trends compared to the prior year, with gross additions increasing and net additions showing a significant improvement. Importantly, DIRECTV's churn rate also demonstrated positive momentum, declining in the second quarter of 2021. These metrics are crucial for understanding the ongoing performance and value of the divested video services business as AT&T continues to streamline its operations.

Key Highlights

  • 1AT&T is providing preliminary operational data for its DIRECTV business as part of its debt financing activities related to the divestiture.
  • 2The data covers the three and six-month periods ended June 30, 2021, and includes subscriber trends and churn rates for DIRECTV, AT&T TV, and U-verse TV.
  • 3Aggregate premium video gross additions in Q2 2021 were 492,000, a 2% increase year-over-year.
  • 4Aggregate premium video net additions in Q2 2021 improved significantly to (473,000), a 47% improvement from (887,000) in Q2 2020.
  • 5Total aggregate premium video subscriptions at the end of Q2 2021 were 15,412,000, a decrease of 13% from the prior year.
  • 6DIRECTV churn rate in Q2 2021 was 1.87%, an improvement of 22% from 2.42% in Q2 2020, indicating positive momentum in subscriber retention.
  • 7The filing emphasizes that the presented data is preliminary and subject to potential material adjustments during the financial statement closing process.

Frequently Asked Questions

The main purpose of this 8-K filing is to provide preliminary operational data regarding the performance of AT&T's DIRECTV business. This information is being shared with potential purchasers of debt securities and lenders as part of the financing arrangements for the divestiture of DIRECTV.

No, the numbers provided are preliminary and based on estimates and assumptions from information available as of the filing date. AT&T cautions that these figures may be subject to material adjustments during their financial statement closing process and should not be considered a substitute for their actual reported results.

The improvement in DIRECTV's churn rate, decreasing by 22% year-over-year in Q2 2021, indicates that fewer subscribers are disconnecting their service. This suggests positive momentum in subscriber retention for the video services business, despite an overall decline in total subscriptions.

The Company's presentation of churn in this filing differs in two key aspects: (i) it calculates churn based on the average number of subscribers over a period, rather than the number at the beginning of the period, and (ii) it includes all disconnections (cancellations, migrations, and transfers), not just cancellations.