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Board raises dividend 12.7 percent, largest annual increase in company's history, approves new share repurchase authorization
-- Company expects to deliver a continued ramp in revenue growth to mid-single digits or better in the coming year -- driven by wireless, broadband, enterprise, IP data, video and converged services
-- Wireless revenues expected to continue midteens percentage growth in 2008, including Dobson, powered by subscriber gains, wireless data
-- Enterprise customer revenue growth expected to be positive throughout 2008
-- Total expense-savings run rate from merger synergies and additional operational initiatives expected to exceed $7 billion annual run rate in 2010
-- Strong growth in free cash flow expected to fuel substantial return of value to shareowners through continued dividend growth and share repurchases
-- Expected to exceed 1 million U-verse subscribers by the end of 2008
-- Major expansion of AT&T U-verse(SM) video deployment announced, to reach approximately 30 million living units by year-end 2010
AT&T Inc. (NYSE:T) today at its analyst conference in New York updated its 2008 and multiyear outlook and outlined its strategies for sustained double-digit growth in adjusted earnings per share driven by advances in wireless, broadband, enterprise, IP data and a new generation of converged services.
Randall Stephenson, AT&T chairman and CEO, said that AT&T will enter 2008 with solid operational momentum, having delivered 10 consecutive quarters of double-digit growth in adjusted earnings per share and five straight quarters of improved revenue growth. “Our premier set of assets is capable of generating continued strong results over the next several years,” said Stephenson.
“Over the past three years AT&T has executed a major transformation,” Stephenson said. “In wireless, we have achieved the most successful large-scale integration and significant operational improvements the industry has seen. We’re well on our way to delivering equally impressive results in our enterprise business. And we have initiatives under way across our operations to further advance our premier network capabilities, grow the business and deliver value to shareowners.
“AT&T’s time is now,” Stephenson said. “We have a great outlook for the coming years. We are a company that is able to do things today that wouldn’t have been possible just a year or two ago. Our unique set of assets and our investments in IP networks and wireless provide our customers with an unprecedented level of connectivity and mobility. The best news is we are just getting started. The velocity of change in this industry is stunning. Customer demand for bandwidth is growing at impressive levels. And no company is better positioned to take advantage of this growth than AT&T.”
Dividend Increase, New Share Repurchase Authorization
AT&T also announced today that its board of directors approved a 12.7 percent increase in the company’s quarterly dividend, the largest annual increase in the company’s history, from $0.355 a share to $0.40 a share on a quarterly basis and from $1.42 to $1.60 a share on an annualized basis.
This increase recognizes the company’s strong growth and positive outlook and follows a 6.8 percent dividend increase approved by AT&T’s board in December 2006, marking the company’s 24th consecutive year with an annual dividend increase.
The board also approved a new authorization for the repurchase of 400 million shares, which represents approximately 6.6 percent of AT&T’s shares outstanding as of Dec. 7, 2007. This replaces AT&T’s current repurchase authorization, under which the company had repurchased more than $13 billion of its shares through Dec. 7, 2007.
Based on current market conditions and the company’s outlook, AT&T expects to complete the repurchases available in the new authorization by the end of 2009.
The dividend will be payable on Feb. 1, 2008, to common shareowners of record on Jan. 10, 2008. The timing and nature of repurchases are subject to market conditions and applicable securities laws.
“These actions speak to the strength of our operations and our confidence looking ahead,” Stephenson said. “I am proud to say that we have increased our dividend every year in our company’s history, a record that is unmatched by any other major U.S. telecom company. With our operational and financial strength, we have the capacity to continue our record of returning substantial value to shareowners as we invest in the future of our business.”
2008 Outlook
AT&T reaffirmed and expanded its growth outlook for 2008. In the coming year, AT&T expects to deliver:
* Continued midteens wireless revenue growth, including results from the recent acquisition of Dobson Communications, reflecting strong subscriber growth and continued robust growth in wireless data services.
* A return to positive enterprise revenue growth, with positive growth throughout 2008.
* Further ramp in consolidated revenue growth into the mid-single-digit range.
* An adjusted consolidated operating income margin in the 25 percent to 26 percent range, up from the company’s 23 percent to 24 percent range in 2007, reflecting continued wireless progress, increased expense savings from merger synergies and operational initiatives offsetting expected increased expense for deployment of AT&T U-verse services.
* A wireless OIBDA margin for the full year in the low-40 percent range, trending toward the mid-40 percent range by year’s end.
* Continued double-digit growth in adjusted earnings per share.
* Growth in free cash flow to the $16 billion to $17 billion range (free cash flow is cash from operations minus capital expenditures).
* Continued capital expenditures in the midteens as a percentage of total revenues as the company expands its advanced wireless and wired network capabilities.
* Significant progress in AT&T U-verse deployment with total AT&T U-verse video subscribers expected to exceed 1 million by the end of 2008. Beginning its commitment to bring the benefits of AT&T U-verse services to the Southeast, AT&T today began a controlled launch of U-verse services in the Atlanta area. For the full year 2008, AT&T's outlook anticipates additional dilution from its U-verse deployment of approximately $0.12 to $0.14 per share above 2007 levels.
Multiyear Outlook
AT&T reaffirmed confidence that its ramping revenue growth combined with continuous cost improvements and share repurchases give it the ability to deliver sustained double-digit growth in adjusted earnings per share and strong growth in free cash flow in 2008 and on an ongoing basis.
With its strong operational assets and emerging opportunities, AT&T is confident in its ability to drive revenue growth in the mid-single-digit range or better over the coming years. The company expects to deliver revenue growth in every major revenue category over the next few years, and revenues from YELLOWPAGES.COM and content advertising are expected to exceed $1.5 billion by 2010, up from approximately $600 million in 2007.
AT&T also has substantial opportunities to reduce costs over the next few years, through previously identified merger synergies and through new operational initiatives in network operations, information technology and customer care. AT&T expects its annual operating-expense-savings run rate from AT&T Corp. and BellSouth merger synergies, and from operational initiatives to double over the next three years, growing from approximately $3.6 billion in 2007 to more than $7.0 billion in 2010.
AT&T also announced a major expansion of its AT&T-U-verse services to include the company’s Southeast region, with deployment now expected to reach approximately 30 million living units across 22 states by the end of 2010. AT&T expects that its U-verse services will represent a multibillion-dollar revenue stream by 2010.
For more information, visit www.att.com/investor.relations.