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AT&T Backs 2020 Outlook

AT&T Inc. (T) said it still expects 2020 adjusted earnings per share to be in the $3.60 to $3.70 range, including HBO Max investment of $1.5 billion to $2 billion and significant share retirements. It expects revenue growth of 1%-2%, including wireless equipment revenue gains from 5G device adoption.

AT&T said it has retired about 140 million shares it issued for the Time Warner acquisition, including about 80 million shares so far in 2020 under its accelerated share repurchase (ASR) agreement.

Funding for the ASR-related share retirements will adversely affect the company's first quarter 2020 net debt-to-adjusted EBITDA ratio, but the company expects this ratio will come back down during the rest of 2020.

AT&T noted that its fourth-quarter 2019 revenues will reflect lower Warner Bros. theatrical revenues as compared to a strong fourth-quarter 2018 film slate. Fourth-quarter revenues are also expected to reflect U.S. wireless equipment sales revenue slightly lower than fourth quarter of 2018. The company expects to see foreign exchange rate pressure in some of its international operations.

The company reiterated that it is focused on exceeding the annual 6% to 8% reduction in network operational costs it has achieved in recent years. The company has already virtualized 71% of its network functions and expects to meet its goal of 75% by the end of 2020.

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