The key topic of focus during the announcement is likely to be
HBO Max, which is set to launch in May 2020 with 10,000 hours of premium
content at $14.99 a month. HBO has a wide library of popular content which will
be an advantage for the company.
AT&T is developing a company-wide membership model that
will tap into its 170 million direct-to-consumer relationships, 5,500 retail
stores and 3.2 billion annual customer touchpoints. However, higher costs
related to investments in HBO Max might hurt margins in the quarter.
In the third quarter of 2019, AT&T beat earnings estimates while revenues fell short of expectations. Revenues fell 3% to $44.6 billion while adjusted EPS rose 4% to $0.94.
Last quarter, the
company revealed a 3-year financial outlook and capital allocation plan, which is
expected to drive significant growth in EBITDA margins and EPS, and allow it to
invest in growth areas, retire shares and pay down debt. The capital allocation
plan includes dividend growth and payout ratio, share retirement, retiring 100%
of the acquisition debt from the Time Warner deal, and continued disciplined
review of the portfolio.
In 2019, AT&T
had planned to close about $14 billion from monetizing non-core assets. In
2020, the company expects to monetize $5 billion to $10 billion of
non-strategic assets.
Shares of AT&T have gained over 25% in the past one year.