AT&T Reports Fourth-Quarter and Full-Year Results
Solid wireless, fiber and HBO Max subscriber gains with continuing strong cash flows
Fourth-Quarter Consolidated Results
•Consolidated revenues of $45.7 billion
•Cash from operations of $10.1 billion
•Capital expenditures of $2.4 billion; gross capital investment of $4.3 billion1
•Free cash flow of $7.7 billion2; total dividend payout ratio of 49%3
•Reported EPS of ($1.95) due to non-cash charges compared to $0.33 diluted EPS in the year-ago quarter
•Adjusted EPS of $0.75 compared to $0.89 in the year-ago quarter
◦Includes COVID-19 impacts of ($0.08): $0.01 incremental cost reductions and ($0.09) of estimated revenues
Full-Year Consolidated Results
•Consolidated revenues of $171.8 billion
•Cash from operations of $43.1 billion
•Capital expenditures of $15.7 billion; gross capital investment of $19.7 billion1
•Free cash flow of $27.5 billion2; total dividend payout ratio 55%3
•Reported EPS of ($0.75) due to non-cash charges compared to $1.89 diluted EPS in the prior year
•Adjusted EPS of $3.18 compared to $3.57 in the prior year
◦Includes COVID-19 impacts of ($0.43): ($0.10) of incremental costs and ($0.33) of estimated revenues
Note: AT&T’s fourth-quarter earnings conference call will be webcast at 8:30 a.m. ET on Wednesday, January 27, 2021. The webcast and related materials will be available on AT&T’s Investor Relations website at https://investors.att.com.
DALLAS, January 27, 2021 — AT&T Inc. (NYSE:T) reported fourth-quarter results that showed continuing subscriber growth in wireless, fiber and HBO Max while continuing to reflect strong cash flows and financial strength.
“We ended the year with strong momentum in our market focus areas of broadband connectivity and software-based entertainment,” said John Stankey, AT&T CEO. “By investing in our high-quality wireless customer base, we had our best full-year of postpaid phone net adds in a decade and our second lowest postpaid phone churn ever. Our fiber broadband net adds passed the 1 million mark for the year. And the release of Wonder Woman 1984 helped drive our domestic HBO Max and HBO subscribers to more than 41 million, a full two years faster than our initial forecast.”
Fourth-Quarter Highlights
Communications
•Mobility:
◦800,000 postpaid phone net adds; 1.5 million for full year
◦1.2 million postpaid net adds; 2.2 million for full year
◦Nearly 6 million total domestic wireless net adds
◦Postpaid phone churn of 0.76%, second-lowest quarter ever; full-year churn of 0.79%
◦Revenues up 7.6%; service revenues up 0.5%; equipment revenues up 28.3%
◦Nation’s fastest 5G wireless network and, for the 8th consecutive quarter in a row, the fastest network in the nation4
•Broadband:
◦273,000 AT&T Fiber net adds; more than 1 million for full year
◦Solid IP broadband ARPU growth of 4.6% growth
•Video:
◦AT&T TV gains helped offset premium TV loss
▪617,000 net loss, the result of lower churn and higher quality base
WarnerMedia
•Total domestic HBO and HBO Max subscribers5 top 41 million and nearly 61 million6 worldwide
•HBO Max activations doubled since end of third-quarter 2020; 17.2 million as of end of 4Q
Consolidated Financial Results
AT&T’s consolidated revenues for the fourth quarter totaled $45.7 billion versus $46.8 billion in the year-ago quarter. The COVID-19 pandemic impacted revenues across most businesses, particularly WarnerMedia and domestic wireless service revenues, which were pressured from lower international roaming. For the quarter, revenue declines included domestic video, Warner Bros. television and theatrical products, legacy wireline services, and Latin America, which includes foreign exchange pressure. These declines were partly offset by higher domestic wireless revenues, primarily from equipment sales.
Operating expenses were $56.4 billion versus $41.5 billion in the year-ago quarter. Expenses increased due to higher non-cash asset impairments and abandonments (including $15.5 billion for the Video business), higher domestic wireless equipment costs and higher HBO Max investments. These increases were partially offset by lower Video and Warner Bros. costs associated with lower revenues and foreign exchange impacts on Latin America expenses.
Operating income/(loss) was ($10.7) billion versus $5.3 billion in the year-ago quarter due to the non-cash asset impairments in the quarter and the impact of lower revenues. Operating income margin was (23.5%) versus 11.4% in the year-ago quarter. When adjusted for non-cash asset impairments, merger-amortization costs and other items, operating income was $7.8 billion versus $9.2 billion in the year-ago quarter, and operating income margin was 17.1% versus 19.6% in the year-ago quarter.
Fourth-quarter net loss attributable to common stock was ($13.9) billion, or ($1.95) per common share, versus net income attributable to common stock of $2.4 billion, or $0.33 per diluted common share, in the year-ago quarter. Adjusting for $2.70, which includes asset impairments, an actuarial loss on benefit plans, merger-amortization costs and other items, earnings per diluted common share was $0.75 compared to an adjusted $0.89 in the year-ago quarter. The company did not adjust for COVID-19 impacts of ($0.08): $0.01 incremental cost reductions and ($0.09) of estimated revenues.
Cash from operating activities was $10.1 billion, and capital expenditures were $2.4 billion. Gross capital investment – which consists of capital expenditures, cash payments for vendor payments and excludes FirstNet reimbursements – totaled $4.3 billion. Capital investment – which consists of capital expenditures plus cash payments for vendor financing – totaled $3.4 billion, which includes $1.0 billion of cash payments for vendor financing and $920 million of FirstNet reimbursements. Free cash flow – cash from operating activities minus capital expenditures – was $7.7 billion for the quarter. Net debt declined by $1.6 billion sequentially in the quarter, and net debt to adjusted EBITDA at the end of the fourth quarter was 2.70x.7
Full-Year Results
For full-year 2020 when compared with 2019 results, AT&T's consolidated revenues totaled $171.8 billion versus $181.2 billion. The COVID-19 pandemic impacted revenues across all businesses, particularly WarnerMedia and domestic wireless service revenues, which were pressured from lower international roaming. Declines at WarnerMedia included lower content and advertising revenues, in part due to COVID-19. Revenues also declined in domestic video, legacy wireline services and Latin America, which was impacted by foreign exchange pressures. Growth from domestic wireless equipment and strategic and managed services partly offset these declines.
Operating expenses were $165.4 billion in 2020 compared with $153.2 billion in 2019, primarily due to non-cash asset impairments and abandonments that were $17.4 billion higher than in 2019, costs relating to launching and operating HBO Max, higher domestic wireless equipment costs, incremental COVID-19 costs, higher severance charges, and higher subscriber acquisition and fulfillment costs. These increases were partially offset by lower Video and WarnerMedia costs from lower revenues, foreign exchange impacts on Latin America expenses, a one-time spectrum gain and cost efficiencies.
Compared with results from 2019, operating income was $6.4 billion, down 77.1% primarily due to higher asset impairments and abandonments and COVID-19 impacts; and operating income margin was 3.7% versus 15.4%. With adjustments for both years, operating income was $34.1 billion versus $38.6 billion in 2019, and operating income margin was 19.8% versus 21.3%.
2020 net loss attributable to common stock was ($5.4) billion, or ($0.75) per common share, versus net income attributable to common stock of $13.9 billion, or $1.89 per diluted common share, in 2019. With adjustments for both years, earnings per diluted common share was $3.18 compared to $3.57 in 2019.
Cash from operating activities was $43.1 billion, and capital expenditures were $15.7 billion. Gross capital investment – which includes capital expenditures, cash payments for vendor financing and excludes FirstNet reimbursements – was $19.7 billion. Capital investment – which consists of capital expenditures plus cash payments for vendor financing – totaled $18.6 billion, including $3.0 billion of cash payments for vendor financing and $1.1 billion of FirstNet reimbursements. Full-year free cash flow2 was $27.5 billion compared to $29.0 billion in 2019. The company’s free cash flow total dividend payout ratio for the full year was 55%.3 Net debt declined by $3.5 billion in the year.
2021 Outlook
In 2021, the company expects:
•Consolidated revenue growth in the 1% range
•Adjusted EPS to be stable with 20209
•Gross capital investment1 in the $21 billion range with capital expenditures in the $18 billion range
•2021 free cash flow8 in the $26 billion range, with a full-year total dividend payout ratio in the high 50’s% range.3
1Gross capital investment includes capital expenditures and cash payments for vendor financing and excludes FirstNet reimbursements. In 4Q20, gross capital investment included $1 billion in vendor financing payments and excluded $920 million of FirstNet reimbursements. In 2020, gross capital investment included $3.0 billion in vendor financing payments and excluded $1.1 billion of FirstNet reimbursements. In 2021, vendor financing payments are expected to be in the $2 billion range and FirstNet reimbursements are expected to be about $1 billion.
2 Free cash flow is a non-GAAP financial measure that is used by investors and credit rating agencies to provide relevant and useful information. Free cash flow is cash from operating activities minus capital expenditures. For 2020, Cash from operating activities was $43.1 billion and 2020 capital expenditures were $15.7 billion.
3 Free cash flow total dividend payout ratio is total dividends paid divided by free cash flow. In 4Q20, total dividends paid were $3.7 billion. For full-year 2020, dividends paid totaled $15.0 billion.
4 Fastest 5G network based on AT&T analysis of Ookla® of Speedtest Intelligence® data median 5G download speeds for Q4 2020. Fastest network based on analysis by Ookla® of Speedtest Intelligence® data of average download speeds for Q1, Q2, Q3 and Q4 2019, and median download speeds for Q1, Q2, Q3 and Q4 2020. Ookla trademarks used under license and reprinted with permission.
5 Domestic HBO Max and HBO subscribers exclude customers that are part of a free trial.
6 Worldwide HBO Max and HBO subscribers consist of domestic and international HBO subscribers and domestic HBO Max subscribers and excludes basic subscribers and Cinemax subscribers.
7Net Debt to adjusted EBITDA ratios are non-GAAP financial measures that are used by investors and credit rating agencies to provide relevant and useful information. Our Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt by the sum of the most recent four quarters of Adjusted EBITDA.
8 Free cash flow is cash from operating activities minus capital expenditures. Due to high variability and difficulty in predicting items that impact cash from operating activities and capital expenditures, the company is not able to provide a reconciliation between projected free cash flow and the most comparable GAAP metric without unreasonable effort.
9 The company expects adjustments to 2021 reported diluted EPS to include merger-related amortization in the range of $5.9 billion and other adjustments, a non-cash mark-to-market benefit plan gain/loss, and other items. Expect the mark-to-market adjustment, which is driven by interest rates and investment returns that are not reasonably estimable at this time, to be a significant item. Our 2021 EPS depends on future levels of revenues and expenses which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between our non-GAAP metrics and the reported GAAP metrics without unreasonable effort9
*About AT&T
AT&T Inc. (NYSE:T) is a diversified, global leader in telecommunications, media and entertainment, and technology. AT&T Communications provides more than 100 million U.S. consumers with entertainment and communications experiences across TV, mobile and broadband. Plus, it serves high-speed, highly secure connectivity and smart solutions to nearly 3 million business customers. WarnerMedia is a leading media and entertainment company that creates and distributes premium and popular content to global audiences through its consumer brands, including: HBO, HBO Max, Warner Bros., TNT, TBS, truTV, CNN, DC Entertainment, New Line, Cartoon Network, Adult Swim and Turner Classic Movies. Xandr, now part of WarnerMedia, provides marketers with innovative and relevant advertising solutions for consumers around premium video content and digital advertising through its platform. AT&T Latin America provides pay-TV services across 10 countries and territories in Latin America and the Caribbean and wireless services to consumers and businesses in Mexico.
AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com. © 2021 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.
Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.
This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at https://investors.att.com.
For more information, contact:
Fletcher Cook
AT&T Inc.
Phone: 214-912-8541
Daphne Avila
AT&T Inc.
Phone: (972) 266-3866
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| AT&T Inc. | | | | | | |
| Financial Data | | | | | | |
| | | | | | |
| Consolidated Statements of Income |
| Dollars in millions except per share amounts | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| Service | $ | 39,051 | | $ | 41,475 | | (5.8) | % | $ | 152,767 | | $ | 163,499 | | (6.6) | % |
| Equipment | 6,640 | | 5,346 | | 24.2 | % | 18,993 | | 17,694 | | 7.3 | % |
| Total Operating Revenues | 45,691 | | 46,821 | | (2.4) | % | 171,760 | | 181,193 | | (5.2) | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Cost of revenues | | | | | | |
| Equipment | 7,084 | | 5,606 | | 26.4 | % | 19,706 | | 18,653 | | 5.6 | % |
| Broadcast, programming and operations | 7,750 | | 8,684 | | (10.8) | % | 27,305 | | 31,132 | | (12.3) | % |
Other cost of revenues (exclusive of depreciation and amortization shown separately below) | 8,076 | | 8,446 | | (4.4) | % | 32,909 | | 34,356 | | (4.2) | % |
| Selling, general and administrative | 10,182 | | 10,345 | | (1.6) | % | 38,039 | | 39,422 | | (3.5) | % |
| Asset impairments and abandonments | 16,365 | | 1,458 | | — | % | 18,880 | | 1,458 | | — | % |
| Depreciation and amortization | 6,979 | | 6,961 | | 0.3 | % | 28,516 | | 28,217 | | 1.1 | % |
| Total Operating Expenses | 56,436 | | 41,500 | | 36.0 | % | 165,355 | | 153,238 | | 7.9 | % |
| Operating Income (Loss) | (10,745) | | 5,321 | | — | % | 6,405 | | 27,955 | | (77.1) | % |
| Interest Expense | 1,894 | | 2,049 | | (7.6) | % | 7,925 | | 8,422 | | (5.9) | % |
| Equity in Net Income (Loss) of Affiliates | 106 | | (30) | | — | % | 95 | | 6 | | — | % |
| Other Income (Expense) — Net | (3,020) | | (104) | | — | % | (1,431) | | (1,071) | | (33.6) | % |
| Income (Loss) Before Income Taxes | (15,553) | | 3,138 | | — | % | (2,856) | | 18,468 | | — | % |
| Income Tax (Benefit) Expense | (2,038) | | 434 | | — | % | 965 | | 3,493 | | (72.4) | % |
| Net Income (Loss) | (13,515) | | 2,704 | | — | % | (3,821) | | 14,975 | | — | % |
Less: Net Income Attributable to
Noncontrolling Interest | (368) | | (310) | | (18.7) | % | (1,355) | | (1,072) | | (26.4) | % |
| Net Income (Loss) Attributable to AT&T | $ | (13,883) | | $ | 2,394 | | — | % | $ | (5,176) | | $ | 13,903 | | — | % |
| Less: Preferred Stock Dividends | (55) | | (3) | | — | % | (193) | | (3) | | — | % |
Net Income (Loss) Attributable
to Common Stock | $ | (13,938) | | $ | 2,391 | | — | % | $ | (5,369) | | $ | 13,900 | | — | % |
| | | | | | |
Basic Earnings Per Share Attributable
to Common Stock | $ | (1.95) | | $ | 0.33 | | — | % | $ | (0.75) | | $ | 1.90 | | — | % |
Weighted Average Common
Shares Outstanding (000,000) | 7,150 | | 7,312 | | (2.2) | % | 7,157 | | 7,319 | | (2.2) | % |
Diluted Earnings Per Share Attributable
to Common Stock | $ | (1.95) | | $ | 0.33 | | — | % | $ | (0.75) | | $ | 1.89 | | — | % |
Weighted Average Common
Shares Outstanding with Dilution (000,000) | 7,176 | | 7,341 | | (2.2) | % | 7,183 | | 7,348 | | (2.2) | % |
| | | | | | | | | | | |
| AT&T Inc. | | | |
| Financial Data | | | |
| | | |
| Consolidated Balance Sheets |
| Dollars in millions | |
| Unaudited | Dec. 31, | | Dec. 31, |
| 2020 | | 2019 |
| Assets | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | 9,740 | | | $ | 12,130 | |
| Accounts receivable - net of related allowance for credit loss of $1,221 and $1,235 | 20,215 | | | 22,636 | |
| Prepaid expenses | 1,822 | | | 1,631 | |
| Other current assets | 20,231 | | | 18,364 | |
| Total current assets | 52,008 | | | 54,761 | |
| Noncurrent Inventories and Theatrical Film and Television Production Costs | 14,752 | | | 12,434 | |
| Property, Plant and Equipment – Net | 127,315 | | | 130,128 | |
| Goodwill | 135,259 | | | 146,241 | |
| Licenses – Net | 93,840 | | | 97,907 | |
| Trademarks and Trade Names – Net | 23,297 | | | 23,567 | |
| Distribution Networks – Net | 13,793 | | | 15,345 | |
| Other Intangible Assets – Net | 15,386 | | | 20,798 | |
| Investments in and Advances to Equity Affiliates | 1,780 | | | 3,695 | |
| Operating Lease Right-Of-Use Assets | 24,714 | | | 24,039 | |
| Other Assets | 23,617 | | | 22,754 | |
| Total Assets | $ | 525,761 | | | $ | 551,669 | |
| Liabilities and Stockholders’ Equity | | | |
| Current Liabilities | | | |
| Debt maturing within one year | $ | 3,470 | | | $ | 11,838 | |
| Accounts payable and accrued liabilities | 49,032 | | | 45,956 | |
| Advanced billings and customer deposits | 6,176 | | | 6,124 | |
| Accrued taxes | 1,019 | | | 1,212 | |
| Dividends payable | 3,741 | | | 3,781 | |
| Total current liabilities | 63,438 | | | 68,911 | |
| Long-Term Debt | 153,775 | | | 151,309 | |
| Deferred Credits and Other Noncurrent Liabilities | | | |
| Deferred income taxes | 60,472 | | | 59,502 | |
| Postemployment benefit obligation | 18,276 | | | 18,788 | |
| Operating lease liabilities | 22,202 | | | 21,804 | |
| Other noncurrent liabilities | 28,358 | | | 29,421 | |
| Total deferred credits and other noncurrent liabilities | 129,308 | | | 129,515 | |
| Stockholders’ Equity | | | |
| Preferred stock | — | | | — | |
| Common stock | 7,621 | | | 7,621 | |
| Additional paid-in capital | 130,175 | | | 126,279 | |
| Retained earnings | 37,457 | | | 57,936 | |
| Treasury stock | (17,910) | | | (13,085) | |
| Accumulated other comprehensive income | 4,330 | | | 5,470 | |
| Noncontrolling interest | 17,567 | | | 17,713 | |
| Total stockholders’ equity | 179,240 | | | 201,934 | |
| Total Liabilities and Stockholders’ Equity | $ | 525,761 | | | $ | 551,669 | |
| | | |
| | | | | | | | | | | |
| AT&T Inc. | | | |
| Financial Data | | | |
| | | |
| Consolidated Statements of Cash Flows |
| Dollars in millions | |
| Unaudited | Year Ended |
| 2020 | | 2019 |
| Operating Activities | | | |
| Net income (loss) | $ | (3,821) | | | $ | 14,975 | |
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
| Depreciation and amortization | 28,516 | | | 28,217 | |
| Amortization of film and television costs | 8,603 | | | 9,587 | |
| Undistributed earnings from investments in equity affiliates | 38 | | | 295 | |
| Provision for uncollectible accounts | 1,972 | | | 2,575 | |
| Deferred income tax expense | 1,675 | | | 1,806 | |
| Net (gain) loss on investments, net of impairments | (742) | | | (1,218) | |
| Pension and postretirement benefit expense (credit) | (2,992) | | | (2,002) | |
| Actuarial (gain) loss on pension and postretirement benefits | 4,169 | | | 5,171 | |
| Asset impairments and abandonments | 18,880 | | | 1,458 | |
| Changes in operating assets and liabilities: | | | |
| Receivables | 2,216 | | | 2,812 | |
| Other current assets, inventories and theatrical film and television production costs | (13,070) | | | (12,852) | |
| Accounts payable and other accrued liabilities | (1,410) | | | (1,524) | |
| Equipment installment receivables and related sales | (1,429) | | | 548 | |
| Deferred customer contract acquisition and fulfillment costs | 376 | | | (910) | |
| Postretirement claims and contributions | (985) | | | (1,008) | |
| Other - net | 1,134 | | | 738 | |
| Total adjustments | 46,951 | | | 33,693 | |
| Net Cash Provided by Operating Activities | 43,130 | | | 48,668 | |
| | | |
| Investing Activities | | | |
| Capital expenditures, including $(123) and $(200) of interest during construction | (15,675) | | | (19,635) | |
| Acquisitions, net of cash acquired | (1,851) | | | (1,809) | |
| Dispositions | 3,641 | | | 4,684 | |
| (Purchases), sales and settlements of securities and investments, net | 497 | | | 435 | |
| Advances to and investments in equity affiliates, net | (160) | | | (365) | |
| Net Cash Used in Investing Activities | (13,548) | | | (16,690) | |
| | | |
| Financing Activities | | | |
| Net change in short-term borrowings with original maturities of three months or less | (17) | | | (276) | |
| Issuance of other short-term borrowings | 9,440 | | | 4,012 | |
| Repayment of other short-term borrowings | (9,467) | | | (6,904) | |
| Issuance of long-term debt | 31,988 | | | 17,039 | |
| Repayment of long-term debt | (39,964) | | | (27,592) | |
| Payment of vendor financing | (2,966) | | | (3,050) | |
| Issuance of preferred stock | 3,869 | | | 1,164 | |
| Purchase of treasury stock | (5,498) | | | (2,417) | |
| Issuance of treasury stock | 105 | | | 631 | |
| Issuance of preferred interests in subsidiary | 1,979 | | | 7,876 | |
| Redemption of preferred interest in subsidiary | (1,950) | | | — | |
| Dividends paid | (14,956) | | | (14,888) | |
| Other - net | (4,570) | | | (678) | |
| Net Cash Used in Financing Activities | (32,007) | | | (25,083) | |
| Net (decrease) increase in cash and cash equivalents and restricted cash | (2,425) | | | 6,895 | |
| Cash and cash equivalents and restricted cash beginning of year | 12,295 | | | 5,400 | |
| Cash and Cash Equivalents and Restricted Cash End of Year | $ | 9,870 | | | $ | 12,295 | |
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| AT&T Inc. | | | |
| Consolidated Supplementary Data | | | |
| | | | | | |
| Supplementary Financial Data |
| Dollars in millions except per share amounts | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Capital expenditures | | | | | | |
| Purchase of property and equipment | $ | 2,361 | | $ | 3,752 | | (37.1) | % | $ | 15,552 | | $ | 19,435 | | (20.0) | % |
| Interest during construction | 31 | | 40 | | (22.5) | % | 123 | | 200 | | (38.5) | % |
| Total Capital Expenditures | $ | 2,392 | | $ | 3,792 | | (36.9) | % | $ | 15,675 | | $ | 19,635 | | (20.2) | % |
| | | | | | |
| Dividends Declared per Common Share | $ | 0.52 | | $ | 0.52 | | — | % | $ | 2.08 | | $ | 2.05 | | 1.5 | % |
| | | | | | |
| End of Period Common Shares Outstanding (000,000) | | | | 7,126 | | 7,255 | | (1.8) | % |
| Debt Ratio | | | | 46.7 | % | 44.7 | % | 200 | BP |
| Total Employees | | | | 230,760 | | 247,800 | | (6.9) | % |
| | | |
| Supplementary Operating Data |
| Subscribers and connections in thousands | | | | | |
| Unaudited | | | | December 31, | Percent |
| | | | 2020 | 2019 | Change |
| Broadband Connections | | | | | | |
| IP | | | | 14,818 | | 14,659 | | 1.1 | % |
| DSL | | | | 566 | | 730 | | (22.5) | % |
| Total Broadband Connections | | | | 15,384 | | 15,389 | | — | % |
| | | | | | |
| Voice Connections | | | | | | |
| Network Access Lines | | | | 7,263 | | 8,487 | | (14.4) | % |
| U-verse VoIP Connections | | | | 3,816 | | 4,370 | | (12.7) | % |
| Total Retail Voice Connections | | | | 11,079 | | 12,857 | | (13.8) | % |
| | | | | | |
| Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Broadband Net Additions | | | | | | |
| IP | 57 | | (127) | | — | % | 159 | | (94) | | — | % |
| DSL | (48) | | (59) | | 18.6 | % | (164) | | (219) | | 25.1 | % |
| Total Broadband Net Additions | 9 | | (186) | | — | % | (5) | | (313) | | 98.4 | % |
COMMUNICATIONS SEGMENT
Our Communications segment consists of our Mobility, Video, Broadband and Business Wireline business units. During the fourth quarter, to further accelerate our ability to innovate and execute in our fast-growing broadband and fiber business, we began operating our video business separately from our broadband and legacy telephony operations. We have recast our results for all prior periods to split the Entertainment Group into two separate business units, Video and Broadband, and remove video operations from Business Wireline, combining all video operations in Video.
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| Segment Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Segment Operating Revenues | | | | | | |
| Mobility | $ | 20,119 | | $ | 18,700 | | 7.6 | % | $ | 72,564 | | $ | 71,056 | | 2.1 | % |
| Video | 7,168 | | 8,075 | | (11.2) | % | 28,610 | | 32,124 | | (10.9) | % |
| Broadband | 3,116 | | 3,161 | | (1.4) | % | 12,318 | | 13,012 | | (5.3) | % |
| Business Wireline | 6,319 | | 6,586 | | (4.1) | % | 25,358 | | 26,167 | | (3.1) | % |
| Total Segment Operating Revenues | 36,722 | | 36,522 | | 0.5 | % | 138,850 | | 142,359 | | (2.5) | % |
| | | | | | |
| Segment Operating Contribution | | | | | | |
| Mobility | 5,088 | | 5,503 | | (7.5) | % | 22,372 | | 22,321 | | 0.2 | % |
| Video | 98 | | 39 | | — | % | 1,729 | | 2,064 | | (16.2) | % |
| Broadband | 366 | | 686 | | (46.6) | % | 1,822 | | 2,681 | | (32.0) | % |
| Business Wireline | 1,006 | | 1,283 | | (21.6) | % | 4,598 | | 5,164 | | (11.0) | % |
| Total Segment Operating Contribution | $ | 6,558 | | $ | 7,511 | | (12.7) | % | $ | 30,521 | | $ | 32,230 | | (5.3) | % |
| | | | | | |
Mobility
Mobility provides nationwide wireless service and equipment.
| | | | | | | | | | | | | | | | | | | | |
| Mobility Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| Service | $ | 14,022 | | $ | 13,948 | | 0.5 | % | $ | 55,542 | | $ | 55,331 | | 0.4 | % |
| Equipment | 6,097 | | 4,752 | | 28.3 | % | 17,022 | | 15,725 | | 8.2 | % |
| Total Operating Revenues | 20,119 | | 18,700 | | 7.6 | % | 72,564 | | 71,056 | | 2.1 | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Operations and support | 13,023 | | 11,170 | | 16.6 | % | 42,106 | | 40,681 | | 3.5 | % |
| Depreciation and amortization | 2,008 | | 2,027 | | (0.9) | % | 8,086 | | 8,054 | | 0.4 | % |
| Total Operating Expenses | 15,031 | | 13,197 | | 13.9 | % | 50,192 | | 48,735 | | 3.0 | % |
| Operating Income | 5,088 | | 5,503 | | (7.5) | % | 22,372 | | 22,321 | | 0.2 | % |
| Equity in Net Income (Loss) of Affiliates | — | | — | | — | % | — | | — | | — | % |
| Operating Contribution | $ | 5,088 | | $ | 5,503 | | (7.5) | % | $ | 22,372 | | $ | 22,321 | | 0.2 | % |
| | | | | | |
| Operating Income Margin | 25.3 | % | 29.4 | % | (410) | BP | 30.8 | % | 31.4 | % | (60) | BP |
| | | | | | |
| Supplementary Operating Data |
| Subscribers and connections in thousands | | | | | |
| Unaudited | | | December 31, | Percent |
| | | | 2020 | 2019 | Change |
| Mobility Subscribers | | | | | | |
| Postpaid | | | | 77,154 | | 75,207 | | 2.6 | % |
| Prepaid | | | | 18,102 | | 17,803 | | 1.7 | % |
| Reseller | | | | 6,535 | | 6,893 | | (5.2) | % |
| Connected Devices | | | | 80,767 | | 65,986 | | 22.4 | % |
| Total Mobility Subscribers | | | | 182,558 | | 165,889 | | 10.0 | % |
| | | | | | |
| Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Mobility Net Additions | | | | | | |
Postpaid Phone Net Additions1 | 800 | | 229 | | — | % | 1,457 | | 483 | | — | % |
Total Phone Net Additions1 | 760 | | 209 | | — | % | 1,640 | | 989 | | 65.8 | % |
| | | | | | |
Postpaid1, 2 | 1,229 | | 135 | | — | % | 2,183 | | (435) | | — | % |
Prepaid2, 3 | 14 | | 8 | | 75.0 | % | 379 | | 677 | | (44.0) | % |
Reseller2 | (197) | | (251) | | 21.5 | % | (449) | | (928) | | 51.6 | % |
| Connected Devices | 4,809 | | 3,698 | | 30.0 | % | 14,785 | | 14,645 | | 1.0 | % |
| Total Mobility Net Additions | 5,855 | | 3,590 | | 63.1 | % | 16,898 | | 13,959 | | 21.1 | % |
| | | | | | |
Postpaid Churn1 | 0.94 | % | 1.29 | % | (35) | BP | 0.98 | % | 1.18 | % | (20) BP |
Postpaid Phone-Only Churn1 | 0.76 | % | 1.07 | % | (31) | BP | 0.79 | % | 0.95 | % | (16) BP |
1Fourth-quarter 2020 subscriber net adds include 35 postpaid (28 phone) “Keep Americans Connected Pledge” paying accounts. The fourth quarter postpaid churn excluding “Keep Americans Connected Pledge” paying accounts was 0.96% (0.78% phone), with no impact for the year ended December 31, 2020. |
2The year ended December 31, 2020, includes subscribers transferred in connection with business dispositions. |
3The year ended December 31, 2020, includes 188 subscriber disconnections resulting from updating our prepaid activation policy. |
Video
| | | | | | | | | | | | | | | | | | | | |
| Video provides video, including over-the-top (OTT) services and also sells advertising on video distribution platforms. Video results were previously reported in the Entertainment Group and Business Wireline business units. |
| | | | | | |
| Video Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| Service | $ | 7,124 | | $ | 8,074 | | (11.8) | % | $ | 28,465 | | $ | 32,123 | | (11.4) | % |
| Equipment | 44 | | 1 | | — | % | 145 | | 1 | | — | % |
| Total Operating Revenues | 7,168 | | 8,075 | | (11.2) | % | 28,610 | | 32,124 | | (10.9) | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Operations and support | 6,549 | | 7,447 | | (12.1) | % | 24,619 | | 27,599 | | (10.8) | % |
| Depreciation and amortization | 521 | | 589 | | (11.5) | % | 2,262 | | 2,461 | | (8.1) | % |
| Total Operating Expenses | 7,070 | | 8,036 | | (12.0) | % | 26,881 | | 30,060 | | (10.6) | % |
| Operating Income | 98 | | 39 | | — | % | 1,729 | | 2,064 | | (16.2) | % |
| Equity in Net Income (Loss) of Affiliates | — | | — | | — | % | — | | — | | — | % |
| Operating Contribution | $ | 98 | | $ | 39 | | — | % | $ | 1,729 | | $ | 2,064 | | (16.2) | % |
| | | | | | |
| Operating Income Margin | 1.4 | % | 0.5 | % | 90 | BP | 6.0 | % | 6.4 | % | (40) | BP |
| | | | | | |
| Supplementary Operating Data |
| Subscribers and connections in thousands | | | | | |
| Unaudited | | | | December 31, | Percent |
| | | | 2020 | 2019 | Change |
| Video Connections | | | | | | |
| Premium TV | | | | 16,505 | | 19,496 | | (15.3) | % |
| AT&T TV Now | | | | 656 | | 926 | | (29.2) | % |
| Total Video Connections | | | | 17,161 | | 20,422 | | (16.0) | % |
| | | | | | |
| Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Video Net Additions | | | | | | |
Premium TV 1 | (617) | | (946) | | 34.8 | % | (2,992) | | (3,430) | | 12.8 | % |
| AT&T TV Now | (27) | | (219) | | 87.7 | % | (270) | | (665) | | 59.4 | % |
| Total Video Net Additions | (644) | | (1,165) | | 44.7 | % | (3,262) | | (4,095) | | 20.3 | % |
1Fourth-quarter 2020 subscriber net adds include 4 premium TV “Keep Americans Connected Pledge” paying accounts. |
Broadband
Broadband provides internet, including broadband fiber, and legacy telephony voice communication services to residential customers. Broadband was previously combined with the majority of our Video business unit and reported as Entertainment Group. Results have been recast to conform to the current period’s presentation of separate Video and Broadband business units.
| | | | | | | | | | | | | | | | | | | | |
| Broadband Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| | | | | | |
| High-speed internet | $ | 2,205 | | $ | 2,107 | | 4.7 | % | $ | 8,534 | | $ | 8,403 | | 1.6 | % |
| Legacy voice and data services | 534 | | 604 | | (11.6) | % | 2,213 | | 2,573 | | (14.0) | % |
| Other service and equipment | 377 | | 450 | | (16.2) | % | 1,571 | | 2,036 | | (22.8) | % |
| Total Operating Revenues | 3,116 | | 3,161 | | (1.4) | % | 12,318 | | 13,012 | | (5.3) | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Operations and support | 2,012 | | 1,749 | | 15.0 | % | 7,582 | | 7,451 | | 1.8 | % |
| Depreciation and amortization | 738 | | 726 | | 1.7 | % | 2,914 | | 2,880 | | 1.2 | % |
| Total Operating Expenses | 2,750 | | 2,475 | | 11.1 | % | 10,496 | | 10,331 | | 1.6 | % |
| Operating Income | 366 | | 686 | | (46.6) | % | 1,822 | | 2,681 | | (32.0) | % |
| Equity in Net Income (Loss) of Affiliates | — | | — | | — | % | — | | — | | — | % |
| Operating Contribution | $ | 366 | | $ | 686 | | (46.6) | % | $ | 1,822 | | $ | 2,681 | | (32.0) | % |
| | | | | | |
| Operating Income Margin | 11.7 | % | 21.7 | % | (1,000) | BP | 14.8 | % | 20.6 | % | (580) | BP |
| | | | | | | |
| Supplementary Operating Data |
| Subscribers and connections in thousands | | | | | |
| Unaudited | | | | December 31, | Percent |
| | | | 2020 | 2019 | Change |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Broadband Connections | | | | | | |
| Total Broadband Connections | | | | 14,100 | | 14,119 | | (0.1) | % |
| Fiber Broadband Connections | | | | 4,951 | | 3,887 | | 27.4 | % |
| | | | | | |
| Voice Connections | | | | | | |
| Retail Consumer Switched Access Lines | | | | 2,862 | | 3,329 | | (14.0) | % |
| U-verse Consumer VoIP Connections | | | | 3,231 | | 3,794 | | (14.8) | % |
| Total Retail Consumer Voice Connections | | | | 6,093 | | 7,123 | | (14.5) | % |
| | | | | | |
| Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |
| Broadband Net Additions | | | | | | |
Total Broadband Net Additions1 | (2) | | (182) | | 98.9 | % | (19) | | (290) | | 93.4 | % |
| Fiber Broadband Net Additions | 273 | | 191 | | 42.9 | % | 1,064 | | 1,124 | | (5.3) | % |
1Fourth-quarter 2020 subscriber net adds include 4 “Keep Americans Connected Pledge” paying accounts. |
Business Wireline
Business Wireline unit provides advanced IP-based services, as well as traditional data services to business customers. Results have been recast to conform to the current period's presentation of a separate Video business unit.
| | | | | | | | | | | | | | | | | | | | |
| Business Wireline Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| Strategic and managed services | $ | 4,006 | | $ | 3,925 | | 2.1 | % | $ | 15,788 | | $ | 15,430 | | 2.3 | % |
| Legacy voice and data services | 1,956 | | 2,207 | | (11.4) | % | 8,183 | | 9,180 | | (10.9) | % |
| Other service and equipment | 357 | | 454 | | (21.4) | % | 1,387 | | 1,557 | | (10.9) | % |
| Total Operating Revenues | 6,319 | | 6,586 | | (4.1) | % | 25,358 | | 26,167 | | (3.1) | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Operations and support | 3,993 | | 4,056 | | (1.6) | % | 15,534 | | 16,069 | | (3.3) | % |
| Depreciation and amortization | 1,320 | | 1,247 | | 5.9 | % | 5,226 | | 4,934 | | 5.9 | % |
| Total Operating Expenses | 5,313 | | 5,303 | | 0.2 | % | 20,760 | | 21,003 | | (1.2) | % |
| Operating Income | 1,006 | | 1,283 | | (21.6) | % | 4,598 | | 5,164 | | (11.0) | % |
| Equity in Net Income (Loss) of Affiliates | — | | — | | — | % | — | | — | | — | % |
| Operating Contribution | $ | 1,006 | | $ | 1,283 | | (21.6) | % | $ | 4,598 | | $ | 5,164 | | (11.0) | % |
| | | | | | |
| Operating Income Margin | 15.9 | % | 19.5 | % | (360) | BP | 18.1 | % | 19.7 | % | (160) | BP |
Business Solutions
As a supplemental presentation to our Communications segment operating results, we are providing a view of our AT&T Business Solutions results which includes both wireless and fixed operations. This combined view presents a complete profile of the entire business customer relationship and underscores the importance of mobile solutions to serving our business customers. Results have been recast to conform to the current period's classification of consumer and business wireless subscribers and a separate Video reporting unit.
| | | | | | | | | | | | | | | | | | | | |
| Business Solutions Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| Wireless service | $ | 1,948 | | $ | 1,899 | | 2.6 | % | $ | 7,732 | | $ | 7,444 | | 3.9 | % |
| Strategic and managed services | 4,006 | | 3,925 | | 2.1 | % | 15,788 | | 15,430 | | 2.3 | % |
| Legacy voice and data services | 1,956 | | 2,207 | | (11.4) | % | 8,183 | | 9,180 | | (10.9) | % |
| Other service and equipment | 357 | | 454 | | (21.4) | % | 1,387 | | 1,557 | | (10.9) | % |
| Wireless equipment | 925 | | 855 | | 8.2 | % | 2,882 | | 2,754 | | 4.6 | % |
| Total Operating Revenues | 9,192 | | 9,340 | | (1.6) | % | 35,972 | | 36,365 | | (1.1) | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Operations and support | 6,091 | | 5,960 | | 2.2 | % | 22,713 | | 22,714 | | — | % |
| Depreciation and amortization | 1,640 | | 1,554 | | 5.5 | % | 6,509 | | 6,148 | | 5.9 | % |
| Total Operating Expenses | 7,731 | | 7,514 | | 2.9 | % | 29,222 | | 28,862 | | 1.2 | % |
| Operating Income | 1,461 | | 1,826 | | (20.0) | % | 6,750 | | 7,503 | | (10.0) | % |
| Equity in Net Income (Loss) of Affiliates | — | | — | | — | % | — | | — | | — | % |
| Operating Contribution | $ | 1,461 | | $ | 1,826 | | (20.0) | % | $ | 6,750 | | $ | 7,503 | | (10.0) | % |
| | | | | | |
| Operating Income Margin | 15.9 | % | 19.6 | % | (370) | BP | 18.8 | % | 20.6 | % | (180) | BP |
WARNERMEDIA SEGMENT
The WarnerMedia segment develops, produces and distributes feature films, television, gaming and other content in various physical and digital formats globally, and also includes our Xandr business, which utilizes data analytics to provide targeted advertising services. Results from Turner, Home Box Office (HBO) and Warner Bros. businesses are combined with AT&T's Regional Sports Network (RSN), Otter Media Holdings and Xandr in the WarnerMedia segment. All previously reported periods have been recast to include Xandr, which was a separate reportable segment prior to the second quarter of 2020 and to remove the Crunchyroll anime business that was classified as held-for-sale.
| | | | | | | | | | | | | | | | | | | | |
| Segment Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Segment Operating Revenues | | | | | | |
| Turner | $ | 3,242 | | $ | 3,262 | | (0.6) | % | $ | 12,568 | | $ | 13,122 | | (4.2) | % |
| HBO | 1,903 | | 1,704 | | 11.7 | % | 6,808 | | 6,749 | | 0.9 | % |
| Warner Bros. | 3,247 | | 4,118 | | (21.2) | % | 12,154 | | 14,358 | | (15.4) | % |
| Eliminations and other | 162 | | 369 | | (56.1) | % | (1,088) | | 1,030 | | — | % |
| Total Segment Operating Revenues | 8,554 | | 9,453 | | (9.5) | % | 30,442 | | 35,259 | | (13.7) | % |
| | | | | | |
| Cost of revenues | | | | | | |
| Turner | 1,356 | | 1,458 | | (7.0) | % | 5,330 | | 5,970 | | (10.7) | % |
| HBO | 1,201 | | 892 | | 34.6 | % | 4,356 | | 3,248 | | 34.1 | % |
| Warner Bros. | 2,057 | | 2,823 | | (27.1) | % | 8,236 | | 10,006 | | (17.7) | % |
| Selling, general and administrative | 1,698 | | 1,416 | | 19.9 | % | 5,803 | | 5,368 | | 8.1 | % |
| Eliminations and other | (477) | | (141) | | — | % | (2,146) | | (420) | | — | % |
| Depreciation and amortization | 177 | | 169 | | 4.7 | % | 671 | | 589 | | 13.9 | % |
| Total Operating Expenses | 6,012 | | 6,617 | | (9.1) | % | 22,250 | | 24,761 | | (10.1) | % |
| Operating Income | 2,542 | | 2,836 | | (10.4) | % | 8,192 | | 10,498 | | (22.0) | % |
| Equity in Net Income (Loss) of Affiliates | (13) | | 23 | | — | % | 18 | | 161 | | (88.8) | % |
| Total Segment Operating Contribution | $ | 2,529 | | $ | 2,859 | | (11.5) | % | $ | 8,210 | | $ | 10,659 | | (23.0) | % |
| | | | | | |
Turner
Turner creates and programs branded news, entertainment, sports and kids multi-platform content that is sold to various distribution affiliates. Turner also sells advertising on its networks and digital properties.
| | | | | | | | | | | | | | | | | | | | |
| Turner Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| Subscription | $ | 1,920 | | $ | 1,901 | | 1.0 | % | $ | 7,613 | | $ | 7,736 | | (1.6) | % |
| Advertising | 1,111 | | 1,126 | | (1.3) | % | 3,941 | | 4,566 | | (13.7) | % |
| Content and other | 211 | | 235 | | (10.2) | % | 1,014 | | 820 | | 23.7 | % |
| Total Operating Revenues | 3,242 | | 3,262 | | (0.6) | % | 12,568 | | 13,122 | | (4.2) | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Cost of revenues | 1,356 | | 1,458 | | (7.0) | % | 5,330 | | 5,970 | | (10.7) | % |
| Selling, general and administrative | 453 | | 469 | | (3.4) | % | 1,624 | | 1,770 | | (8.2) | % |
| Depreciation and amortization | 70 | | 68 | | 2.9 | % | 277 | | 235 | | 17.9 | % |
| Total Operating Expenses | 1,879 | | 1,995 | | (5.8) | % | 7,231 | | 7,975 | | (9.3) | % |
| Operating Income | 1,363 | | 1,267 | | 7.6 | % | 5,337 | | 5,147 | | 3.7 | % |
| Equity in Net Income (Loss) of Affiliates | (2) | | 6 | | — | % | (2) | | 52 | | — | % |
| Operating Contribution | $ | 1,361 | | $ | 1,273 | | 6.9 | % | $ | 5,335 | | $ | 5,199 | | 2.6 | % |
| | | | | | |
| Operating Income Margin | 42.0 | % | 38.8 | % | 320 | BP | 42.5 | % | 39.2 | % | 330 | BP |
Home Box Office
Home Box Office consists of premium pay television and OTT services domestically and premium pay, basic tier television and OTT services internationally, as well as content licensing and home entertainment.
| | | | | | | | | | | | | | | | | | | | |
| Home Box Office Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| Subscription | $ | 1,687 | | $ | 1,431 | | 17.9 | % | $ | 6,090 | | $ | 5,814 | | 4.7 | % |
| Content and other | 216 | | 273 | | (20.9) | % | 718 | | 935 | | (23.2) | % |
| Total Operating Revenues | 1,903 | | 1,704 | | 11.7 | % | 6,808 | | 6,749 | | 0.9 | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Cost of revenues | 1,201 | | 892 | | 34.6 | % | 4,356 | | 3,248 | | 34.1 | % |
| Selling, general and administrative | 591 | | 296 | | 99.7 | % | 1,672 | | 1,064 | | 57.1 | % |
| Depreciation and amortization | 25 | | 35 | | (28.6) | % | 98 | | 102 | | (3.9) | % |
| Total Operating Expenses | 1,817 | | 1,223 | | 48.6 | % | 6,126 | | 4,414 | | 38.8 | % |
| Operating Income | 86 | | 481 | | (82.1) | % | 682 | | 2,335 | | (70.8) | % |
| Equity in Net Income (Loss) of Affiliates | 1 | | (10) | | — | % | 16 | | 30 | | (46.7) | % |
| Operating Contribution | $ | 87 | | $ | 471 | | (81.5) | % | $ | 698 | | $ | 2,365 | | (70.5) | % |
| | | | | | |
| Operating Income Margin | 4.5 | % | 28.2 | % | (2,370) | BP | 10.0 | % | 34.6 | % | (2,460) | BP |
Warner Bros.
Warner Bros. consists of the production, distribution and licensing of television programming and feature films, the distribution of home entertainment products and the production and distribution of games.
| | | | | | | | | | | | | | | | | | | | |
| Warner Bros. Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| Theatrical product | $ | 1,186 | | $ | 1,570 | | (24.5) | % | $ | 4,389 | | $ | 5,978 | | (26.6) | % |
| Television product | 1,566 | | 1,983 | | (21.0) | % | 6,171 | | 6,367 | | (3.1) | % |
| Games and other | 495 | | 565 | | (12.4) | % | 1,594 | | 2,013 | | (20.8) | % |
| Total Operating Revenues | 3,247 | | 4,118 | | (21.2) | % | 12,154 | | 14,358 | | (15.4) | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Cost of revenues | 2,057 | | 2,823 | | (27.1) | % | 8,236 | | 10,006 | | (17.7) | % |
| Selling, general and administrative | 354 | | 450 | | (21.3) | % | 1,681 | | 1,810 | | (7.1) | % |
| Depreciation and amortization | 45 | | 40 | | 12.5 | % | 169 | | 162 | | 4.3 | % |
| Total Operating Expenses | 2,456 | | 3,313 | | (25.9) | % | 10,086 | | 11,978 | | (15.8) | % |
| Operating Income | 791 | | 805 | | (1.7) | % | 2,068 | | 2,380 | | (13.1) | % |
| Equity in Net Income (Loss) of Affiliates | (20) | | (11) | | (81.8) | % | (70) | | (30) | | — | % |
| Operating Contribution | $ | 771 | | $ | 794 | | (2.9) | % | $ | 1,998 | | $ | 2,350 | | (15.0) | % |
| | | | | | |
| Operating Income Margin | 24.4 | % | 19.5 | % | 490 | BP | 17.0 | % | 16.6 | % | 40 | BP |
LATIN AMERICA SEGMENT
The Latin America segment provides entertainment and wireless service outside of the U.S. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates. The Latin America segment contains two business units: Vrio and Mexico.
| | | | | | | | | | | | | | | | | | | | |
| Segment Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| | 2020 | 2019 | Change | 2020 | 2019 | Change |
| Segment Operating Revenues | | | | | | |
| Vrio | $ | 762 | | $ | 982 | | (22.4) | % | $ | 3,154 | | $ | 4,094 | | (23.0) | % |
| Mexico | 736 | | 776 | | (5.2) | % | 2,562 | | 2,869 | | (10.7) | % |
| Total Segment Operating Revenues | 1,498 | | 1,758 | | (14.8) | % | 5,716 | | 6,963 | | (17.9) | % |
| | | | | | |
| Segment Operating Contribution | | | | | | |
| Vrio | (41) | | 40 | | — | % | (142) | | 83 | | — | % |
| Mexico | (126) | | (127) | | 0.8 | % | (587) | | (718) | | 18.2 | % |
| Total Segment Operating Contribution | $ | (167) | | $ | (87) | | (92.0) | % | $ | (729) | | $ | (635) | | (14.8) | % |
| | | | | | |
Vrio
Vrio provides entertainment services to customers utilizing satellite technology in Latin America and the Caribbean.
| | | | | | | | | | | | | | | | | | | | |
| Vrio Results |
| Dollars in millions | | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| | 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | $ | 762 | | $ | 982 | | (22.4) | % | $ | 3,154 | | $ | 4,094 | | (23.0) | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Operations and support | 681 | | 780 | | (12.7) | % | 2,800 | | 3,378 | | (17.1) | % |
| Depreciation and amortization | 120 | | 164 | | (26.8) | % | 520 | | 660 | | (21.2) | % |
| Total Operating Expenses | 801 | | 944 | | (15.1) | % | 3,320 | | 4,038 | | (17.8) | % |
| Operating Income (Loss) | (39) | | 38 | | — | % | (166) | | 56 | | — | % |
| Equity in Net Income (Loss) of Affiliates | (2) | | 2 | | — | % | 24 | | 27 | | (11.1) | % |
| Operating Contribution | $ | (41) | | $ | 40 | | — | % | $ | (142) | | $ | 83 | | — | % |
| | | | | | |
| Operating Income Margin | (5.1) | % | 3.9 | % | (900) | BP | (5.3) | % | 1.4 | % | (670) | BP |
| | | | | | |
| Supplementary Operating Data |
| Subscribers and connections in thousands | | | | | | |
| Unaudited | | | | December 31, | Percent |
| | | | | 2020 | 2019 | Change |
| Vrio Video Subscribers | | | | 10,942 | | 13,331 | | (17.9) | % |
| | | | | | |
| | Fourth Quarter | Percent | Year Ended | Percent |
| | 2020 | 2019 | Change | 2020 | 2019 | Change |
Vrio Video Net Additions1 | 49 | | 25 | | 96.0 | % | (148) | | (285) | | 48.1 | % |
| | | | | | |
12020 excludes the impact of 2.2 million subscriber disconnections resulting from the closure of our DIRECTV operations in Venezuela. |
Mexico
Mexico provides wireless services and equipment to customers in Mexico.
| | | | | | | | | | | | | | | | | | | | |
| Mexico Results |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| | 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| Wireless service | $ | 459 | | $ | 487 | | (5.7) | % | $ | 1,656 | | $ | 1,863 | | (11.1) | % |
| Wireless equipment | 277 | | 289 | | (4.2) | % | 906 | | 1,006 | | (9.9) | % |
| Total Operating Revenues | 736 | | 776 | | (5.2) | % | 2,562 | | 2,869 | | (10.7) | % |
| | | | | | |
| Operating Expenses | | | | | | |
| Operations and support | 722 | | 773 | | (6.6) | % | 2,636 | | 3,085 | | (14.6) | % |
| Depreciation and amortization | 140 | | 130 | | 7.7 | % | 513 | | 502 | | 2.2 | % |
| Total Operating Expenses | 862 | | 903 | | (4.5) | % | 3,149 | | 3,587 | | (12.2) | % |
| Operating Income (Loss) | (126) | | (127) | | 0.8 | % | (587) | | (718) | | 18.2 | % |
| Equity in Net Income of Affiliates | — | | — | | — | % | — | | — | | — | % |
| Operating Contribution | $ | (126) | | $ | (127) | | 0.8 | % | $ | (587) | | $ | (718) | | 18.2 | % |
| | | | | | |
| Operating Income Margin | (17.1) | % | (16.4) | % | (70) | BP | (22.9) | % | (25.0) | % | 210 | BP |
| | | |
| Supplementary Operating Data |
| Subscribers and connections in thousands | | | | | |
| Unaudited | | | | December 31, | Percent |
| | | | | 2020 | 2019 | Change |
| Mexico Wireless Subscribers | | | | | | |
| Postpaid | | | | 4,696 | | 5,103 | | (8.0) | % |
| Prepaid | | | | 13,758 | | 13,584 | | 1.3 | % |
| Reseller | | | | 489 | | 472 | | 3.6 | % |
| Mexico Wireless Subscribers | | | | 18,943 | | 19,159 | | (1.1) | % |
| | | | | | |
| | Fourth Quarter | Percent | Year Ended | Percent |
| | 2020 | 2019 | Change | 2020 | 2019 | Change |
Mexico Wireless Net Additions1 | | | | | | |
| Postpaid | (14) | | (249) | | 94.4 | % | (407) | | (608) | | 33.1 | % |
| Prepaid | 509 | | 736 | | (30.8) | % | 174 | | 1,919 | | (90.9) | % |
| Reseller | 34 | | 53 | | (35.8) | % | 118 | | 219 | | (46.1) | % |
| Mexico Wireless Net Additions | 529 | | 540 | | (2.0) | % | (115) | | 1,530 | | — | % |
| | | | | | |
12020 excludes the impact of 101 subscriber disconnections resulting from conforming our policy on reporting of fixed wireless resellers. |
Supplemental AT&T Advertising Revenues
As a supplemental presentation, we are providing a view of total advertising revenues generated by AT&T, which combines the advertising revenues recorded across all operating segments. This combined view presents the entire portfolio of revenues generated from AT&T assets.
| | | | | | | | | | | | | | | | | | | | |
| Advertising Revenues |
| Dollars in millions | | | | | |
| Unaudited | Fourth Quarter | Percent | Year Ended | Percent |
| 2020 | 2019 | Change | 2020 | 2019 | Change |
| Operating Revenues | | | | | | |
| Turner | $ | 1,111 | | $ | 1,126 | | (1.3) | % | $ | 3,941 | | $ | 4,566 | | (13.7) | % |
| Video | 603 | | 502 | | 20.1 | % | 1,718 | | 1,672 | | 2.8 | % |
| Xandr | 741 | | 607 | | 22.1 | % | 2,089 | | 2,022 | | 3.3 | % |
| Other | 122 | | 116 | | 5.2 | % | 386 | | 382 | | 1.0 | % |
| Eliminations | (603) | | (502) | | (20.1) | % | (1,718) | | (1,672) | | (2.8) | % |
| Total Advertising Revenues | $ | 1,974 | | $ | 1,849 | | 6.8 | % | $ | 6,416 | | $ | 6,970 | | (7.9) | % |
| | | | | | | |
SUPPLEMENTAL SEGMENT RECONCILIATION
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dollars in millions | | | | | | | |
| Unaudited | | | | | | | |
| December 31, 2020 | | | | | | | |
| Revenues | Operations
and Support
Expenses | EBITDA | Depreciation
and
Amortization | Operating
Income (Loss) | Equity in Net
Income (Loss) of
Affiliates | Segment
Contribution |
| Communications | | | | | | | |
| Mobility | $ | 20,119 | | $ | 13,023 | | $ | 7,096 | | $ | 2,008 | | $ | 5,088 | | $ | — | | $ | 5,088 | |
| Video | 7,168 | | 6,549 | | 619 | | 521 | | 98 | | — | | 98 | |
| Broadband | 3,116 | | 2,012 | | 1,104 | | 738 | | 366 | | — | | 366 | |
| Business Wireline | 6,319 | | 3,993 | | 2,326 | | 1,320 | | 1,006 | | — | | 1,006 | |
| Total Communications | 36,722 | | 25,577 | | 11,145 | | 4,587 | | 6,558 | | — | | 6,558 | |
| WarnerMedia | | | | | | | |
| Turner | 3,242 | | 1,809 | | 1,433 | | 70 | | 1,363 | | (2) | | 1,361 | |
| Home Box Office | 1,903 | | 1,792 | | 111 | | 25 | | 86 | | 1 | | 87 | |
| Warner Bros. | 3,247 | | 2,411 | | 836 | | 45 | | 791 | | (20) | | 771 | |
| Eliminations and other | 162 | | (177) | | 339 | | 37 | | 302 | | 8 | | 310 | |
| Total WarnerMedia | 8,554 | | 5,835 | | 2,719 | | 177 | | 2,542 | | (13) | | 2,529 | |
| Latin America | | | | | | | |
| Vrio | 762 | | 681 | | 81 | | 120 | | (39) | | (2) | | (41) | |
| Mexico | 736 | | 722 | | 14 | | 140 | | (126) | | — | | (126) | |
| Total Latin America | 1,498 | | 1,403 | | 95 | | 260 | | (165) | | (2) | | (167) | |
| Segment Total | 46,774 | | 32,815 | | 13,959 | | 5,024 | | 8,935 | | $ | (15) | | $ | 8,920 | |
| Corporate and Other | | | | | | | |
| Corporate | 388 | | 894 | | (506) | | 52 | | (558) | | | |
| Acquisition-related items | — | | 37 | | (37) | | 1,890 | | (1,927) | | | |
| Certain significant items | — | | 16,617 | | (16,617) | | 14 | | (16,631) | | | |
Eliminations and consolidations | (1,471) | | (906) | | (565) | | (1) | | (564) | | | |
| AT&T Inc. | $ | 45,691 | | $ | 49,457 | | $ | (3,766) | | $ | 6,979 | | $ | (10,745) | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended |
| Dollars in millions | | | | | | | |
| Unaudited | | | | | | | |
| December 31, 2019 | | | | | | | |
| Revenues | Operations and Support Expenses | EBITDA | Depreciation and Amortization | Operating Income (Loss) | Equity in Net
Income (Loss) of
Affiliates | Segment Contribution |
| Communications | | | | | | | |
| Mobility | $ | 18,700 | | $ | 11,170 | | $ | 7,530 | | $ | 2,027 | | $ | 5,503 | | $ | — | | $ | 5,503 | |
| Video | 8,075 | | 7,447 | | 628 | | 589 | | 39 | | — | | 39 | |
| Broadband | 3,161 | | 1,749 | | 1,412 | | 726 | | 686 | | — | | 686 | |
| Business Wireline | 6,586 | | 4,056 | | 2,530 | | 1,247 | | 1,283 | | — | | 1,283 | |
| Total Communications | 36,522 | | 24,422 | | 12,100 | | 4,589 | | 7,511 | | — | | 7,511 | |
| WarnerMedia | | | | | | | |
| Turner | 3,262 | | 1,927 | | 1,335 | | 68 | | 1,267 | | 6 | | 1,273 | |
| Home Box Office | 1,704 | | 1,188 | | 516 | | 35 | | 481 | | (10) | | 471 | |
| Warner Bros. | 4,118 | | 3,273 | | 845 | | 40 | | 805 | | (11) | | 794 | |
| Eliminations and other | 369 | | 60 | | 309 | | 26 | | 283 | | 38 | | 321 | |
| Total WarnerMedia | 9,453 | | 6,448 | | 3,005 | | 169 | | 2,836 | | 23 | | 2,859 | |
| Latin America | | | | | | | |
| Vrio | 982 | | 780 | | 202 | | 164 | | 38 | | 2 | | 40 | |
| Mexico | 776 | | 773 | | 3 | | 130 | | (127) | | — | | (127) | |
| Total Latin America | 1,758 | | 1,553 | | 205 | | 294 | | (89) | | 2 | | (87) | |
| Segment Total | 47,733 | | 32,423 | | 15,310 | | 5,052 | | 10,258 | | $ | 25 | | $ | 10,283 | |
| Corporate and Other | | | | | | | |
| Corporate | 463 | | 955 | | (492) | | 126 | | (618) | | | |
| Acquisition-related items | — | | 381 | | (381) | | 1,741 | | (2,122) | | | |
| Certain significant items | — | | 1,701 | | (1,701) | | 43 | | (1,744) | | | |
Eliminations and consolidations | (1,375) | | (921) | | (454) | | (1) | | (453) | | | |
| AT&T Inc. | $ | 46,821 | | $ | 34,539 | | $ | 12,282 | | $ | 6,961 | | $ | 5,321 | | | |
| | | | | | | |
SUPPLEMENTAL SEGMENT RECONCILIATION
| | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended |
| Dollars in millions | | | | | | | |
| Unaudited | | | | | | | |
| December 31, 2020 | | | | | | | |
| Revenues | Operations
and Support
Expenses | EBITDA | Depreciation
and
Amortization | Operating
Income (Loss) | Equity in Net
Income (Loss) of
Affiliates | Segment
Contribution |
| Communications | | | | | | | |
| Mobility | $ | 72,564 | | $ | 42,106 | | $ | 30,458 | | $ | 8,086 | | $ | 22,372 | | $ | — | | $ | 22,372 | |
| Video | 28,610 | | 24,619 | | 3,991 | | 2,262 | | 1,729 | | — | | 1,729 | |
| Broadband | 12,318 | | 7,582 | | 4,736 | | 2,914 | | 1,822 | | — | | 1,822 | |
| Business Wireline | 25,358 | | 15,534 | | 9,824 | | 5,226 | | 4,598 | | — | | 4,598 | |
| Total Communications | 138,850 | | 89,841 | | 49,009 | | 18,488 | | 30,521 | | — | | 30,521 | |
| WarnerMedia | | | | | | | |
| Turner | 12,568 | | 6,954 | | 5,614 | | 277 | | 5,337 | | (2) | | 5,335 | |
| Home Box Office | 6,808 | | 6,028 | | 780 | | 98 | | 682 | | 16 | | 698 | |
| Warner Bros. | 12,154 | | 9,917 | | 2,237 | | 169 | | 2,068 | | (70) | | 1,998 | |
| Eliminations and other | (1,088) | | (1,320) | | 232 | | 127 | | 105 | | 74 | | 179 | |
| Total WarnerMedia | 30,442 | | 21,579 | | 8,863 | | 671 | | 8,192 | | 18 | | 8,210 | |
| Latin America | | | | | | | |
| Vrio | 3,154 | | 2,800 | | 354 | | 520 | | (166) | | 24 | | (142) | |
| Mexico | 2,562 | | 2,636 | | (74) | | 513 | | (587) | | — | | (587) | |
| Total Latin America | 5,716 | | 5,436 | | 280 | | 1,033 | | (753) | | 24 | | (729) | |
| Segment Total | 175,008 | | 116,856 | | 58,152 | | 20,192 | | 37,960 | | $ | 42 | | $ | 38,002 | |
| Corporate and Other | | | | | | | |
| Corporate | 1,932 | | 3,974 | | (2,042) | | 300 | | (2,342) | | | |
| Acquisition-related items | — | | 468 | | (468) | | 8,012 | | (8,480) | | | |
| Certain significant items | — | | 19,156 | | (19,156) | | 14 | | (19,170) | | | |
Eliminations and consolidations | (5,180) | | (3,615) | | (1,565) | | (2) | | (1,563) | | | |
| AT&T Inc. | $ | 171,760 | | $ | 136,839 | | $ | 34,921 | | $ | 28,516 | | $ | 6,405 | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Year Ended |
| Dollars in millions | | | | | | | |
| Unaudited | | | | | | | |
| December 31, 2019 | | | | | | | |
| Revenues | Operations and Support Expenses | EBITDA | Depreciation and Amortization | Operating Income (Loss) | Equity in Net
Income (Loss) of
Affiliates | Segment Contribution |
| Communications | | | | | | | |
| Mobility | $ | 71,056 | | $ | 40,681 | | $ | 30,375 | | $ | 8,054 | | $ | 22,321 | | $ | — | | $ | 22,321 | |
| Video | 32,124 | | 27,599 | | 4,525 | | 2,461 | | 2,064 | | — | | 2,064 | |
| Broadband | 13,012 | | 7,451 | | 5,561 | | 2,880 | | 2,681 | | — | | 2,681 | |
| Business Wireline | 26,167 | | 16,069 | | 10,098 | | 4,934 | | 5,164 | | — | | 5,164 | |
| Total Communications | 142,359 | | 91,800 | | 50,559 | | 18,329 | | 32,230 | | — | | 32,230 | |
| WarnerMedia | | | | | | | |
| Turner | 13,122 | | 7,740 | | 5,382 | | 235 | | 5,147 | | 52 | | 5,199 | |
| Home Box Office | 6,749 | | 4,312 | | 2,437 | | 102 | | 2,335 | | 30 | | 2,365 | |
| Warner Bros. | 14,358 | | 11,816 | | 2,542 | | 162 | | 2,380 | | (30) | | 2,350 | |
| Eliminations and other | 1,030 | | 304 | | 726 | | 90 | | 636 | | 109 | | 745 | |
| Total WarnerMedia | 35,259 | | 24,172 | | 11,087 | | 589 | | 10,498 | | 161 | | 10,659 | |
| Latin America | | | | | | | |
| Vrio | 4,094 | | 3,378 | | 716 | | 660 | | 56 | | 27 | | 83 | |
| Mexico | 2,869 | | 3,085 | | (216) | | 502 | | (718) | | — | | (718) | |
| Total Latin America | 6,963 | | 6,463 | | 500 | | 1,162 | | (662) | | 27 | | (635) | |
| Segment Total | 184,581 | | 122,435 | | 62,146 | | 20,080 | | 42,066 | | $ | 188 | | $ | 42,254 | |
| Corporate and Other | | | | | | | |
| Corporate | 1,937 | | 3,279 | | (1,342) | | 636 | | (1,978) | | | |
| Acquisition-related items | (72) | | 960 | | (1,032) | | 7,460 | | (8,492) | | | |
| Certain significant items | — | | 2,082 | | (2,082) | | 43 | | (2,125) | | | |
Eliminations and consolidations | (5,253) | | (3,735) | | (1,518) | | (2) | | (1,516) | | | |
| AT&T Inc. | $ | 181,193 | | $ | 125,021 | | $ | 56,172 | | $ | 28,217 | | $ | 27,955 | | | |
| | | | | | | |
Discussion and Reconciliation of Non-GAAP Measures
We believe the following measures are relevant and useful information to investors as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors. These measures should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with U.S. generally accepted accounting principles (GAAP).
Free Cash Flow
Free cash flow is defined as cash from operations minus capital expenditures. Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends on common and preferred shares. Free cash flow dividend payout ratio is defined as the percentage of dividends paid on common and preferred shares to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.
| | | | | | | | | | | | | | | | | |
| Free Cash Flow and Free Cash Flow Dividend Payout Ratio |
| Dollars in millions | | | | |
| | Fourth Quarter | | Year Ended |
| | 2020 | 2019 | | 2020 | 2019 |
| Net cash provided by operating activities | $ | 10,082 | | $ | 11,943 | | | $ | 43,130 | | $ | 48,668 | |
| Less: Capital expenditures | (2,392) | | (3,792) | | | (15,675) | | (19,635) | |
| Free Cash Flow | 7,690 | | 8,151 | | | 27,455 | | 29,033 | |
| | | | | |
| Less: Dividends paid | (3,741) | | (3,726) | | | (14,956) | | (14,888) | |
| Free Cash Flow after Dividends | $ | 3,949 | | $ | 4,425 | | | $ | 12,499 | | $ | 14,145 | |
| Free Cash Flow Dividend Payout Ratio | 48.6 | % | 45.7 | % | | 54.5 | % | 51.3 | % |
Cash Paid for Capital Investment
In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. We present an additional view of cash paid for capital investment to provide investors with a comprehensive view of cash used to invest in our networks, product developments and support systems.
| | | | | | | | | | | | | | | | | |
| Cash Paid for Capital Investment |
| Dollars in millions | | | | |
| | Fourth Quarter | | Year Ended |
| | 2020 | 2019 | | 2020 | 2019 |
| Capital Expenditures | $ | (2,392) | | $ | (3,792) | | | $ | (15,675) | | $ | (19,635) | |
| Cash paid for vendor financing | (1,001) | | (449) | | | (2,966) | | (3,050) | |
| Cash paid for Capital Investment | $ | (3,393) | | $ | (4,241) | | | $ | (18,641) | | $ | (22,685) | |
| FirstNet reimbursement | (920) | | (902) | | | (1,063) | | (1,005) | |
| Gross Capital Investment | $ | (4,313) | | $ | (5,143) | | | $ | (19,704) | | $ | (23,690) | |
EBITDA
Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) – net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP.
EBITDA service margin is calculated as EBITDA divided by service revenues.
When discussing our segment, business unit and supplemental results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from operating contribution.
These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing operating performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which management is responsible and upon which we evaluate performance.
We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Mobility business unit operating margin. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.
There are material limitations to using these non-GAAP financial measures. EBITDA, EBITDA margin and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates. For market comparability, management analyzes performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA, EBITDA margin and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.
| | | | | | | | | | | | | | | | | |
| EBITDA |
| Dollars in millions | | | | |
| | Fourth Quarter | | Year to Date |
| | 2020 | 2019 | | 2020 | 2019 |
| Net Income (Loss) | $ | (13,515) | | $ | 2,704 | | | $ | (3,821) | | $ | 14,975 | |
| Additions: | | | | | |
| Income Tax Expense | (2,038) | | 434 | | | 965 | | 3,493 | |
| Interest Expense | 1,894 | | 2,049 | | | 7,925 | | 8,422 | |
| Equity in Net (Income) Loss of Affiliates | (106) | | 30 | | | (95) | | (6) | |
| Other (Income) Expense - Net | 3,020 | | 104 | | | 1,431 | | 1,071 | |
| Depreciation and amortization | 6,979 | | 6,961 | | | 28,516 | | 28,217 | |
| EBITDA | (3,766) | | 12,282 | | | 34,921 | | 56,172 | |
Impairments1 | 16,365 | | 1,458 | | | 18,880 | | 1,458 | |
| Employee separation costs and benefit-related (gain) loss | 253 | | 243 | | | 1,177 | | 624 | |
| Gain on spectrum transactions | — | | — | | | (900) | | — | |
| Merger costs and revenue adjustments | 37 | | 382 | | | 468 | | 1,033 | |
Adjusted EBITDA2 | $ | 12,889 | | $ | 14,365 | | | $ | 54,546 | | $ | 59,287 | |
1 Includes $15.5 billion for the impairment of goodwill and other long-lived assets in our video business. |
2 See page 5 for additional discussion and reconciliation of adjusted items. |
| | | | | | | | | | | | | | | | | |
| Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin |
| Dollars in millions | | | | |
| | Fourth Quarter | | Year Ended |
| | 2020 | 2019 | | 2020 | 2019 |
| Communications Segment |
| Operating Contribution | $ | 6,558 | | $ | 7,511 | | | $ | 30,521 | | $ | 32,230 | |
| Additions: | | | | | |
| Depreciation and amortization | 4,587 | | 4,589 | | | 18,488 | | 18,329 | |
| EBITDA | 11,145 | | 12,100 | | | 49,009 | | 50,559 | |
| | | | | |
| Total Operating Revenues | 36,722 | | 36,522 | | | 138,850 | | 142,359 | |
| | | | | |
| Operating Income Margin | 17.9 | % | 20.6 | % | | 22.0 | % | 22.6 | % |
| EBITDA Margin | 30.3 | % | 33.1 | % | | 35.3 | % | 35.5 | % |
| Mobility |
| Operating Contribution | $ | 5,088 | | $ | 5,503 | | | $ | 22,372 | | $ | 22,321 | |
| Additions: | | | | | |
| Depreciation and amortization | 2,008 | | 2,027 | | | 8,086 | | 8,054 | |
| EBITDA | 7,096 | | 7,530 | | | 30,458 | | 30,375 | |
| | | | | |
| Total Operating Revenues | 20,119 | | 18,700 | | | 72,564 | | 71,056 | |
| Service Revenues | 14,022 | | 13,948 | | | 55,542 | | 55,331 | |
| | | | | |
| Operating Income Margin | 25.3 | % | 29.4 | % | | 30.8 | % | 31.4 | % |
| EBITDA Margin | 35.3 | % | 40.3 | % | | 42.0 | % | 42.7 | % |
| EBITDA Service Margin | 50.6 | % | 54.0 | % | | 54.8 | % | 54.9 | % |
| Video |
| Operating Contribution | $ | 98 | | $ | 39 | | | $ | 1,729 | | $ | 2,064 | |
| Additions: | | | | | |
| Depreciation and amortization | 521 | | 589 | | | 2,262 | | 2,461 | |
| EBITDA | 619 | | 628 | | | 3,991 | | 4,525 | |
| | | | | |
| Total Operating Revenues | 7,168 | | 8,075 | | | 28,610 | | 32,124 | |
| | | | | |
| Operating Income Margin | 1.4 | % | 0.5 | % | | 6.0 | % | 6.4 | % |
| EBITDA Margin | 8.6 | % | 7.8 | % | | 13.9 | % | 14.1 | % |
| Broadband |
| Operating Contribution | $ | 366 | | $ | 686 | | | $ | 1,822 | | $ | 2,681 | |
| Additions: | | | | | |
| Depreciation and amortization | 738 | | 726 | | | 2,914 | | 2,880 | |
| EBITDA | 1,104 | | 1,412 | | | 4,736 | | 5,561 | |
| | | | | |
| Total Operating Revenues | 3,116 | | 3,161 | | | 12,318 | | 13,012 | |
| | | | | |
| Operating Income Margin | 11.7 | % | 21.7 | % | | 14.8 | % | 20.6 | % |
| EBITDA Margin | 35.4 | % | 44.7 | % | | 38.4 | % | 42.7 | % |
| Business Wireline |
| Operating Contribution | $ | 1,006 | | $ | 1,283 | | | $ | 4,598 | | $ | 5,164 | |
| Additions: | | | | | |
| Depreciation and amortization | 1,320 | | 1,247 | | | 5,226 | | 4,934 | |
| EBITDA | 2,326 | | 2,530 | | | 9,824 | | 10,098 | |
| | | | | |
| Total Operating Revenues | 6,319 | | 6,586 | | | 25,358 | | 26,167 | |
| | | | | |
| Operating Income Margin | 15.9 | % | 19.5 | % | | 18.1 | % | 19.7 | % |
| EBITDA Margin | 36.8 | % | 38.4 | % | | 38.7 | % | 38.6 | % |
| | | | | | | | | | | | | | | | | |
| Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin |
| Dollars in millions | | | | |
| | Fourth Quarter | | Year Ended |
| | 2020 | 2019 | | 2020 | 2019 |
WARNERMEDIA Segment |
| Operating Contribution | $ | 2,529 | | $ | 2,859 | | | $ | 8,210 | | $ | 10,659 | |
| Additions: | | | | | |
| Equity in Net (Income) of Affiliates | 13 | | (23) | | | (18) | | (161) | |
| Depreciation and amortization | 177 | | 169 | | | 671 | | 589 | |
| EBITDA | 2,719 | | 3,005 | | | 8,863 | | 11,087 | |
| | | | | |
| Total Operating Revenues | 8,554 | | 9,453 | | | 30,442 | | 35,259 | |
| | | | | |
| Operating Income Margin | 29.7 | % | 30.0 | % | | 26.9 | % | 29.8 | % |
| EBITDA Margin | 31.8 | % | 31.8 | % | | 29.1 | % | 31.4 | % |
| | | | | | | | | | | | | | | | | |
| Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin |
| Dollars in millions | | | | |
| | Fourth Quarter | | Year Ended |
| | 2020 | 2019 | | 2020 | 2019 |
| Latin America Segment |
| Operating Contribution | $ | (167) | | $ | (87) | | | $ | (729) | | $ | (635) | |
| Additions: | | | | | |
| Equity in Net (Income) of Affiliates | 2 | | (2) | | | (24) | | (27) | |
| Depreciation and amortization | 260 | | 294 | | | 1,033 | | 1,162 | |
| EBITDA | 95 | | 205 | | | 280 | | 500 | |
| | | | | |
| Total Operating Revenues | 1,498 | | 1,758 | | | 5,716 | | 6,963 | |
| | | | | |
| Operating Income Margin | -11.0 | % | -5.1 | % | | -13.2 | % | -9.5 | % |
| EBITDA Margin | 6.3 | % | 11.7 | % | | 4.9 | % | 7.2 | % |
| Vrio | | | | | |
| Operating Contribution | $ | (41) | | $ | 40 | | | $ | (142) | | $ | 83 | |
| Additions: | | | | | |
| Equity in Net (Income) of Affiliates | 2 | | (2) | | | (24) | | (27) | |
| Depreciation and amortization | 120 | | 164 | | | 520 | | 660 | |
| EBITDA | 81 | | 202 | | | 354 | | 716 | |
| | | | | |
| Total Operating Revenues | 762 | | 982 | | | 3,154 | | 4,094 | |
| | | | | |
| Operating Income Margin | -5.1 | % | 3.9 | % | | -5.3 | % | 1.4 | % |
| EBITDA Margin | 10.6 | % | 20.6 | % | | 11.2 | % | 17.5 | % |
| Mexico | | | | | |
| Operating Contribution | $ | (126) | | $ | (127) | | | $ | (587) | | $ | (718) | |
| Additions: | | | | | |
| Equity in Net (Income) Loss of Affiliates | — | | — | | | — | | — | |
| Depreciation and amortization | 140 | | 130 | | | 513 | | 502 | |
| EBITDA | 14 | | 3 | | | (74) | | (216) | |
| | | | | |
| Total Operating Revenues | 736 | | 776 | | | 2,562 | | 2,869 | |
| | | | | |
| Operating Income Margin | -17.1 | % | -16.4 | % | | -22.9 | % | -25.0 | % |
| EBITDA Margin | 1.9 | % | 0.4 | % | | -2.9 | % | -7.5 | % |
Adjusting Items
Adjusting items include revenues and costs we consider non-operational in nature, such as items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often-significant impact on our results (we immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses). Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income.
The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude, can drive a change in the effective tax rate, in these cases we use the actual tax expense or combined marginal rate of approximately 25%.
| | | | | | | | | | | | | | | | | |
| Adjusting Items |
| Dollars in millions | | | | |
| | Fourth Quarter | | Year Ended |
| | 2020 | 2019 | | 2020 | 2019 |
| Operating Revenues | | | | | |
| Time Warner merger adjustment | $ | — | | $ | — | | | $ | — | | $ | 72 | |
| Adjustments to Operating Revenues | — | | — | | | — | | 72 | |
| Operating Expenses | | | | | |
| Merger costs | 37 | | 382 | | | 468 | | 961 | |
Employee separation costs and benefit-related (gain) loss1 | 253 | | 243 | | | 1,177 | | 624 | |
Impairments2 | 16,365 | | 1,458 | | | 18,880 | | 1,458 | |
| Gain on spectrum transaction | — | | — | | | (900) | | — | |
| Adjustments to Operations and Support Expenses | 16,655 | | 2,083 | | | 19,625 | | 3,043 | |
| Amortization of intangible assets | 1,890 | | 1,741 | | | 8,012 | | 7,460 | |
| Impairments | 14 | | 43 | | | 14 | | 43 | |
| Adjustments to Operating Expenses | 18,559 | | 3,867 | | | 27,651 | | 10,546 | |
| Other | | | | | |
| Gain on sale of investments - net | — | | (69) | | | — | | (707) | |
| Debt redemption, impairments and other adjustments | 14 | | 331 | | | 1,685 | | 693 | |
| Actuarial (gain) loss | 4,106 | | 1,123 | | | 4,169 | | 5,171 | |
Employee benefit-related (gain) loss1 | (149) | | — | | | (172) | | — | |
| Adjustments to Income Before Income Taxes | 22,530 | | 5,252 | | | 33,333 | | 15,775 | |
| Tax impact of adjustments | 3,186 | | 1,119 | | | 4,977 | | 3,302 | |
| Tax-related items | 41 | | — | | | 41 | | 141 | |
| Impairment attributable to noncontrolling interest | — | | — | | | 105 | | — | |
| Adjustments to Net Income | $ | 19,303 | | $ | 4,133 | | | $ | 28,210 | | $ | 12,332 | |
1Total holding gains on benefit-related investments were approximately $205 million in the fourth quarter and $330 million for the year ended December 31,2020. |
2 Includes $15.5 billion for the impairment of goodwill and other long-lived assets in our video business. |
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs, actuarial gains and losses, significant abandonments and impairment, severance and other material gains and losses. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. AT&T's calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.
| | | | | | | | | | | | | | | | | |
Adjusted Operating Income, Adjusted Operating Income Margin,
Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Service Margin |
| Dollars in millions | | | | |
| | Fourth Quarter | | Year Ended |
| | 2020 | 2019 | | 2020 | 2019 |
| Operating Income | $ | (10,745) | | $ | 5,321 | | | $ | 6,405 | | $ | 27,955 | |
| Adjustments to Operating Revenues | — | | — | | | — | | 72 | |
| Adjustments to Operating Expenses | 18,559 | | 3,867 | | | 27,651 | | 10,546 | |
| Adjusted Operating Income | 7,814 | | 9,188 | | | 34,056 | | 38,573 | |
| | | | | |
| EBITDA | (3,766) | | 12,282 | | | 34,921 | | 56,172 | |
| Adjustments to Operating Revenues | — | | — | | | — | | 72 | |
| Adjustments to Operations and Support Expenses | 16,655 | | 2,083 | | | 19,625 | | 3,043 | |
| Adjusted EBITDA | 12,889 | | 14,365 | | | 54,546 | | 59,287 | |
| | | | | |
| Total Operating Revenues | 45,691 | | 46,821 | | | 171,760 | | 181,193 | |
| Adjustments to Operating Revenues | — | | — | | | — | | 72 | |
| Total Adjusted Operating Revenue | 45,691 | | 46,821 | | | 171,760 | | 181,265 | |
| Service Revenues | 39,051 | | 41,475 | | | 152,767 | | 163,499 | |
| Adjustments to Service Revenues | — | | — | | | — | | 72 | |
| Adjusted Service Revenue | 39,051 | | 41,475 | | | 152,767 | | 163,571 | |
| | | | | |
| | | | | |
| Operating Income Margin | (23.5) | % | 11.4 | % | | 3.7 | % | 15.4 | % |
| Adjusted Operating Income Margin | 17.1 | % | 19.6 | % | | 19.8 | % | 21.3 | % |
| Adjusted EBITDA Margin | 28.2 | % | 30.7 | % | | 31.8 | % | 32.7 | % |
| Adjusted EBITDA Service Margin | 33.0 | % | 34.6 | % | | 35.7 | % | 36.2 | % |
| | | | | | | | | | | | | | | | | |
| Adjusted Diluted EPS |
| | Fourth Quarter | | Year Ended |
| | 2020 | 2019 | | 2020 | 2019 |
| Diluted Earnings Per Share (EPS) | $ | (1.95) | | $ | 0.33 | | | $ | (0.75) | | $ | 1.89 | |
| Amortization of intangible assets | 0.22 | | 0.19 | | | 0.90 | | 0.81 | |
| Merger integration items | — | | 0.04 | | | 0.05 | | 0.13 | |
Impairments 2 | 2.02 | | 0.16 | | | 2.37 | | 0.16 | |
| Debt redemption costs, (gain) loss on sale of assets and other | 0.04 | | 0.05 | | | 0.18 | | 0.04 | |
Actuarial (gain) loss 1 | 0.43 | | 0.12 | | | 0.44 | | 0.56 | |
| Tax-related items | (0.01) | | — | | | (0.01) | | (0.02) | |
| Adjusted EPS | $ | 0.75 | | $ | 0.89 | | | $ | 3.18 | | $ | 3.57 | |
| Year-over-year growth - Adjusted | -15.7 | % | | | -10.9 | % | |
Weighted Average Common Shares Outstanding
with Dilution (000,000) | 7,176 | | 7,341 | | | 7,183 | | 7,348 | |
1Includes adjustments for actuarial gains or losses associated with our postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. We recorded total net actuarial losses of $4.2 billion in 2020. As a result, adjusted EPS reflects an expected return on plan assets of $3.7 billion (based on an average expected return on plan assets of 7.0% for our pension trust and 4.75% for our VEBA trusts), rather than the actual return on plan assets of $6.5 billion gain (actual pension return of 12.2% and VEBA return of 8.4%), included in the GAAP measure of income. |
2 Includes $1.91 for the impairment of goodwill and other long-lived assets in our video business. |
Constant Currency
Constant Currency is a non-GAAP financial measure that management uses to evaluate the operating performance of certain international subsidiaries by excluding or otherwise adjusting for the impact of changes in foreign currency exchange rates between comparative periods. We believe constant currency enhances comparison and is useful to investors to evaluate the performance of our business without taking into account the impact of changes to the foreign exchange rates to which our business is subject. To compute our constant currency results, we multiply or divide, as appropriate, our current year U.S. dollar results by the current year average foreign exchange rates and then multiply or divide, as appropriate, those amounts by the prior year average foreign exchange rates. In calculating amounts on a constant currency basis, for our Vrio business unit (sale of this business unit closed in second quarter 2020), we exclude our Venezuela subsidiary in light of the hyperinflationary conditions in Venezuela, which we do not believe are representative of the macroeconomics of the rest of the region in which we operate.
| | | | | | | | | | | |
| Constant Currency |
| Dollars in millions | |
| | Fourth Quarter |
| | 2020 | | 2019 |
| AT&T Inc. |
| Total Operating Revenues | $ | 45,691 | | | $ | 46,821 | |
| Exclude Venezuela | — | | | (6) | |
| Impact of foreign exchange translation | 219 | | | — | |
| Operating Revenues on Constant Currency Basis | 45,910 | | | 46,815 | |
| Year-over-year growth | -1.9 | % | | |
| | | |
| Adjusted EBITDA | 12,889 | | | 14,365 | |
| Exclude Venezuela | — | | | (38) | |
| Impact of foreign exchange translation | 52 | | | — | |
| Adjusted EBITDA on Constant Currency Basis | 12,941 | | | 14,327 | |
| Year-over-year growth | -9.7 | % | | |
| | | |
| WarnerMedia Segment |
| Total Operating Revenues | $ | 8,554 | | | $ | 9,453 | |
| Impact of foreign exchange translation | (6) | | | — | |
| WarnerMedia Operating Revenues on Constant Currency Basis | 8,548 | | | 9,453 | |
| Year-over-year growth | -9.6 | % | | |
| | | |
| EBITDA | 2,719 | | | 3,005 | |
| Impact of foreign exchange translation | 4 | | | — | |
| WarnerMedia EBITDA on Constant Currency Basis | 2,723 | | | 3,005 | |
| Year-over-year growth | -9.4 | % | | |
| | | |
| Latin America Segment |
| Total Operating Revenues | $ | 1,498 | | | $ | 1,758 | |
| Exclude Venezuela | — | | | (6) | |
| Impact of foreign exchange translation | 225 | | | — | |
| Latin America Operating Revenues on Constant Currency Basis | 1,723 | | | 1,752 | |
| Year-over-year growth | -1.7 | % | | |
| | | |
| EBITDA | 95 | | | 205 | |
| Exclude Venezuela | — | | | (38) | |
| Impact of foreign exchange translation | 48 | | | — | |
| Latin America EBITDA on Constant Currency Basis | 143 | | | 167 | |
| Year-over-year growth | -14.4 | % | | |
Net Debt to Adjusted EBITDA
Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. Our Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt by the sum of the most recent four quarters Adjusted EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days, from the sum of debt maturing within one year and long-term debt.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Debt to Adjusted EBITDA |
| Dollars in millions | | | | | | |
| | | Three Months Ended | | |
| | | March 31, | | June 30, | | Sept. 30, | | Dec. 31, | | Four Quarters |
| | | 2020 1 | | 2020 1 | | 2020 1 | | 2020 | |
Adjusted EBITDA2 | | $ | 14,232 | | | $ | 14,112 | | | $ | 13,313 | | | $ | 12,889 | | | $ | 54,546 | |
| End-of-period current debt | | | | | | | | | | 3,470 | |
| End-of-period long-term debt | | | | | | | | | | 153,775 | |
| Total End-of-Period Debt | | | | | | | | | | 157,245 | |
| Less: Cash and Cash Equivalents | | | | | | | | | | 9,740 | |
| Net Debt Balance | | | | | | | | | | 147,505 | |
| Annualized Net Debt to Adjusted EBITDA Ratio | | | | | | | | | | 2.70 | |
1As reported in AT&T's Form 8-K filed April 22, 2020, July 23, 2020, and October 22, 2020. |
2Includes the purchase accounting reclassification of released content amortization of $69 million, $75 million, $45 million, and $38 million in the four quarters presented, respectively. |
Supplemental Operational Measures
We provide a supplemental discussion of our business solutions operations that is calculated by combining our Mobility and Business Wireline operating units, and then adjusting to remove non-business operations. The following tables present a reconciliation of our supplemental Business Solutions results. Results have been recast to conform to the current period's classification.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Supplemental Operational Measure |
| | Fourth Quarter |
| | December 31, 2020 | | December 31, 2019 |
| | Mobility | Business
Wireline | Adjustments1 | Business
Solutions | | Mobility | Business
Wireline | Adjustments1 | Business
Solutions |
| Operating Revenues | | | | | | | | | |
| Wireless service | $ | 14,022 | | $ | — | | $ | (12,074) | | $ | 1,948 | | | $ | 13,948 | | $ | — | | $ | (12,049) | | $ | 1,899 | |
| Strategic and managed services | — | | 4,006 | | — | | 4,006 | | | — | | 3,925 | | — | | 3,925 | |
| Legacy voice and data services | — | | 1,956 | | — | | 1,956 | | | — | | 2,207 | | — | | 2,207 | |
| Other services and equipment | — | | 357 | | — | | 357 | | | — | | 454 | | — | | 454 | |
| Wireless equipment | 6,097 | | — | | (5,172) | | 925 | | | 4,752 | | — | | (3,897) | | 855 | |
| Total Operating Revenues | 20,119 | | 6,319 | | (17,246) | | 9,192 | | | 18,700 | | 6,586 | | (15,946) | | 9,340 | |
| | | | | | | | | |
| Operating Expenses | | | | | | | | | |
| Operations and support | 13,023 | | 3,993 | | (10,925) | | 6,091 | | | 11,170 | | 4,056 | | (9,266) | | 5,960 | |
| EBITDA | 7,096 | | 2,326 | | (6,321) | | 3,101 | | | 7,530 | | 2,530 | | (6,680) | | 3,380 | |
| Depreciation and amortization | 2,008 | | 1,320 | | (1,688) | | 1,640 | | | 2,027 | | 1,247 | | (1,720) | | 1,554 | |
| Total Operating Expenses | 15,031 | | 5,313 | | (12,613) | | 7,731 | | | 13,197 | | 5,303 | | (10,986) | | 7,514 | |
| Operating Income | 5,088 | | 1,006 | | (4,633) | | 1,461 | | | 5,503 | | 1,283 | | (4,960) | | 1,826 | |
| Equity in Net Income (Loss) of Affiliates | — | | — | | — | | — | | | — | | — | | — | | — | |
| Operating Contribution | $ | 5,088 | | $ | 1,006 | | $ | (4,633) | | $ | 1,461 | | | $ | 5,503 | | $ | 1,283 | | $ | (4,960) | | $ | 1,826 | |
1Non-business wireless reported in the Communication segment under the Mobility business unit. |
| | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| Supplemental Operational Measure |
| | Year Ended |
| | December 31, 2020 | | December 31, 2019 |
| | Mobility | Business
Wireline | Adjustments1 | Business
Solutions | | Mobility | Business
Wireline | Adjustments1 | Business
Solutions |
| Operating Revenues | | | | | | | | | |
| Wireless service | $ | 55,542 | | $ | — | | $ | (47,810) | | $ | 7,732 | | | $ | 55,331 | | $ | — | | $ | (47,887) | | $ | 7,444 | |
| Strategic and managed services | — | | 15,788 | | — | | 15,788 | | | — | | 15,430 | | — | | 15,430 | |
| Legacy voice and data services | — | | 8,183 | | — | | 8,183 | | | — | | 9,180 | | — | | 9,180 | |
| Other services and equipment | — | | 1,387 | | — | | 1,387 | | | — | | 1,557 | | — | | 1,557 | |
| Wireless equipment | 17,022 | | — | | (14,140) | | 2,882 | | | 15,725 | | — | | (12,971) | | 2,754 | |
| Total Operating Revenues | 72,564 | | 25,358 | | (61,950) | | 35,972 | | | 71,056 | | 26,167 | | (60,858) | | 36,365 | |
| | | | | | | | | |
| Operating Expenses | | | | | | | | | |
| Operations and support | 42,106 | | 15,534 | | (34,927) | | 22,713 | | | 40,681 | | 16,069 | | (34,036) | | 22,714 | |
| EBITDA | 30,458 | | 9,824 | | (27,023) | | 13,259 | | | 30,375 | | 10,098 | | (26,822) | | 13,651 | |
| Depreciation and amortization | 8,086 | | 5,226 | | (6,803) | | 6,509 | | | 8,054 | | 4,934 | | (6,840) | | 6,148 | |
| Total Operating Expenses | 50,192 | | 20,760 | | (41,730) | | 29,222 | | | 48,735 | | 21,003 | | (40,876) | | 28,862 | |
| Operating Income | 22,372 | | 4,598 | | (20,220) | | 6,750 | | | 22,321 | | 5,164 | | (19,982) | | 7,503 | |
| Equity in Net Income (Loss) of Affiliates | — | | — | | — | | — | | | — | | — | | — | | — | |
| Operating Contribution | $ | 22,372 | | $ | 4,598 | | $ | (20,220) | | $ | 6,750 | | | $ | 22,321 | | $ | 5,164 | | $ | (19,982) | | $ | 7,503 | |
1Non-business wireless reported in the Communication segment under the Mobility business unit. |
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For comparative purposes and to assist in the transition to our current financial presentation, we provided on a one-time basis, a supplemental presentation of the Historical Entertainment Group business unit (Historical EG) that is calculated by combining our Video and Broadband business units, adjusted to remove the business video operations previously reported in the Business Wireline business unit. The following tables present a reconciliation of the supplemental Historical EG results.
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| Supplemental Operational Measure |
| | Fourth Quarter |
| | December 31, 2020 | | December 31, 2019 |
| | Video | Broadband | Adj.1 | Historical EG | | Video | Broadband | Adj.1 | Historical EG |
| Operating Revenues | | | | | | | | | |
| Video | $ | 7,124 | | $ | — | | $ | (2) | | $ | 7,122 | | | $ | 8,074 | | $ | — | | $ | (6) | | $ | 8,068 | |
| High-speed internet | — | | 2,205 | | — | | 2,205 | | | — | | 2,107 | | — | | 2,107 | |
| Legacy voice and data services | — | | 534 | | — | | 534 | | | — | | 604 | | — | | 604 | |
| Other services and equipment | 44 | | 377 | | — | | 421 | | | 1 | | 450 | | 3 | | 454 | |
| Total Operating Revenues | 7,168 | | 3,116 | | (2) | | 10,282 | | | 8,075 | | 3,161 | | (3) | | 11,233 | |
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| Operating Expenses | | | | | | | | | |
| Operations and support | 6,549 | | 2,012 | | (8) | | 8,553 | | | 7,447 | | 1,749 | | (7) | | 9,189 | |
| EBITDA | 619 | | 1,104 | | 6 | | 1,729 | | | 628 | | 1,412 | | 4 | | 2,044 | |
| Depreciation and amortization | 521 | | 738 | | (15) | | 1,244 | | | 589 | | 726 | | (17) | | 1,298 | |
| Total Operating Expenses | 7,070 | | 2,750 | | (23) | | 9,797 | | | 8,036 | | 2,475 | | (24) | | 10,487 | |
| Operating Income | 98 | | 366 | | 21 | | 485 | | | 39 | | 686 | | 21 | | 746 | |
| Equity in Net Income (Loss) of Affiliates | — | | — | | — | | — | | | — | | — | | — | | — | |
| Operating Contribution | $ | 98 | | $ | 366 | | $ | 21 | | $ | 485 | | | $ | 39 | | $ | 686 | | $ | 21 | | $ | 746 | |
| Operating Income Margin | 1.4 | % | 11.7 | % | | 4.7 | % | | 0.5 | % | 21.7 | % | | 6.6 | % |
| EBITDA Margin | 8.6 | % | 35.4 | % | | 16.8 | % | | 7.8 | % | 44.7 | % | | 18.2 | % |
1 Predominantly the video business previously reported in the Communications segment under the Business Wireline business unit. |
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| Supplemental Operational Measure |
| | Year Ended |
| | December 31, 2020 | | December 31, 2019 |
| | Video | Broadband | Adj.1 | Historical EG | | Video | Broadband | Adj.1 | Historical EG |
| Operating Revenues | | | | | | | | | |
| Video | $ | 28,465 | | $ | — | | $ | (8) | | $ | 28,457 | | | $ | 32,123 | | $ | — | | $ | (13) | | $ | 32,110 | |
| High-speed internet | — | | 8,534 | | — | | 8,534 | | | — | | 8,403 | | — | | 8,403 | |
| Legacy voice and data services | — | | 2,213 | | — | | 2,213 | | | — | | 2,573 | | — | | 2,573 | |
| Other services and equipment | 145 | | 1,571 | | (1) | | 1,715 | | | 1 | | 2,036 | | 3 | | 2,040 | |
| Total Operating Revenues | 28,610 | | 12,318 | | (9) | | 40,919 | | | 32,124 | | 13,012 | | (10) | | 45,126 | |
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| Operating Expenses | | | | | | | | | |
| Operations and support | 24,619 | | 7,582 | | (30) | | 32,171 | | | 27,599 | | 7,451 | | (22) | | 35,028 | |
| EBITDA | 3,991 | | 4,736 | | 21 | | 8,748 | | | 4,525 | | 5,561 | | 12 | | 10,098 | |
| Depreciation and amortization | 2,262 | | 2,914 | | (57) | | 5,119 | | | 2,461 | | 2,880 | | (65) | | 5,276 | |
| Total Operating Expenses | 26,881 | | 10,496 | | (87) | | 37,290 | | | 30,060 | | 10,331 | | (87) | | 40,304 | |
| Operating Income | 1,729 | | 1,822 | | 78 | | 3,629 | | | 2,064 | | 2,681 | | 77 | | 4,822 | |
| Equity in Net Income (Loss) of Affiliates | — | | — | | — | | — | | | — | | — | | — | | — | |
| Operating Contribution | $ | 1,729 | | $ | 1,822 | | $ | 78 | | $ | 3,629 | | | $ | 2,064 | | $ | 2,681 | | $ | 77 | | $ | 4,822 | |
| Operating Income Margin | 6.0 | % | 14.8 | % | | 8.9 | % | | 6.4 | % | 20.6 | % | | 10.7 | % |
| EBITDA Margin | 13.9 | % | 38.4 | % | — | % | 21.4 | % | | 14.1 | % | 42.7 | % | — | % | 22.4 | % |
1 Predominantly the video business previously reported in the Communications segment under the Business Wireline business unit. |
