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A Look at AT&T’s and Verizon’s Debt Profiles

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Comparing interest expenses

In 2018, Verizon (VZ) posted interest expenses of $4.8 billion, a YoY (year-over-year) rise of 2.1%, while AT&T (T) posted interest expenses of $8.0 billion, a YoY rise of 26.3%.

Analysts expect Verizon’s interest expenses to increase 2.5% YoY to $1.2 billion in the first quarter and 2.1% YoY to $4.94 billion in 2019. In contrast, analysts expect Verizon’s interest expenses to fall 1.6% YoY to $4.86 billion in 2020 and 7.8% YoY to $4.5 billion in 2021.

On the other hand, analysts expect AT&T’s interest expenses to grow 13.5% YoY to $2.0 billion in the first quarter but to fall 0.6% YoY to $7.9 billion in 2019, 5.5% YoY to $7.5 billion in 2020, and 7.5% YoY to $6.9 billion in 2021.

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Comparing total debt and free cash flow

On December 31, 2018, Verizon’s total debt was $113.1 billion, while AT&T’s total debt was $176.5 billion. Analysts expect AT&T’s total debt to fall 5.1% YoY to $167.6 billion in 2019 and 6.1% YoY to $157.4 billion in 2020. They expect Verizon’s total debt to fall 3.1% YoY to $109.6 billion in 2019 and 4.6% YoY to $104.5 billion in 2020.

Analysts expect AT&T’s free cash flow to rise 12.5% YoY to $25.7 billion in 2019, 3.1% YoY to $26.5 billion in 2020, and 0.3% YoY to $26.6 billion in 2021. Analysts expect Verizon’s free cash flows to be $18.7 billion, $19.4 billion, and $21.0 billion, respectively, in 2019, 2020, and 2021.

Verizon’s dividend yield was 4.2% on March 12, lower than AT&T’s 6.7% yield.

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