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How Is AT&T Managing Its Leverage?


May. 22 2019, Published 2:18 p.m. ET

AT&T’s debt levels

At the end of March 31, AT&T’s (T) long-term debt was $163.9 billion, while its short-term debt was $11.5 billion. AT&T had total debt of $175.5 billion. In comparison, AT&T’s total debt was $163.0 billion at the end of March 31, 2018. The company’s debt levels increased mainly due to its $85.4 billion Time Warner acquisition in mid-June last year.

During the JPMorgan Global Technology, Media and Communications Conference last week, Randall Stephenson, AT&T’s chair and CEO, spoke about the company’s deleveraging plan. Stephenson stated that the company was on track to reduce its leverage to the 2.5x range by the end of this year and return to its historical level of the 1.8x range by the end of 2022.

He added, “We need to do $26 billion of free cash flow, which again is up considerably from last year. And we need to do asset monetizations of $6 billion to $8 billion.”

Stephenson highlighted that AT&T expects to outperform its free cash flow and asset sale monetization targets for 2019. Further, the company has achieved ~$5 billion in asset monetization via its Hulu stake sale, its sale of its Hudson Yards properties, and its working capital reconfigurations.

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AT&T’s dividend yield

AT&T remains committed to paying higher dividends despite its higher debt levels. In the first quarter, the telecommunications company returned $3.7 billion to its shareholders in the form of dividends compared to $3.1 billion in the first quarter of 2018. At the end of May 21, AT&T’s dividend yield was ~6.3%.


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