AT&T’s free cash flow

AT&T (T) delivered free cash flow of $5.87 billion in the first quarter of 2019, an increase of over 100% from its previous year’s level of $2.83 billion. Its cash flow from operations also increased 23.5% YoY (year-over-year) to $11.1 billion in the first quarter. For 2019, the company expects its free cash flow to increase ~16.1% YoY to $26 billion.

Could a Merger with Dish Help AT&T Reduce Its Debt Levels?

AT&T’s focus on lowering its debt levels

AT&T ended 2018 with debt of $176.5 billion. A significant addition to AT&T’s debt was its $85.4 billion acquisition of Time Warner in mid-June last year.

AT&T paid off ~$9.084 billion in debt during the first quarter of 2019. The company has also stopped giving away promotional discounts for phone and TV plans to lower its debt load. If AT&T sells DIRECTV to Dish Network, it could help it reduce its debt and also focus on WarnerMedia’s upcoming streaming service.

Meanwhile, the company is looking to deleverage its business using its free cash flow. For 2019, it plans to use its free cash flow of $12 billion to reduce its debt burden and reach a net debt-to-adjusted EBITDA ratio of ~2.6x. Its debt-to-EBITDA ratio was 2.8x in 2018. In November, the company had expected to see a debt reduction of ~$18 billion–$20 billion in 2019.

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