AT&T CEO John Stankey advised CNBC on Friday the corporate can preserve its dividend fee whereas nonetheless investing in development companie
AT&T CEO John Stankey advised CNBC on Friday the corporate can preserve its dividend fee whereas nonetheless investing in development companies like direct-to-consumer streaming service HBO Max.
Stankey made within the feedback on “Squawk on the Road” in response to a query from CNBC’s David Faber, who requested the CEO if cash AT&T used to pay the dividend can be higher spent accelerating its digital transformation.
That is a binary selection AT&T doesn’t must make proper now, Stankey responded.
“I really feel very comfy once we’re down at 50, low 50s, mid 50 payout ratios on the dividend, that we will maintain that proper now and never must stroll away from the chance to maintain this a robust and sustainable enterprise,” mentioned Stankey, showing on CNBC as AT&T’s host its Analyst and Investor Day.
“The second that I cross a path the place I do not assume that may occur, or that we’re not getting acknowledged for that capital return, in fact I’ve obtained to ask that query,” Stankey added. “However we’re not in that place.”
AT&T paid out $15 billion in dividends in 2020 whereas producing $27.5 billion in free money circulate, placing the corporate’s complete dividend payout ratio at 55%, in response to its Jan. 27 earnings launch. For the upcoming 12 months, the corporate tasks free money circulate to be within the $26 billion vary and its dividend payout ratio to be within the “excessive 50’s% vary.”
AT&T had a dividend yield of round 6.8% on Friday as its shares traded at greater than $30 every.
Stankey mentioned he is assured AT&T will have the ability to develop its revenues going ahead. Income got here in at $171.Eight billion in 2020, a 12 months upended by the coronavirus pandemic, in contrast with $181.2 billion in 2019.
“Our perception is we have got the portfolio of development,” Stankey mentioned, including the corporate was deploying its “time and vitality … in a means that we expect we could be profitable in these markets and return this enterprise to top-line development.”
HBO Max, which is a part of AT&T’s WarnerMedia division, is a key focus for the corporate.
Stankey mentioned he sees causes to be optimistic and believes new subscribers will proceed to flock to the streaming service.
AT&T on Friday elevated its subscriber forecast for HBO Max and HBO, projecting world subscribers of between 120 million and 150 million for HBO Max and HBO by the top of 2025. On the finish of fiscal 12 months 2020, world subscribers reached practically 61 million for HBO Max and HBO and U.S. subscribers 41 million, aided by the Christmas Day launch of “Surprise Lady 1984.”
“We grew extra within the final seven months of final 12 months than we did within the earlier decade,” Stankey mentioned.
The corporate is planning to launch HBO Max in Latin America and later Europe, he mentioned. “Add to that the thrilling growth of bringing in an ad-supported choice for purchasers [in June], which broadens the chance domestically in the US to begin attacking value factors that we have been locked out of,” he mentioned. “The staff feels actually good about their momentum. We have not seen our greatest days.”
AT&T’s new forecast comes as Netflix not too long ago surpassed 200 million subscribers in the course of the fourth quarter of 2020, and and Disney’s streaming service Disney+ surpassed 100 million subscribers simply 16 months after its launch.
Stankey additionally mentioned he is happy with the latest efficiency of WarnerMedia’s Turner division, which incorporates the likes of TNT and CNN. The latter is coming of a “document 12 months, document scores, document income,” he mentioned.
“Now we have very succesful individuals who have executed a pleasant job positioning these belongings to even be related in what I’d name that shrinking dynamic of the cable bundle — not solely shrinking from a subscriber base however shrinking when it comes to the variety of channels which can be related for a buyer to hold ahead,” he mentioned.
— CNBC’s Sarah Whitten contributed to this report.