AT&T Expects Revenues, Earnings and Free Cash Flow to Grow in 2015 and Each of the Next Three Years

• Provides Update on Strategy, Plans & Financial Outlook Following DIRECTV Acquisition *

*AT&T now has unique set of assets and can provide customers seamless, smart and integrated services – video, mobile and broadband – unlike anyone else *

• Updated 2015 financial guidance includes: *

• Consolidated revenues: double-digit growth

• *Adjusted EPS: $2.62 to $2.68 range¹ *

• Free cash flow: $13 billion range or better

• 2016 – 2018 financial guidance includes: *

• Consolidated revenue growth in line with GDP growth or better

• Adjusted EPS growth in mid single-digit range or better
• Improving free cash flow with a free cash flow dividend payout ratio in the 70s percent range*

Analyst Conference to be Webcast Live at 9 a.m. CT

DALLAS, August 12, 2015 **** — AT&T Inc. (NYSE:T) today provided an update on its strategy and financial outlook, including expectations that revenues, adjusted earnings and free cash flow will grow in 2015 and each of the next three years. This growth will reflect AT&T’s unmatched position as an integrated communications and entertainment company following its recent acquisitions of DIRECTV and Mexican wireless properties Iusacell and Nextel Mexico.

AT&T leadership is hosting a financial analyst conference today to discuss the company’s strategies and plans. The conference will be video webcast live beginning at 9 a.m. Central Time on the AT&T Investor Relations website. Related materials will be posted in the same location shortly before the webcast begins.

“We’re a different company than when we began the year and it shows in what we’ll be able to offer customers and in our financial outlook. We’ve diversified our capabilities, added significant scale in video and mobility, and can now deliver integrated services that set us apart from the competition,” said Randall Stephenson, AT&T chairman and CEO. “With our national retail presence, coast-to-coast TV and mobile coverage, and pervasive broadband footprint, we’re positioned like no other to lead the evolution of video and shape the future of the industry. We have the premier set of assets to redefine TV everywhere and deliver an entertainment experience that is truly unique.”

AT&T now is the largest pay TV provider in the United States and the world, providing service to more than 26 million subscribers in the United States and more than 19 million customers** in Latin America, including Mexico and the Caribbean. Additionally, AT&T has 132 million wireless subscribers in the U.S. and Mexico; offers 4G LTE mobile coverage to nearly 310 million people in the U.S. and expects LTE coverage to 350 million people in its North American service area by the end of the year; covers 57 million U.S. customer locations with high-speed Internet; and has nearly 16 million broadband subscribers.

AT&T continues to expect to boost broadband speeds and now plans to expand its high-speed Internet service to reach more than 60 million customer locations by the end of 2018. The company also plans to expand its all-fiber broadband footprint. When the expansion is complete, AT&T’s all-fiber broadband footprint will reach more than 14 million residential and business customer locations. Current GigaPower deployments have exceeded penetration expectations with costs per customer location passed running much lower than original expectations.

AT&T’s DIRECTV and Mexico acquisitions significantly diversify the company’s revenue mix, products, geographies and customer bases. As previously reported, AT&T expects that, by the end of 2015, its largest revenue streams will be, in descending order: Mobility and Business Solutions (both wireless and wireline); Entertainment & Internet; Consumer Mobility; and International Mobility and Video. The company plans to begin providing detailed reporting on these segments beginning with the third quarter.

AT&T continues to expect $2.5 billion or better annual run-rate cost synergies from the DIRECTV transaction by 2018. This does not include numerous revenue synergy opportunities, including cross-selling additional products to each customer base; enhanced retail distribution as AT&T begins to offer DIRECTV in its 2,200 company-owned retail store locations; and enhanced advertising opportunities, such as local ad insertion. The cross-selling is a 39 million total household opportunity – with 15 million adding wireless, 21 million adding video, and 3 million adding high speed Internet. Additionally, AT&T now has the ability to broadly offer TV service to its 57 million broadband customer locations; previously, the company could offer U-verse TV and broadband to only about half of these customer locations.

Additional potential capital spending and working capital synergies include moving to a common video platform, as well as transitioning to a common set-top box with the Genie platform.

To reflect these synergies and the strategic benefits of offering an unparalleled combined video entertainment, mobile and broadband service, the company updated its 2015 guidance and gave a three-year view of certain financial metrics. In 2015, the company expects:

• Double-digit consolidated revenue growth due to its DIRECTV acquisition;
• Adjusted earnings per share in the $2.62 – $2.68 range¹ ;
• Capital spending to be in the $21 billion range, including capitalized interest from spectrum;
• Free cash flow in the $13 billion range or better with an improving free cash flow dividend payout ratio.

From 2016 through 2018, the company expects in each of the next three years:

• Consolidated revenue growth in line with GDP growth or better;
• Adjusted earnings per share growth in the mid-single digit range;
• Adjusted consolidated margins that expand from current levels;
• Capital intensity, including merger-related items, in the 15 percent range of revenues or lower;
• Improving free cash flow with a free cash flow dividend payout ratio in the 70s percent range.

*¹ * Expected range excludes adjustments for non-cash mark-to-market benefit plan adjustments, merger integration costs and other adjustments that are not reasonably estimable at this time.

*Free cash flow dividend payout ratio is dividends divided by free cash flow; free cash flow is cash from operating activities minus capital expenditures

**Includes DIRECTV Latin America pay TV subscribers as of June 30, 2015, including subscribers of Sky Mexico, in which DIRECTV holds a minority stake

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.