John Stephens, senior executive vice president and chief financial officer of AT&T, said the telecom operator is focused on exceeding the annual 6 percent to 8 percent reduction in network operational costs it has achieved in recent years.
The company has begun cost reduction initiatives as it targets an incremental 4 percent in cost reductions driven primarily by lower labor-related costs and corporate overhead. The company has already virtualized 71 percent of its network functions and expects to meet its goal of 75 percent by the end of 2020.
AT&T’s fourth-quarter 2019 revenues will reflect lower Warner Bros. theatrical revenues as compared to a strong fourth-quarter 2018 film slate. Investment in HBO Max in the fourth quarter, in the form of new content production, foregone licensing revenues and platform costs, pressured operating income about $500 million.
Fourth-quarter revenues are also expected to reflect U.S. wireless equipment sales revenue slightly lower than fourth quarter of 2018. As in prior quarters, the company expects to see foreign exchange rate pressure in some of its international operations.
Gross capital investment for 2020 will be in the $20 billion range, reflecting downward bias from fiber build completion and the company’s capital efficient one-touch wireless spectrum deployment.
AT&T is expecting revenue growth of 1-2 percent, including wireless equipment revenue gains from 5G device adoption, in 2020.