AT&T CEO To Stay On Board To Lead Portfolio Review, Grow Revenues

AT&T CEO Randall Stephenson will stay on through at least 2020 as the carrier works with Elliott Management to increase revenues and shed non-strategic assets, he told investors during the carrier's Q3 2019 earnings call.


AT&T is in the midst of returning to its telecom roots under the leadership of the carrier's current Chairman and CEO Randall Stephenson.

Stephenson said he would stay on as CEO through at least 2020 as the carrier works with activist investor Elliott Management to add two new board members as two current members retire within the next 18 months and shed non-strategic assets to gain an additional $14 billion in profit this year. The carrier plans to free up another $5-$10 billion next year.

The changes outlined by Elliott Management in September have been "constructive and helpful," Stephenson said during AT&T's Q3 2019 earnings call Monday. As part of the carrier's three-year capital allocation plan, AT&T promised a disciplined review of its portfolio and no major acquisitions for the next several years.

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"There are no sacred cows," Stephenson said. "We'll analyze each of our businesses individually and as part of the whole. We're always open to making portfolio changes … it will be an important piece of our strategy over the next three years."

While there's no formal retirement plan for Stephenson in place yet, when the 11-year executive does leave his post, the roles of chairman and CEO will be split, the Dallas-based carrier said.

For the third quarter, which ended September 31, net income was $3.70 billion, down from $4.72 billion in Q3 2018. Diluted earnings per share during the quarter was 94 cents, up 4.4 percent compared with 90 cents one year ago. Total revenue declined 2.5 percent to $44.59 billion from $45.74 billion in the same quarter one year earlier.

Business wireline services revenue dipped by 2.7 percent to $6.50 billion compared to $6.68 billion a year ago, which the carrier attributed to sales declines of about $350 million in legacy products. Total business revenues factoring in business wireless, however, went up slightly by 0.9 percent in the third quarter and helped business solutions revenues grow, said John Stephens, AT&T's senior executive vice president and CFO.

Revenue from strategic and managed services, which AT&T said includes its most advanced business solutions, increased 6.1 percent during Q3 2019 year-over-year, continuing the growth trend that the segment has seen every quarter since last year, Stephens said.

Stephens said to grow services revenues, AT&T will be putting more emphasis on resellers. "We're at an inflection point with our resellers … for the past four quarters, our reseller revenues were essentially flat … we now have an opportunity for real growth from that reseller perspective and we are excited about that."

Resellers, he said, will help AT&T make more services revenues, noting the carrier's IoT and 5G services for businesses.

AT&T said that more than 500,000 U.S. business buildings are now lit with fiber, which means high-speed fiber connections to more than 2.5 million U.S. business customer locations. More than 8 million business customer locations are on or within 1,000 feet of AT&T's fiber, the carrier said.

AT&T's mobility segment revenue slipped slightly, totaling $17.70 billion during third-quarter 2019 compared to $17.74 billion in the same quarter a year ago, which the carrier attributed to declines in equipment revenues. The communications business, which includes high-speed internet, video and legacy voice services, also dropped to $35.40 billion during the quarter from $36.01 billion in the third quarter of 2018.

AT&T's WarnerMedia unit, which includes Turner and premium TV channel HBO that AT&T acquired as part of its Time Warner purchase last year, reported revenue of $6.50 billion in the quarter compared to $6.68 billion last year. The carrier said it expects to see more opportunities for revenue growth from this segment in the future.