|AT&T INC. filed this Form 425 on 11/09/2016|
Jennifer Fritzsche^ This will clearly play a role here. What are the actual mechanics to get to the 2.5 times leverage at the end of year one? And will it require any asset sales? I have a few questions after that.
John Stephens^ If you remember -- first of all, maybe a point in time: end of year one is end of 2018. So we've got a full 26 months from then. That's one point I would make.
Secondly, all the cash accumulation that might be done or generation that might be done, not only by AT&T but by Time Warner through that period, will be available to manage the debt down.
Third, I would suggest to you if you look at the combined Companies, the growth in cash flows, we're looking at EBITDAs in the range of $60 billion, cash from operations in the range of $45 billion on an annual basis. So a significant amount of cash to manage debt load very, very prudently, very easily.
With regard to the net debt-to-EBITDA ratio, certainly we expect to grow EBITDA. We expect to grow revenues and profitability, and certainly that helps in the mechanics of getting there.
We will continue to look at our balance sheet. Right now it's a $400 billion total asset balance sheet. Post-transaction we'll be in that $500 billion range.
And certainly we'll continue to look at assets that we can monetize, as we have over time. And we will focus the use of our cash on debt repayment and moving towards more traditional rates, not only at the end of 2018, but at four years out when we will strive and expect to get to that 1.8 times net debt-to-EBITDA range. Feel really good about this collection of assets coming together that can really generate a lot of cash.
Jennifer Fritzsche^ How does that -- AT&T does have a lot of paper out there. You put $40 billion more, I guess, how do you feel about that?
Do you feel like that -- what are your people telling you in terms of the demand? I mean, we've had some amazing success stories with you in the capital markets, especially in the debt markets.
John Stephens^ We continue to feel very good. As you know we got bridge facilities from two banks, and we had opportunities from many others. So we felt really good about that before we announced the transaction. The conversations and the activities we've had since only lead us to believe that we can be very successful in syndicating out the bridge and getting financing.
The uniqueness of the time and place we have in today's economy is one we -- the marketplace has become rather global. We have over $25 billion, I believe, of foreign-denominated bonds out there right now. We've been very successful over the last five years in hitting and, if you will, going to different markets and utilizing different markets and have a very good reputation.
Secondly, the European economy and really the rest of the world economy is very tepid, to say the least. So rates on a global basis are very low, which make our bonds very attractive even at the low rates we borrow at, especially with a reliable player.