SEC Filings

425
AT&T INC. filed this Form 425 on 11/09/2016
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Jennifer Fritzsche^ If you look at -- I assume your most important metric is free cash flow, as you sit down -- taxes, free cash flow. But if we look at the components of that, just in a simplistic form -- EBITDA less CapEx, less taxes -- I'm not asking you to predict tax reform or anything like that, and not looking at TWX, but how do you feel about that free cash flow sustainability longer-term?

John Stephens^ Well, we've had this conversation in the sense of -- we feel really good about the standalone AT&T, I'll say it that way, free cash flow. The continued payoff of the automation and the streamlining projects that came out of Project Agile, the things like Digital First and those transformations, our project we call HALO, High Automation Low Overhead, efforts in our enterprise space: those continue to go well.

If you look at what we're doing with network function virtualization and software-defined networks, which not only lower capital costs but also streamline operating costs, reduce truck rolls, reduce hands-on handling of orders, all of that, we feel really good about the ability to improve cash flow from that.

And as you see, the rest of the merger integration synergies come to realization -- which we are confident they will with regard to DTV -- those three bundles are well over $5 billion, could probably approximate different pieces of it, because they approximate well over $5 billion.

So we have an easy path, we believe, over time to get the standalone AT&T into the $20 billion free cash flow range. And then you add on the significant cash flow of Time Warner and the ability to grow that.

Remember, Time Warner has been using much of their cash to buy back shares. That can be repurposed pay down debt, and so we feel very good about our long-term cash opportunities.

Jennifer Fritzsche^ I asked you about wireless competition. I didn't really ask you about the competitive landscape on the wireline side. I think we have to address Comcast here, right?

You're both moving to combine distribution and content. But unlike Comcast, you have a big wireless pipe; you have national video distribution. How do you feel like that gives you an edge?

As you look at Comcast and the strategies -- or Charter; let's bring them both in. But how do you look at cable as a competitor?

John Stephens^ Well, I think you hit the key. When we bring that content in, we're a national wireless-based broadband provider, we're a national content provider, we have national distribution with regard to retail capabilities. So we have an ability to do things that others won't.

And that will accelerate innovation. That will give customers choice. We'll certainly compete strongly with cable, but we really believe that's the real benefit of the Time Warner transaction; and the key differentiator there is wireless.

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