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According to AT&T 2018 annual report their operating revenues increased for
2018 and decreased in 2017. The increase in 2018 is said to be contributed
primarily to the acquisition of Time Warner and growth in Xandr.
Partially offsetting the revenues were declines in the company’s
communications segment, which continues to experience pressure from
developing technology and shifts in customer behavior.
Operations expense
Operations expense increased in 2018 and 2017. The increase in 2018 was
primarily due to business acquisitions in 2018, higher content costs and
higher equipment costs related to wireless device sales and upgrades. The
increase in 2017 was due to annual content cost increases and additional
programming costs in the video business and the copper abandonment
charge. The increase was partially offset by lower expenses due to their
continued focus on cost management, lower equipment expenses, lower
selling and commission costs from reduced volumes and lower marketing
costs.
Operating income
Operating income increased in 2018 and decreased in 2017. Operating
margin was 15.3% in 2018, compared to 12.4% in 2017 and 14.4% in 2016.
Interest expense
Interest expense increased in 2018 and 2017, primarily due to the
acquisition of Time Warner. The increase in 2018 was primarily due to higher
debt balances related to the acquisition, including interest expense on Time
Warner notes, and lower capitalized interest associated with the network
plans putting spectrum in service.
The increase in 2017 was primarily due to higher debt balances in
anticipation of closing our acquisition of Time Warner and an increase in
average interest rates when compared to the prior year. Financing fees
related to pending acquisitions and debt exchange costs also contributed to
higher interest expense in 2017.