AT&T: Caught Between A Rock and A Hard Place

• AT&T’s Debt to Cash flow ratio is 4.6x, which is not great given that AT&T operates in a capital intensive, slow growth industry with deteriorating unit economics.

• AT&T’s Mobility business is the company’s bread and butter as it accounts for 68% of Total Revenue. The issue here is that Mobility subscriber growth is narrowly outpacing Mobility revenue per subscriber declines.

  • If Mobility revenues were to decline or if Mobility subscriber growth were to be cut in half, the risk of AT&T defaulting on its debt would immediately double in my view.

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