AT&T Inc. (NYSE:T) has continued to manage its capital structure proactively and reduce its debt repayment.
AT&T focused on reducing its debt levels
The company has issued communication regarding the redemption of its outstanding principal amount of six bonds series of around $4.3 billion as well as early repayment of term loans of around $1 billion. The aggregate principal of the prepayments is estimated to be around $5.3 billion. Considering the repayment activity recently announced plus the expected continued solid cash flow, AT&T‘s future debt maturity towers appear to be manageable.
The announcement of the series of transactions is in line with the company’s plans to continue improving its credit quality. This is as AT&T remains committed to paying dividends to its stockholders and investing in growth areas such as 5G, HBO max, and fiber. The company expects a free cash flow ratio dividend payout for 2020 to be in the range of 60%. As a result, this will give the company the necessary flexibility to continue reducing its debt levels this year.
AT&T and Verizon unveil new prepaid plans
The company and Verizon Communications (NYS:VZ) have unveiled new prepaid service pricing options to attract more customers in the long run. AT&T’s service allows its customers to get a low monthly rate for using the prepaid service for 3-months or a whole year of service. On the other hand, Verizon gives subscribers discounts depending on the amount of time they remain in the prepaid plan. Customers will receive a $5 discount after three months, and a second $ 10 discount will kick in after 9-months.
The new pricing options will help the telecommunication firms attract prepaid customers who can be profitable in the long term. Unlike post-paid plans, prepaid plans usually attract price-sensitive and less loyal subscribers. Although this will help the wireless carriers grow their prepaid customer base by undercutting rivals on the price it is nonetheless mot an effective strategy. This is because such customers will almost leave immediately after finding a better deal.