AT&T Wireless 2014 Annual Report Download - page 41

AT&T INC. | 39
services enabling us to compete more effectively against
cable operators as well as other technology, media and
communications companies. In addition, we believe the
acquisition will result in cost savings, especially in the
area of video content costs, and other potential synergies,
enabling us to expand and enhance our broadband
deployment and provide more video options across
multiple fixed and mobile devices.
Achieving these results will depend upon obtaining
governmental approvals on favorable terms within the
time limits contemplated by the parties. Delays in closing,
including as a result of delays in obtaining regulatory
approval could divert attention from ongoing operations
on the part of management and employees, adversely
affecting customers and suppliers and therefore revenues.
If such approvals are obtained and the transaction is
consummated, then we must integrate a large number
of video network and other operational systems and
administrative systems, which may involve significant
management time and create uncertainty for employees,
customers and suppliers. The integration process may
also result in significant expenses and charges against
earnings, both cash and noncash. While we have
successfully merged large companies into our operations
in the past, delays in the process could have a material
adverse effect on our revenues, expenses, operating
results and financial condition. This acquisition also
will increase the amount of debt on our balance sheet
(both from DIRECTV’s debt and the indebtedness needed
to pay a portion of the purchase price) leading to
additional interest expense and, due to additional shares
being issued, will result in additional cash being required
for any dividends declared. Both of these factors could
put pressure on our financial flexibility to continue capital
investments, develop new services and declare future
dividends. In addition, events outside of our control,
including changes in regulation and laws as well as
economic trends, could adversely affect our ability to
realize the expected benefits from this acquisition.
The acquisitions of DIRECTV, GSF Telecom and NII
will increase our exposure to both changes in the
international economy and to the level of regulation
on our business and these risks could offset our
expected growth opportunities from these acquisitions.
(For ease of reading, we have assumed all three acquisitions
have closed.) These three acquisitions will increase the
magnitude of our international operations, particularly in
Mexico and the rest of Latin America. We will need to
comply with a wide variety of new and complex local laws,
regulations and treaties and government involvement in
private business activity. We will also be exposed to
adverse health effects on customers or employees who
use such technologies including, for example, wireless
handsets. We may incur significant expenses defending
such suits or government charges and may be required to
pay amounts or otherwise change our operations in ways
that could materially adversely affect our operations or
financial results.
Cyber attacks, equipment failures, natural disasters
and terrorist acts may materially adversely affect
our operations.
Cyber attacks, major equipment failures or natural
disasters, including severe weather, terrorist acts or other
breaches of network or IT security that affect our wireline
and wireless networks, including telephone switching
offices, microwave links, third-party-owned local and
long-distance networks on which we rely, our cell sites
or other equipment, our customer account support and
information systems, or employee and business records
could have a material adverse effect on our operations.
While we have been subject to security breaches or cyber
attacks, these did not result in a material adverse effect
on our operations. However, as such attacks continue to
increase in scope and frequency, we may be unable to
prevent a significant attack in the future. Our inability to
operate our wireline, wireless or customer or employee-
related support systems as a result of such events, even
for a limited time period, could result in significant
expenses, potential legal liability or a loss of customers
or impair our ability to attract new customers, and
damage to our reputation, any of which could have a
material adverse effect on our business, results of
operations and financial condition.
The impact of our pending acquisition of DIRECTV,
including our ability to obtain governmental approvals
on favorable terms including any required divestitures;
the risk that the businesses will not be integrated
successfully; the risk that the cost savings and any other
synergies from the acquisition may not be fully realized
or may take longer to realize than expected; our costs
in financing the acquisition and potential adverse effects
on our share price and dividend amount due to the
issuance of additional shares; the addition of DIRECTV’s
existing debt to our balance sheet; disruption from
the acquisition making it more difficult to maintain
relationships with customers, employees or suppliers;
and competition and its effect on pricing, spending,
third party relationships and revenues.
We have agreed to acquire DIRECTV for approximately
$48,500. We believe that the acquisition will give us the
scale, resources and ability to deploy video services to
more customers than otherwise possible and to provide
an integrated bundle of broadband, video and wireless