AT&T Wireless 2015 Annual Report Download - page 8

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6
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AT&T INC.
Our second priority is to provide a consistent
cash return to our owners through a methodical
dividend policy.
We have increased the quarterly dividend
for 32 consecutive years, and we are proud
of that achievement.
In 2014, as we invested significantly to build
out our wireless, fiber and IP networks, our
dividend payout as a percentage of cash flows
moved above our historic average. But in 2015,
our ratio moved back in line with our normal
targeted levels, as we completed those major
investment projects. Going forward, we expect
our dividend payout to be in the 70s as a
percentage of free cash flow.
In a highly capital-intensive industry where
the ability to invest is a competitive advantage,
we believe a strong balance sheet with high-
quality investment-grade debt is critical.
As a result of last year’s DIRECTV acquisition,
we increased our debt levels higher than our
historical norm. However, we’re confident that
our future cash flows are sufficient to bring
those debt levels back into our traditional
target range over the next 3 years. In fact, for
the next 3 years, we’re planning to use nearly
all of our cash flow after dividends to pay
down debt.
Finally, we have a strong history of returning
cash to our owners through share repurchases
when our cash flows exceed the capital
requirements of the business, plus the dividend
and debt retirements.
mobile device in the United States and Canada,
as if they were in Mexico. And it’s all enabled by
our network’s ability to provide fast and highly
secure mobile LTE connectivity to 355 million
people and businesses in the United States
and Mexico.
Meanwhile, our DIRECTV operations in Latin
America are good, self-sustaining franchises.
Despite operating in a region of the world with
challenged economies, our local management
teams are experienced operators in these
environments and know the markets well. This
gives us the confidence to be patient as we
evaluate options for how best to take advantage
of these quality businesses in the future.
CAPITAL ALLOCATION
Our capital allocation approach
is very straightforward. Our first
priority is to invest for growth.
We operate in a highly capital-intensive industry.
Leadership over the long term requires
consistent, sustained investment. In fact,
over the last 5 years, we have invested over
$140 billion, including capital investments
in our wireless and wireline networks and
acquisitions of wireless spectrum and
operations, to build out one of the most
advanced wireless, fiber and IP networks in
the world. We believe it is critical to lead in
developing new technologies to ensure we
have the integrated products and services
that will set us apart and give us the lowest
cost structure with the greatest efficiency
and productivity in the industry. As we look
out over the next 3 years, we anticipate that
our capital spending will continue to run
around 15% of our service revenues.