AT&T has said that an ad-supported version of its streaming service HBO Max likely to debut later this year in June and upped the platform’s subscriber targets for 2025.

The American telco, which also owns media assets like Warner Bros, CNN and HBO housed under Warner Media, said on Friday it expects global subscribers for HBO Max and HBO between 120- 150 million by the end of 2025, raising its forecast as more people turn to streaming services for entertainment on the go, Reuters reported.

In October 2019, the company had said it expected to add 75 million to 90 million subscribers for the same period.

With this upward revision, AT&T expects HBO revenue to more than double over the next five years. In 2020, Warner Media’s HBO segment had $6.8 billion in operating revenue.

Releasing these projections ahead of its analyst and investor day presentation Friday (US time zone), AT&T said in an update, “As HBO Max scales at a global level, the company plans to increase investment, with expectations for peak dilution in 2022 and break even in 2025.”

AT&T, according to another media report, expects the AVOD version of HBO Max, which will carry a monthly price less than the standard $15/month standard tier, to contribute to the overall streaming-subscriber growth numbers this year.

“It turns out that most people on this planet are not wealthy,” Warner Media chief Jason Kilar said at a Morgan Stanley investor conference last week, discussing the AVOD strategy, adding, “And so if we can wake up and use price and be able to kind of invent and do things elegantly through advertising to reduce the price of a service, I think that’s a fantastic thing for fans. And I do think once they see it, because I’ve seen the service in terms of the designs that we’ve come up with, I think people are going to be so excited about how we’ve been so thoughtful about the insertion of advertising and how it’s a very organic nature of the experience.”

AT&T expects to launch HBO Max in 60 markets outside the US in 2021 (39 territories in Latin America and the Caribbean in late June and 21 territories in Europe in the second half of 2021), according to media reports.

However, Asia, which is one of the biggest growth area for some global streaming services like Netflix and Amazon Prime Video, doesn’t seem to be in the scheme of things for HBO Max.

According to the 2020 annual report of AT&T, operating revenues for HBO increased in 2020, primarily due to the May 2020 acquisition of HBO LAG and higher domestic (American) HBO Max retail subscribers, partially offset by decreases in content and other revenue from lower content licensing.

At December 31, 2020, the company said it had 41.5 million U.S. subscribers from HBO and HBO Max, up from 34.6 million at December 31, 2019, including growth from intercompany relationships with the communications segment.

Cost of revenues increased in 2020, primarily due to approximately $1,800 of programming investment related to HBO Max.

Overall, the Warner Media segment accounted for approximately 17 per cent of AT&T’s 2020 total segment operating revenues compared to 19 per cent in 2019 and 22 per cent of 2020 total segment operating contribution compared to 25 per cent in 2019.

Warner Media segment develops, produces and distributes feature films, television, gaming and other content over various physical and digital formats globally.

Theatrical product revenues were lower due to theaters closing for a significant portion of 2020 and postponement of theatrical releases.

Meanwhile, AT&T also said in its annual report that on February 25, 2021, it signed an agreement to form a new company named DIRECTV (New DTV) with TPG Capital, which will be jointly governed by a board with representation from both AT&T and TPG.

Under the agreement, AT&T will contribute its video business unit to New DTV for $4,250 of junior preferred units, an additional distribution preference of $4,200 and a 70 per cent economic interest in common units.

“We expect to receive $7,600 in cash from New DTV at closing. TPG will contribute approximately $1,800 in cash to New DTV for $1,800 of senior preferred units and a 30 per cent economic interest in common units. The remaining $5,800 will be funded by debt taken on by New DTV. As part of this transaction, we agreed to pay net losses under the NFL SUNDAY TICKET contract up to a cap of $2,500 over the remaining period of the contract,” AT&T said.

The transaction is expected to close in the second half of 2021, pending customary closing conditions. The total of $7,600 of proceeds from the transaction are expected to reduce AT&T’s total and net debt positions.