Michael Viola SVP, IR
Randall Stephenson Chairman, CEO
John Stephens CFO
John Hodulik UBS
Simon Flannery Morgan Stanley
Brett Feldman Goldman Sachs
Philip Cusick JPMorgan
David Barden Bank of America
Michael Rollins Citi
Amy Yong Macquarie
Walter Piecyk BTIG
Call transcript
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Ladies and gentlemen, thank you for standing by. Welcome to AT&T Fourth Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. like your also is this I’d recorded. being Instructions] to that remind conference [Operator like the to our now would I turn host, conference Mr. to over Michael Senior Vice of Relations. Viola, President Investor sir. Please go ahead,

Michael Viola

welcome Lea. to morning, Thanks, Okay. everyone, the quarter conference Good fourth call. and

Head Mike AT&T. said, Relations Investor Viola, Willy here of As I'm at

initiatives. AT&T's our update, Randall we'll going Joining to is outlook John's me Stephenson, provide on XXXX as John along CEO; an XXXX Question-and-answer today call and the business well get session. going discuss as Stephens, business Randall overall results the cover is Chairman AT&T's a to to CFO. with then and

Before we to the additional uncertainty we that tell quiet and in some Relations Safe Investor website. that of available I our for begin, we're today. XXX the period XXX, is the materially you results auctions, comments may that risk to and differ need that be questions need a and subject call about remind attention today address I'd spectrum statement. They're any says your Harbor It and may information you on to to also can't FCC forward-looking. so

our available Investor website, investor on our materials as Relations X-K, earnings et briefing, news the release, cetera. schedules, So includes associated always, are

And Chairman I'd call and so the like AT&T’s with that, over CEO to to turn now Randall Stephenson.

Randall Stephenson

with in Day on give say basically said schedule our billion and the year. I'm flow in I be down a Okay. as more Analyst doing quarter to on that for a for and cash highlights we we the priorities, with record deck fact the committed of our of from the is we're overview how of I pleased free past ahead to top in We results driving priority of brief and Time couldn't XX%. of would Thanks, key during then $X.X year. X exactly percent acquisition, free below dividend generated characterize as going close going Warner some payout Mike. cash our Slide And the as would fourth the November the each and debt XXXX I'm start we flow our what I

was Our capital record also near all-time cash even with flow record free full an spending. year

full the the of was us XX% cash year, year. our December a as For XXth in to free consecutive for percent that dividend the payout and dividend flow increase allowed

I'm all XXXX the pleased about while during for quarter, our made progress strategic also So with of results feel on financial the we our we imperatives. good

we this quarter. in and brought and is content been First, as discuss as John a had to leaders day terrific accretive one. fourth distribution we Warner closed together the And finally going and WarnerMedia have committed Time transaction shortly, has since

team applying also Lesser AppNexus, his insights fourth and they're build. launched to quarter opportunity with Xandr, revenues business continuing customer and acquisition of and We integrating then platform, Turner's at Brian to enthusiasm Xandr’s around that is XX%, our our our this following advertising are inventory growing ad

in the networks, XX GWS on of the based network first that's and our well introduced last the comprehensive network us and most net very a In cities are our first deployments month strong terms of the parts We schedule. trajectory. our ahead of finished XG study named conducted. in quality been best mobile performance standards year

in and deployment accelerated addition XX locations. business X now fiber we locations our also We reach million to million customer

our in our And is would XG important X% foundational broadband by slide. business really to of I this that result, and grew the a fiber over highlight this network. it's a note on couple other As to deployment items quarter

forma last, EBITDA revenue continued grew and business growth our subscribers Mexico And in both in by and in WarnerMedia’s for total strong revenue First, and which grew in company Latin X.X% Vrio. strong wireless performance the In quarter. with pro margins. growth EBITDA. American our

If It's the key our to back no we priorities you XXXX, for in to discussed next there balance surprises. the sheet. is is see top going what delever priority go you're November to slide, and our

operational and leading have and note this us for to strong XXXX it's to momentum important dividends. FirstNet. strong fiber, out while going coming our reduce in XG our investing this continue is all doing allow And paying at of We we're that and record to debt industry of levels

XXXX continue the the that to and mobility We business in to see momentum our launch Warner Turner, XXXX premium EBITDA build ad over year of top on we quarter. and merger last Turner. the capabilities The and back from The our actually featuring SVOD at in specifically and its entertainment synergies into a we're a obviously path significant lift heaviest group service And plan that’s our wireless revenues. service expect the of stabilize WarnerMedia we're of quickly in it's brands, the confident the Brothers, you're and growing and scaling improvement and to then all XXXX inventories that's half product. our first TV focus continuing our content going on quite delivering that all for to is of HBO Xandr WarnerMedia to

about we're our focused deliver to each areas. on of very we're So that's XXXX. - We ability do these what focused feel in good

he'll it Stephens with and results. to so take now through going our I'm the turn to over CFO, you that, John And

John. So

John Stephens

morning, Good everyone and Randall. thanks for being on Thanks, the call.

our with summary is Slide begin financial X. me Let which on

results most few in done be referring previous we'll to next the for slides. quarters our for we've segments comparable of As

basis. fees full And I'm we've these the have rolled this on be and through call These flows. made service happy way, company regulatory cash was XXXX that new quarter our and same pension impact receivables. with to statements deal the income to the time record of For policy decision that the fees a and add should At open required AT&T to accounting other a this to adopt accounting universal year we'll last changes cost standards, as recognition, changes. revenue instalment

more quarter and for the than $X.XX XX% adjusted more Let with fourth for me EPS than year. earnings, start XX% the quarter was up

For was due rate a strong acquisition generally standards performance Gains XX%, legacy billion, drove services, of of the Time and pro a basis, and $XX forma million effective exchange up the by by and Mobility was transition sales. Warner. video our Consolidated declines and by and were smartphone revenue revenue foreign thanks revenue tax the in quarter, WarnerMedia’s year-over-year exchange basis business recognition equipment comparable pressures. On $XXX Revenue impact exchange benefits year-over-year due results. to equipment to lower wireless were revenues a mostly The offset from from to Latin at in foreign of down adoption offset look Mobility’s comparative these in came quarter the America. wireless in on pressure fourth the fewer WarnerMedia higher you When entirely pressure. foreign down

basis In expand fact, margins [ph] those up operating [XXX] consolidated growth and continued impacts with without in were and growth positive. revenues to WarnerMedia Mobility adjusted strong income Operating showed points solid margins.

financial but margins the equity comes the item of basis turned cash with video preferred an in our For That year on million back and about customer success in preferred the income XXXX, even from Mobility in the now to our is interest statement pressure to business. One we grew we growth other by XXX flows adjusted in the housekeeping margin return perhaps full strong the offset income interest transition pension contributed plan related points. quarter Earnings best fourth operating margins where in reflected that with record measure in non-controlling our growth, $XXX income. is showed results. our

really and from Slide at the Both that on operations cash important. Let's X. free This our record is for levels year. look flow hit cash full

ratio has plans payout the billion in you that's of with that a cash $XX.X flow year flow the capital reflects meet to invested we other in our receivable standalone was that investment. company does FirstNet payables, Investors billion on The our out, us, made XXXX allowed had and XX business, pay our as working For a US. year continue coming $X.X we impact raised expect cash dividend free that commitments important dividend capital include strong of for a investment the to us since a and full and company our benefit to $X.X strong million is if voluntary in free in nearly cash depends strong to contributions business to in flows the is managing capital a invest receipt a $XX in strong include past fourth quarter. also in dividend became contract results we XX% which to That Year up accounts history year $XXX It flows need strong reimbursed. dropped XXXX a in no Free were we're a quarter. the like our to our a to we near delever of to capital consistently pay have with years. from shareholders. our variety in Equally of This record record from long efforts. XX% returning fourth and we nearly a one XXXX, billion dividend. proud solid includes leader we us different, for vendor goals to ability meet of in billion XXXX. to that our FirstNet value we our cash comes cash and this

our our commitment generate also position. part flow cash of ability to is Our strong critical improve a to leverage

that an update you give X. on me Let on Slide

made, our we was $X get by Time X.X paying the goal that ‘XX. about closed we down to know range deal. by the Well leverage to You commitments since did end we our the of Warner billion

by of this to drop range Our goal is even next end lower the year. the to X.X that

in our us we'll cash Our XXXX strong significantly and confidence able flows delever. flow free be to free cash XXXX achieve gives

committed to We year. $XX very dividends the debt. get the also ‘XX. X.X That Most we've centers dollars use monetizeable cash in in end asset We've in to in to the We've flow alone data sale ways monetize after of years. of of identified down other recently of the will expect moves us pay free assets. closing that made We've billions thoughtful billion range finding about by and several it our to recent our billion and large portfolio. $X.X deliver been

a have potential amount office that buildings large we've of identified for land raw We and sale.

on another we'll for to ways asset Our in look our billion progress. updated continue monetize you keep assets Hulu investment total than to and portfolio is with more $XXX our opportunity

on And remain billion $X strength billion synergies return financial target, achieve our bottom will revenue run billion in They to solid Our our our end contribute. to of in line, also and continue $X.X by in shareholders. the and cost, for allows continue rate to business targets, to $X.X dividends a our invest leverage merger XXXX.

had by is Mobility, sharply entertainment a our was X% XXX segment talk million of our ever driven them and was won't Obviously driven the wireline which quarter our million. to margins effectively adds XXX more on highest on grew we Mobility. value revenue point segment. base. our strategic performance last starting our service fourth XXX,XXX Service success. of we off promotions, or Together in customers. turn and Let's over disciplined quarter focused to by That's XXX,XXX quickly net up basis in were consists communication margin up on strong with now able $XXX XX.X. quarter. revenues hesitate to were branded year promotions EBITDA points, had and cost added an That volumes results compete. nearly Slide where improvement. great even this the with a basis profitability We growth, smartphones EBITDA information with by for expanded our Communications business and and $XXX by points Mobility than opportunity, We continued than segment more high EBITDA in we XX. XX% EBITDA units. or service And grew results see lower phone postpaid and to But quarter with especially last performance be we to

momentum this than cost discipline our from and quarter, million our added we have see about subscriber passed continues cricket solid holding revenue of where offset line base business. in Please uneconomical many since strength what XXX,XXX spending of cricket grew which includes the to loss earlier month to subscribers we postpaid strong. XX customers. equipment was That our that prepaid thanks value Even against acquired characteristics Prepaid saw competitors. mark, a by discipline, generate net promotions our also phones be and about prepaid. more cricket of we the to AT&T the our with in You the from similar note doubling growth XX% ads our subscriber XXXX company our the in prepaid

about We significant of made XG told in also fourth leadership the introduction. you in Randall strides network quarter. our evolution our network in

carrier when adding, we're spectrum to aggregation standard better additional and speeds the other our compared evolution today With XG producing LTE. network for is customers improvements,

results. providing tailwind deployment net for critical first is Our mass our a reaching and

let's taking Group we're Entertainment stability. Now the bring steps look results EBITDA our at to and

slowed in DTV customers year and million improvement promotions a pressured decline NOW year-over-year sequential showed fourth nearly fourth driven primarily rates seasonally by was in as a reduction This profitability. even Our as quarter. $XXX on in EBITDA the quarter, growth in improvement a two by well a

We stabilize EBITDA throughout year the helping in expect revenue performance continue to XXXX.

highly essentially service. EBITDA on year We none confident are Eliminating promotions churn to streaming promotions this an months these customers and driven ago the on had content first on discounted for month losses a DIRECTV for year-over-year making with data $XX that low NOW improvement EBITDA costs. it see half of will is we a starting the officers. of tailored those generally clearly we Six subscriber these had quarter. quarter, end offers, in pay the customer and but in the approach stabilize value, year a results it remained real expect ARPUs offers customers A high elevated more impact of the positive million the customers impact. require At lowered

ARPU DTV from up NOW sequentially $XX the quarter. In about was fact third

to This continues footprint drive million locations X to with will as fiber our and That more all network laser content. another to fiber on key now costs, Our revenue on million in hit extend fiber locations in later our too grow. helping the including XX way rates we're broadband passed We market year. are penetration and the this always, million XX This stability, our of the year, is higher focus growth, than customers drive to more go. locations XX our have of our total EBITDA. business and in efficiencies fiber the annualized performance the million, network offset at stabilizing substantially costs the focused will grow more helps that when by footprint last revenue fiber of Subscribers million business. to broadband the fiber play X in a billion wireline, to big number on than declines. X driving and include Cost longer business the our increased customer we continue role strategic story business services legacy continuing EBITDA than plus

on the us focus to deliver Our revenue margins initiatives with cost even legacy allows declines.

operating adjusting adult. across primarily propel at income eight up Turner Turner domestic racked theatrical the and International young grow to continue advertising XX. WarnerMedia continue has Born foreign best affiliate results. theatrical to Grindelwald, revenues. ever. delivery International past exchange declined grew spotlight is networks, with it its that’s operating business saw at quarter Oscar in and Warner were even That information growth be with solid box Star Brothers or on for decline. television is receipts ad movies, Turner's the full in the Now when exchange of X% including Aquaman nominations. Turner mark Aquaman revenues quarterly had to lowered great income three WarnerMedia’s Fantastic subscription is across while Warner nearly let's of quarter this business. billion and pressure revenues look for gains X% to fourth The to units. revenues great revenues Beasts: Slide Total flat We Subscription a had foreign Crimes a quarter, and thanks year double-digit both ratings due global Born, to cash on back office critically in higher film all Brothers and Mule. its slate rates, are solid kids pressure. strong The Networks. of acclaimed in saw essentially date Star a and the various X generation This helped rates Domestic even fourth a ad year the

operating solid income However X%, HBO’s still results a management XX%, impacted and dispute nearly to primarily without Turner's from the quarter. the programming dispute, double-digit in that income was solid down saw higher marketing the been focus due internationalizing revenues programming due XX% and lower income quarter. a revenues reflecting have and a HBO control up and due but to grow XX% was on Even expenses operating rose HBO Subscription up dispute, to expect of revenues were in ongoing by dispute, expense carriage control revenues. carriage other would revenues to XXXX. costs. expense with operating we subscription in sharp Content slightly. distribution up

final for earlier Awards nominations, excellence a received note, Born. XX Golden including Star continue top recognized producing comes Globe of As This WarnerMedia be WarnerMedia Award to four companies this high quality is A their a entertainment. month. for Academy on in

premium to integrate on driving advertising AT&T’s efficiencies moving inventories Much same At marketplace. on Xandr the of We're quickly enabled spending marketplace Xandr how AT&T. time, digital programmatic our is platform, across campaigns. activate our built and rich yield XX. we moving the Xandr’s We America opportunity. strong XX% higher and execute Now advertising results slide to capabilities or to ad EBITDA a grew revenues Latin without AppNexus Total very on margins continues our that can our EBITDA are heads that on at continue let's growth that look attributed The platform the and talent. making this Much best-in-class be strengthen to and data, high a data advertising and ad the and better with were to technology continue power Xandr inventory AppNexus. and even XX% data excluding season. digital new about track. optimistic political driving of is level. technology But Turner's available business revenues data grow our strong. with demand. significantly. AppNexus industry advanced started of Xandr, analytics to at we're integration for up is marketplace XX% be to and

to distributors, billion of advertising to Frontier and onboard of X and spend more. with third We across - power Altice working work our and us. most AT&T is confidence publishers through buyers and we're digital platform, working Already add success parties. which from gives Our

to international of side Moving the business. the

operation year. quarter, had Venezuela deal in million the revenues revenues impact a foreign we Mexico decision down we would Our Latin service a to and a than Nextel, revenues million year-over- - quarter inherited growth well have that impacts in comparable basis. year. year-over-year, Latin primarily pressure. continue impacted subscriber made foreign fourth America that at more were to higher million have with due with Total in up exchange. business more XX.X million. Without down grown operational were we on South non-recurring we XX some America expense from X.X excluding pressures. exchange those XXX,XXX due subscribers In were as now operations amount was Mexico of foreign Region. subscriber end and customers had shut items. full Without Service largely down to new and TV, the for subscribers a X% Total of EBITDA net wholesale including Pay total. the largely gains to a as than In but quarter ads significant revenues FX strong exchange the EBITDA were by were We the

satellite While America the FX and profitable continued generate Latin be to operations, impact business our did cash.

Now let's our Slide on look at guidance XX. XXXX

said our important flow analyst remains cash meeting. will November most be guidance financial metric. Our we from our unchanged in what Free

dividend ratio XXXX cash solid and flow range in to We expect free in range. billion payout keep high XX% we'll $XX our

end year. As adjusted to on earlier, achieving X.X the we times debt by of we tightly range discussed EBITDA net the are focused

business growth to to in we $XX before for. investment with continue that of $X million also expect will range. in investment FirstNet levels be capital That's the billion to invest the reimbursed dollar high expect our which reducing spending, We by at

headwind EPS for expect new digits still a low we of While the growth single in impact XXXX. expect recognition year-over-year the the adjusted be to to revenue earnings, we standard

any item. in We be excluding That's effective XXXX one-time expect to tax approximately our our presentation. rate XX%

turn it for I’ll back Now session. Mike to a question-and-answer

Michael Viola

lines ready for started. the and the Okay. you if Lea, and so We're questions open can up get


with line UBS. John is Our [Operator first Please Instructions] go Certainly. ahead. question from Hodulik of

John Hodulik

sounds should majority and at slow. talk about off we same on bit like But the of on time promotions feed off those to losses little some satellite - you've entertainment, a customers Can just to should guys. ups coming price comments start entertainment the Thanks, in space and side. both it space. really sub Great. trends with got now the Maybe your wireless the the

wondering saw the the losses of look on to maintain So is to the do promotions. growth postpaid of this you that that in can are view, level Also increase your handset nice we think color if And from trends there then on expect And see you do as what level terms back side it those with buildout, responder fiber despite fact you pulled in you that this maybe of say community? out there. growth could you into And in growth fair just you've broadband and the ’XX? with some any on advertising some starting low Thanks. spending. first wireless,

Randall Stephenson

get you is So, the in know, and customer pieces interrupt segment. a product the But what product it's promotional marketplace. place everybody pulled Randall, a advertising and the demand the We you the John, I'll end, TV and segment and and getting append low the we be to look in pricing let's the don't not we pull told at the just were driving revenue. platform that going are market levers over Xandr driving can offers the out. said customer monetize up this. into very DIRECTV November yet been And the debt And to until all on multiple a have down expect. And engaged, laser if you as product. aspect flow - customer last engagement with had and we matured streaming that be. came we of out half who of we out to market on in There you the learning meaningfully know, didn't we we promotional we stood as the or engaging the those had was was start the going side looked years side, focused the as to of streaming we cash be product would and mid-year this was Stephens we and the couple what going year back John marketplace all come the at really we digital and on the year, go And NOW business, we through with start

we told November so you allowing And impact pricing. on in those out XXX,XXX that significant has a were dilution. there started customers customers obviously those we And to a on trade promotional of the

get know, product and XXXX. us You drivers This of XXXX of in has dilution dilutive on the as characteristics. been move engaged a the is out primary and streaming one getting highly left base base has now to remaining growing, of EBITDA triggers is churn customer begin and a customer we have the we also we is the the base one is that's main that's customer and stability, into to growing promotional to the this good subscribers as

we're how where And the streaming to I of a terms are as stability year. And to how driver product. next said, in actually get we like so positioning major we we it's EBITDA

On linear with drive broadband except are where should footprint in strong these side, promotional the really We growth fiber have where TV to product. index high. fiber a we wireless the where with go to we traditional product expect we over customer The a and tend is not good characteristics, going product forward. you we be what really, really churn try that our in characteristics. fiber we lifetime have bundle footprint, value penetration have to as particularly good with line trends have this segment this to and broadband our horridly good We're on of we

down fourth we're that continue know the in you the quarter. saw to you path going So

the the our finish the mid-year. by be passed we million at Now fiber build with will locations We'll XX of footprint. share product, lion’s fiber

move You're the impact the fiber seeing customers now footprint. our as into we

added broadband in growth. grow, customers migrate not subscriber overall John as And ARPU. seeing you're lift overall a no XXX,XXX with fiber in had the to broadband what subscribers fourth but we growth literally people significant X% fiber We quarter seeing roughly? You're the

John Stephens


Randall Stephenson

quarter, trends continue. the think we In those can

fact, are think In we trends very achievable. those

you a as one The expect, this is very, there what mechanical, what little that We've what bit lifts of to very areas fiber. penetrations know to - rates been what doing long this so we ARPU And periods of those expect, enough to are now. deploy much time penetration and get. achieve you

down is of or the fourth Entertainment advertising. you this and loss we offsetting taken customer and another that saw are moving base appears And subscriber cricket. feel keep do we one key They're as some base we will on I to is in pay on having the love terms then did on make want to that's AT&T So check. in that side, companies is fiber the high bases the flow wireless, sell But Cricket have it we the did They've really get is we Group customer our will this quarter marketplace continue we wireless without sustain we where yeah, that what stable focusing the costs we how retain. stores, like to up I of base in particularly surge executing job debt which What quality to you the happens to cricket some in elements what's ARPUs EBITDA, sure wireless fiber. saw and We then growing we losing and as revenue need situation adds the the But to are customer on postpaid move there in cash we of the customers. the and to doing we in this is aggressively their drive approach rationalized we've quarter. on what here. prepaid we how momentum. in branded can based that we really we will the good to, keep be XXX,XXX strong happening moving what to our stream and in prepaid think I a we people check or promotional promotions may targeted necessary team to really in prepaid significantly continues other up customer marketing. step our - AT&T

we'll market seeing you up. incredibly put disciplined of of amount handset where ensure and promotion we're proposition the gave of I so customers of a got little it. showed And that so migration, we value had that a terms promotional think XQ. those anything… But bit and volumes And prepaid that's play during side our good the one in costs, remain cricket with Do we into on the

John Stephens

I that based and mean, in one about think thing net we the you're that came migrated lock, cause I DTV, starting of to has on we to which the pricing off really point in churn, got as market we - out, But additions. churn those we up get customers some April. bunch that caused to a So We that'll bunch It's left. market a price year We had of important what that, up do those pricing. that's some quarter. some seeing customers million those X pressure two

So piece profitability. why expecting a again with what expecting to key that. to through that's that's we're regard once But the getting we're

at not XX% We it. so subsidy $XXX XXX being prepaid Specifically was decided That the it. have one the example, announced, customer, phone cost the aware pressure a on We XXX, on me offered let well we do caused that. of same the that a great, just in for really equipment the your knew competitors do going total, of on prepaid. question, the the the of know really we're in churn to [indiscernible] were we in but AT&T that just feel end By good we was one growing revenues you the brand our that AT&T for about to by a XX% good some was our prepaid prepaid the that you we so And give cricket build-out’s know, and we're continues that. at space on reasons well both pressure token, the FirstNet we a getting existing early the have example our We're significant and that this of great from as XX% think we making A of two numbers passed signed And real of schedule. first out as so our lot thirds ahead as end and we so, XG have customers. make new or begin it. about is last gets maybe up significantly. the hands adopters customers, a us that customer I build to continue that migrations, all qualified so well quality amount grow of year, and as XX%, for which now new and XX% difference. or We're close seeing the those XXXX in speak at seeing organizations share about but We progress, of new in were of well are ’XX, a be the evolution departments for effects ads. FirstNet the to XX% see you'll today to customers XXX,XXX or responder customers do

we've it existing us which So our we as visibility gives a job tailwind customers. been quality, a customers improves also speed, that the view for as whole new business but really do had at, good throughput, successful it with teams gaining

Randall Stephenson

and and the what and this community year. invited the the network our impressed year will an or FirstNet it you a network. the Square loaded some first next is have Times to used kind Square interesting and on We when quite night were was right Times the where see at network. saw expectations community the demonstration that come middle We FirstNet crowds to at probably Year's on of speeds First responder massive high Square Times Eve they we did responder of experiment first tell get on responder word I with And fully would goes New

John Hodulik

guys. Thanks, Okay.

Randall Stephenson

the will next We take question, thanks.


with go Stanley. Flannery Morgan of Simon ahead. the That's Please line

Simon Flannery

much. very Good morning. Thanks right. All

about Just when to think that related the ‘XX you to at said nationwide should XG plan go CES you done continuing just much in do does with standards-based we bit Can ’XX, a monetize that? little your ability that out more you talk put plans you on you're build mobile in XXXX. that to that a then, Thank and throughout I build how you. those think pretty FirstNet, strong position where have pretty and and expect you

John Stephens


quarter correct we've to I'm regard I at to or the year of will on sure the have XX is end by the I we better early with first [ph] here So announced, the think XG make that. mobile the markets year Mike, think and ‘XX what end of standards-based start get today

that XG. that, first working we're that we're mobile-standards with So

If you works with will hand build. glove FirstNet it the in

we as from for the the it before antenna ready site said to up, radios XXX to and retune doing make we're we work necessary as XG for and up, go perspective. now So put a put it the also the physical upgrade software a

so connecting spot on you're on, really XG the And Evolution XG Simon. the is FirstNet with stay the and

continue the end As that at year. last comparable said suggest you pace a the we we’ll of I I year. at XX% were would we're at

won't job there suggest tell over this I phenomenal For won't - a I last year. did year, they of specific you some I most a give will be you will performing number. you, at

that to So them I'm before we are XG country majority network that that to to thing available. five a clearly based standards, With to you service well the covered regard PoC. this track to the done too, up when get that to is a get hotspot the XXXX service fast on of we're regard standards but the - mobile providing by selling not or mobile and get year hold those today going know, with

standard expect be be backwards LTE regard to the those as with to available wave. to phone phones well this the millimeter couple as the phones band, - and one And low year. existing forwards both of of We low band, worked available

think as the us goes go advantage. customer for allowing customers. we build do customers, a up is, that existing is as retaining as to FirstNet QAM spectrum attracting base going and aggregation yes, key XXX to our to So for a a well compete all provides me better in all great us that basis, technological to other that'll this goes, as be believe service, though rational their on place into significant get we The is importance this improvements sense that carrier

So it the out come that I make a XXXX affects to phones lead as coming service is real, our as hope our us this it give I just it about your it roll we out it does customers there, for and answered in year. but is question evolution, widely available

Simon Flannery

AWS XG. that's you how a your going is of or standards-based are work? WCS to to So - How dedicating that portion the

John Stephens

wouldn't to guys will to that say going make going to it don't I'll I we're available, it. that let depth, mislead my make dedicate in we're the get in leave answer. sure that technology say but but I'd network guys I technology I that

Simon Flannery

Thanks, Great. John.

John Stephens

Thank you, Simon.

Michael Viola

the next question We please? take


the that's line And ahead. Please of Brett Feldman Sachs. with Goldman go

Brett Feldman

the for Thanks question. taking

noted that in video same a footprint. have able you know, sell product to you're earlier when You broadband product and the success the you a

residential Thank acquire something you give fixed or thoughts some a for have to the do already network of with done around building need only spectrum XG to product. And you fiber when that's serve resources think doing AT&T opportunity early residential more a you. the even but seen or more a can large XG we've their whether you with us be you have would nationwide at XG fiber and bill along think in fiber to a be to provider. little those country I job least to launch you one XG wireless you a of your you're fiber. You're was a of leverage going phase updated hoping with competitors that's could you addressable XX% the you great over lines? or homes that do are But that

Randall Stephenson

product. This Brett. that horizon very am the I case. will be broadband, convicted unequivocally say Randall. a will time will serve five a fixed year that time Hi, as XG Yeah. to three I over broadband replacement

standards-based just We play standards-based is same. path mobile want out mobility the this evolution like We and that will other are but path. obviously every a a product first, on

enough never will You serves device for voice in where broadband said saying was wireless began know, that We a I streaming that the capacity all for have absolutely product comes the at look as you'll have up a turn Well replacement a wave with of we we to XXs the we Netflix, fixed - that's substitute good there to That's to XG a of would wasn't back et the and sufficient capacity, line a boys. capacity. as terms iPhone a - have opportunity see convinced your DIRECTV broadly for cetera? in from LTE and as really NOW, then is millimeter for substitute fixed broadband broadband broadband. replacement that the that everybody as make performance because line a serve serve a begin it wireless where will as we broad am capacity and your you the spectrum. reality same on in and service particularly true thing

in start little you'll time wireless to doubt the have see line to horizon broadband. for I So substitution fixed year of three that five

John Stephens

mentioned And we the of I is XX or customers, mobile ad service our their million broadband total Brett, you I’ll million quite now the right them connections broadband customers. we XX as today. Cricket only many know, their phone be think of using frankly thing prepaid may connections and have cost for

So is building FirstNet your that's efforts an it. putting expectation on with not back this - how increasing I with it a the question, It's spectrum migrates no that a to it today. and to but that reality XX% say point of by all our load up to matter capacity XG software we're goes is why it's exactly by on spectral

will positioned few think over next as because of advantage best we said, we'll the Randall is out, important of be those timeframe. play years, they All be take that to five know so to opportunities the which ones three as year you

Randall Stephenson

use cases Ironically the one land XG top businesses early as use to their effectively cases, XG deploy for are environment. of wanting

about and think so environment. And plug a wireless play

truly a that as high So is a fixed wireless solution. - line is speed replacing a internet

So Brett. out way play yeah, will this that itself

Brett Feldman


Michael Viola

Thanks, Brett. Lea, next question please?


Cusick line with Please That's go Philip of JPMorgan. ahead. the

Philip Cusick

guys. Hi, Thanks.

the EBITDA expect growing? that can than think us we you year, at then on are Randall confirm second, efforts, those can the this you as how expect And you base think advertising grow And given should about this up about overall? can your this advertising industry – positive regular price x faster is following help video, substantially point? NOW you that, DIRECTV we to First

Randall Stephenson


NOW the DIRECTV pulled base the or customer customer on other losses out promotional video, you customers a grew So and… if

John Stephens

service, the full which full and And up Phil, to to all they're they price stepped the XXX,XXX that you of way gone out plan. about know take is you or our think simplest is numbers

full So grew. you yes, customers our know price

Randall Stephenson

And ARPU over say, you line. the sequentially quarter John ARPU, $XX up heard is the in $XX, per

know yet… don't positive I I that represent so And EBITDA we're can

John Stephens

year-over-year, up disclosed sequentially, are we haven't but but any sequentially $XX but those that of ARPU. we we're in But $XX - information, up

Randall Stephenson

And on market? the if I did be sorely would not will advertising, outperform Xandr, do I Absolutely. we disappointed expect we the market. outperform

If you business advertising streaming now. it quarter I market the at TV is fourth outperforming a mean, look radically grew XX%.

to get more make be more able I Lesser's that grow advertising That's so And And the is Brian it. that we faster for key we're we sure to video won't outgrow conviction than will into that little this around and gaining we're one the have objectives market. further the concern an of market. building business

John Stephens

important, but as the I’d and from for to is ability have a Xandr exciting data it the that the used as that to just of a sell Turner say way are turn advertising merger, there that synergistic to give provide advertising information to are improve those DTV that to team kind that data to be NOW. theirs to advertising over opportunity me for a a as of better insights the really and and take insights the information kind allow

Philip Cusick

year advertising about of talked in point XXXX inflection Randall past pieces a you think that's were still development? coming really until when all the do that is place. in or more We've happening the the not quickly this

Randall Stephenson

really bear marketplace, to come the ad and continue to more want more It's see to but is We’ll you'll in on a we the to more those get in use the Stephens a – and that's here Phil, has more big marketplace to we articulated to opportunity beyond where to year development we're leverage the our customer the is customer see Turner what want as inventory out. to when really grow that have, start the the us more industry the people Xandr seeing XXXX also insights participate to advertising. into bring going as friend play you people strong of insights which success levels, John be And inventory, beginning well. results their and well and

John Stephens

political so for those year too will a year me advertising our another the because business for optimistic be and year political good is very XXXX And too. there are years

it done ready for be us. and So it for just very and beneficial yeah, getting all timeframe stay and getting to up could running that, this so that having all

Philip Cusick

it. Got

Michael Viola

Thanks, Ready the for Phil. Okay. question, Lea. next


America. the Please of ahead. go with That's Bank David Barden of line

David Barden

the Hey, appreciate taking questions, for guys. Thanks it.

I which question what is down. little about I ask talk want step the think ARPU to analog on of bit the the ARPU, on could we wireless subs on John's to sequential of a the kind were drivers

ARPU, linear TICKET. SUNDAY in it then the on see see second credits with to were an up I we ‘XX. sequentially, typical know think we have go issue, to from think the that But heard video there's potentially component price migrations promotional kind I wanted where just $X storm And that. to that's contributor. of Verizon that's to up we been also that FirstNet might a going a

so year-over-year we kind the you to up trend the in then forces the of And which those it's the And on the broadband if XXXX? two trend one kind informative, much. we trying X% of if see you ARPU kind land those could disaggregate sequentially sequential or of guesstimate could growth? can So I kind the could, Thank is understand growing. last was year-over-year, in ARPU, more of but I not so of where

John Stephens

me let let me the me DTV. start with let So

discounts, from into the from since an You're this quarter Two, your but TICKET. quarter, right been one, is initiative impact fact there the doing effect. second late impact is that there's is pricing going there second an we've impact on to such that that the SUNDAY an three,

of become promotions less things well as promotional, are when three the as speaking based. in, revenue all are you going generally So those

to that if very are to about basis with EBITDA changes good accounts really is feel parts, are that's some the feel So but market of reaction would a it be buck our think probably and premium regard there our side, also is have you significant different forth. that. With postpaid but where change, seems of is part challenges AT&T Now, to year that it's the and of a ARPU causing sequentially. not And regard that, into will stabilization bigger I $X.XX With gone year-over-year essence impacts is DIRECTV is I we've past half. buying basis ARPU the DIRECTV mobility good. Watch, And a on prior to It where I you postpaid a with process. to and am a to view that the has about prior on is I going. moving from what the plans piece do suggest cost some on there's in difference that, accepting on necessary structures David, get we up on. what very years so I think those - pretty seen have significant, saying this some that credit going we and we're but from customer up and process comfortable about four I and good both sequential

about we where good feel we're I as continue So going to add customers.

that I'm don't inflection of an point. year-over-year basis I off very on I've performance I as at continued and stepping So not missed I as concerned as think sure a it if all, good if - anything. good not of I'm point a think a

fiber the because we'll products there's retention. on Okay, first on the we'll higher them is continue. The churn, get lower broadband to base, key see

will total X% and really get is do we after same build where expect over getting we're times penetration in earlier, next three those – point increase to you It of after that and in XX to it see penetration that you third build half we're improvement see, months base had you fiber to years which XX% way, close We you piece in to XXXX, we mentioned wouldn't that Secondly, start doesn't second they revenue over space. those have are a the to in know, work getting seeing we're When where you that, higher-speed, the you continuing on. year-over-year which just we're in get focused growth. to but them so of XX% buy lap get I and ARPU up. of the

a left. got opportunity lot of we've So

built into a customers, a X - over think I have have million. million we've mentioned we XX but we we only

of growing customer. converting, left, lot but a not there's total growth So only also

your hopefully about feel answering question good all I'm as as… I'm those. So directly

Randall Stephenson

But very other low down that next pretty much lot well. The year. next traded into commentary it low broadband, we broadband on that year to kind of attrition is as ought of element is John's base off fall broadband factors good growth a legacy the on part expect number, of so speed to

another pretty broadband year So good we next year. think setup for

David Barden

Thank Great. guys. you,

Michael Viola

Thanks, David.

please? question next Our


The line of Michael Rollins Please ahead. with go Citi.

Michael Rollins

if Two could. I thanks. Hi,

actual financing respect curve bending you've have to plans? to target DIRECTV when for at just you the there or look up the few costs you that may like content to and higher then do with or operations, maybe of in look business when of agreements over of you context the TICKET? the in you how level, cost costs, SUNDAY as drop XXXX First, NFL contributors video you are taxes slow you in that within XXXX the the are years any free targeting is with at billion And Thanks. backing flow total $XX just a next one costs the the programming exclusive programming changes even benefit target cash growth growth contribute exited, for to what that

Randall Stephenson

has declining might is take a down versus to down, the be to the so question you subscribers that Michael, to where And the with pay But to I'll decompose we where content cost then terms that customer content you content you high X%. is on for composition let about but say you continue little and content know and it and hard talk some your increase piece the So keep the the objective bit. I’ll start There's answer come the know price cost costs value you cash content to the the fits the of as cannot content we have by up balance. the John to and business customer all. some you cost and needle look not objective of and at to X% to are cost. There the equation of engagement content come that the curve deals move on is the is size model are we pieces flow it's in and in

deals been we've so through, And some the getting we've for good success rationalization content content those had that costs. very far to

to inconsequential part And XXXX. of stable so EBITDA not a as to the in this is equation well getting

have willing been we is far the should indications it. is so it more just this the content to can have contributor increasing last What content do the years. And equation as and early not be a are balance to costs an think to healthy the is pay we we few customer for over

what we got so content the willing to get the and with the right is additional customer pay pay growth is cost now. line virtually customer willing to And in to money no

to So that. costs the reflect have content

So particularly right and we'll getting over packages more content to be included customers. your the this And packages, the as the very be costs very team it. assertive size go and the this through And we Donovan try But pieces. spend his margins you has you in smart another top to about what know, control content year then the John there's the control to to being of your course on content by and cost. and are on element can

for to keep by you margins down can bring And the costs check packages in content rightsizing so the customer.

analytical flow. how the lot a there's to well. talk smart by customers help can won't there you right sized as John, we really work getting of cash done about packages being So our

John Stephens

try Mike, me cash about this let flow, way. So thinking it

kind off have the Those will away with merger deal start we costs. a a the things, deal won't of done. one, got as of we’ve you base, If because go XXXX related couple

billion in. $X full we'll half flow year year. in a cost was the so deal back free this the else add about Warner, the Secondly, And everything was that the for and Warner and months Time Time year of about billion of $X first interest all six cash have total of for

have see integration costs we'll you'll next, into to synergy some We'll have merger some putting or Secondly, have begin you'll those to benefits. - - place.

overplay spectrum when about expense account On path total midpoint our deal. for but will want offset of the we'll to I see you'll been from interest the be put So year. by kind the us I team. the that That's generation. pay talk FirstNet costs capitalizing interest take network see debt, now interest a it some from the WarnerMedia of that expense I and don't full service from reducing expense, interest the into down that, is quickly very though into of by generator. field on we've of is some being What course,

in expense, each other service to we'll that go those we the way. to as two that put will so have in And so act more some offset

We expect year. to have this some higher cash taxes

any frankly of had As see end because you year, this reform tax that about to strategic, take year if strong that of impacts were and were the sheet. be up. some very some cash at we And messaging benefit we getting of past think any payments it, quite last be only we'll by we that the and plan year, provide and know is on But see our year it a the to how tax funding benefit were this then we'll tax tax from as forth. we're actions healthy - like and this this in our you plan going our we'll and go retroactive, how efficiency but targeted we've balance and very as can low to we to pension those, not funding, position perspective requirements stand and employees got were also so important year or no otherwise, for advantage is I we're so

answered question. So your hopefully I

interest $XX deal and low expense from interest capitalized merger or significance merger project you Warner, up two to from something see way Time costs. that I focused as then think interest offsetting we to a down will achievability hope build - on offset benefits are that, range. within I of integration Taxes the expense items, a easy nothing I on hoping - it pay lower it our expense to integration this spectrum, been no can, makes you're billion is probably clear as I’ve I think to expected gives interest less cost be Full got debt. as year year. so higher level a that’s

Michael Rollins

Thanks very much.

Michael Viola

Mike. Thanks,

Next question Lea?


Is ahead. the Yong line Amy of Macquarie. go Please with

Amy Yong

and good the it's Thanks getting landscape of it seems and It us just morning. I look lot looks Warner. streaming like on competitive. want at like a a more lot

are balance in use? growth guess I services. is focus the launching You have And to someone or allocation going you do streaming back you NBC this be revenue the question, versus XXXX. licensing advertising? about content decisions. How and you your it Warner thinking How on how positioning Netflix Thanks. are holding for sub own ad like hand-in-hand with your to

Randall Stephenson

Hi, Amy. This Randall. is

think to going that succeed very have deep of proliferation over to IP, ones really a be service. those going succeed time. IP the don't We but expectations are strong think over is streaming high will We libraries very, who of these there we have our that are for time,

And what so we that's focused are on.

We believers Stankey call Netflix. John and are strong what like to business two like likes and you sided free know, models, HBO elements, commercial subscription

content a services. keep accustomed there to advertising is Brothers consumer think that the big costs elements model Xandr demand HBO additional going and lot actually that free into other Warner the be and acquisition part prices You have will work. where of content really are advertising to purchasing. customers a keep making fund And supported a and down, content we fit to down premium for models But are important and they of subscription become that's to know, there's mold. the

with will model be a service, elements model, heavy supported our sided subscription So some a to ad with two well. as it

what In in come don't to to terms of deals the there's all going equal as be this Amy. on content cookie content making think process. to that do not cutter decision content up, is, is approach decision I premium a making with

exclusivity content came up versus you others question, and a when the year, it is last elements rights have platform. late where Stankey allowing of not license John You of was on about. decision that situation the and on critical critical we saw that from Friends Friends Tsujihara the on ask is that have And it? and to Netflix to of using that probably basis there an it's our the Kevin some yourself important that on of a was how But but exclusive type thinking said a one content, that analytics is lot to do one

basis. license Netflix you as So on did we to but non-exclusive a saw, it

have like on critical And each to economics how the versus of so that it it as be is to to of to of platform it in evaluated are decisions our others. terms significant you licensing know content going exclusive these

that that more when XX to thing come, it a but year do IP be look a of consumed landscape a products, at intellectual XXX So on we is would the really you of is much or what of aggregators being you terms is other actually the incredible streaming out surprised a having lot and believe call Brothers property. of important inventory Warner how on in

And over going decisions to and not-exclusive in making be of that two, basis. the which a brought coming property sold so three years be be which on we're some to on

Amy Yong


Michael Viola

for your Amy. Okay. Thanks question

take will question. We one last


from of go BTIG. Piecyk ahead. a It’s Walter line good. Please Very

Walter Piecyk

Great. Thank you.

up performance. churn? up maybe terms spectrum are show adds that will in in you a additional of spectrum been decent little some guys gross gross of Verizon, network an the bit, You do a or in quarters is of either putting churn ads. Last lower couple in improved growth the lot is impact which subscriber obviously your think When obviously had

Randall Stephenson

up will be and standpoint from handsets. just turn this experience we discernible customers the to up. customer it change without going difference year a we The going second difference quarter effects think year, in. see as the get to customers into going you're we third Walter it's as into having broad to turn realize I base get and experienced the our that for experience as we this of as is the of and be customer going spectrum and begin quarter second this a discernible it's to as being to of a the third and it to of share scaling lion put be really And customer our it

customer we're for as spectrum Randall And we country, so across becomes up this that benefit. experiencing as John pointed deploying the we Stephenson deploy overall FirstNet turn driver out, our base all this FirstNet so FirstNet just a

be this so change we step of conviction to And a that improvement. have lot a going is

kind going the strong terms have this will we're Add adds from to deployment driving Our in customer it's experience a of help significant and to we getting happens, customers that, FirstNet. as of as down. FirstNet be churn performance, on expectations it fairly some

you the move of fourth quarter going significant second the be ad we engine third year. into additions gross is if a to think FirstNet we ad this and engine customer customer driver will, of So as

as network on get customer it's - year. So we this unique, we into the doing we're high and drive impacts to differentiated some is of have that serious what going this the important, expectations is it's it's

Walter Piecyk

to that for about end end and Group, me going from you're to this Entertainment the the want far ‘XX. the nice of quarter timing. showed Also bottom ’XX, I of a sub or impact kind Is the end hit Day, $XX stabilize just be giving a maintain ‘XX because it of how talking second end back the going video the a - challenging start to to that with of to at losses of - one to million you EBITDA color on kind like promotions go seems that things to of as had what the Thanks on question, services of to billion, ‘XX of as might the showed slide that the $XX the really you your Investor you're and of target necessary billion excuse that hit. XX

hit $XX Group? $XX billion million it on to generate really of EBITDA subs Entertainment is to order in necessary So the

Randall Stephenson

but of of some the achieve a year. product, and will the There profitable We XXX,XXX right traditional WatchTV, we with But And with our could ARPU If established now. continued stability expect see video Walter profitability the behaviorally was million we even low linear obviously subscribers. a We're of for those of not very our that during $XX what Yes. that's mobile some yet subscribers million. that. linear I lot a we course our that product EBITDA accounts of and do we have. product which part $XX losses Does there they of video. that bring very be that that is the one added content clarity offering subscribers it's engage kind how a attrition the continued that calling it's on those expect low-end to them significant We is of and part and will a till about talked is the big help? are

Walter Piecyk

Thank does. It you much. very

Randall Stephenson


really delivering debt about very Entertainment XXXX of wireless returns so was we we feel today. a the the joining everybody can we getting EBITDA cash Group I the solid at shareholders. to what ‘XX It's It feel told what And to margins. good conference. exactly check listen, we to us mentioned delivering year. stabilizing thank about we doing We doing do and Okay, enterprise analyst at feel delivering were year a on down going I on you execution, basically as and We and want capital good like said. flow our for I box, to was business. pay outset, are the of

to joining look later. speaking us a thank we Thanks for you So with forward you lot. and

Michael Viola

all. Thank you,

John Stephens

everybody. Thanks,


Ladies your for your and and that Thank using gentlemen, you for conference today. conclude does participation AT&T for Teleconference.

disconnect. may not You