Thank you, Randall, and good morning, everyone.
Let me begin with our financial summary on Slide 5.
As Randall mentioned, we’re on track with all our financial targets. And in many areas, we’re ahead of plan. Adjusted EPS was $0.89 in the quarter, including $0.02 impact from a higher effective tax rate.
We continue to expect low-single-digit growth for the full year, as we are set up for a solid second half of the year performance.
We grew revenue both on a reported and pro forma basis in the quarter.
In fact, all segments are growing on a constant currency basis. Adjusted operating margin was up 90 basis points with the addition of WarnerMedia, strong growth in Mobility, and continued improvement in our Entertainment Group.
Our cash flows were very strong on the quarter.
Let’s look at this on Slide 6. Cash from operations came in strong at $14.3 billion, that’s up 40% and free cash flow was a record $8.8 billion. The addition of WarnerMedia operations made and impact, as did adding their receivables to our securitization efforts. The securitization lifted free cash flow by $2.6 billion.
Our ability to generate cash continues to be impressive.
Over the last 12 months, we’ve generated $29 billion in free cash flow or about $4 a share.
With the benefit of our securitization efforts, we have confidence to raise our free cash flow guidance for the full year to the $28 billion range.
Our strong cash position also allows us to continue to invest at industry leading levels. CapEx was $5.5 billion and total capital investment was $6.5 billion, when you include the $1 billion of payments for prior vendor financing activity. And we reduced net debt by $6.8 billion in the quarter.
Let me speak more to deleveraging on Slide 7. We paid-off $18 billion in debt since we closed the merger, and we ended the quarter with our adjusted net debt to EBITDA ratio at just under 2.7 times. This is down from 3 times leverage ratio, when we close the deal. And we’re squarely on track to hit our year-end target of being in the 2.5 times range.
Year-to-date, we’ve reduced net debt by nearly $9 billion, that includes about $7 billion from free cash flow and nearly $4 billion in asset monetizations, offset by about $2 billion of vendor payments and other purchases of assets. And these sales have come from assets that contribute no EBITDA.
Looking at the remainder of the year, we’re confident that we’ll hit our year-end leverage target. To the extent, we can overachieve with that target you can expect will take a hard look at allocating capital to share buybacks in the back half of the year.
Let’s now look at our segment operating results starting with our Communications segment on Slide 8. The story of our Communications segments this quarter is stable revenue [Technical Difficulty] EBITDA and margin growth, while adding phone subscribers.
Our Entertainment Group is delivering EBITDA growth. And Business Wireline revenue trends improved in the quarter, thanks to strength in strategic and managed services and about $125 million from IP licensing. But even without those licensing proceeds, Business Wireline revenue trends were the best that we’ve seen in years. And when you factor in strong Business Wireless performance, our Business Solutions revenue grew 2.3%.
On the cost side between, the team is doing great work in controlling content, promotions and other operating costs.
Solid cost management was evident throughout the business, especially in our Entertainment and Business Wireline units.
Let me give you some more details starting with Mobility on Slide 9.
Our Mobility business continues to perform very well. Service revenues grew by 2.4%, EBITDA growth was even higher at 3.1% and EBITDA margins expanded by 80 basis points with service margins of 56.1%.
We had a strong quarter with 355,000 phone net adds, including 72,000 postpaid and 283,000 prepaid. And we added 388,000 smartphones in the quarter further strengthening our customer base. Postpaid phone trend was up slightly to 0.86%, but was down sequentially.
And at the same time, our prepaid business, especially Cricket continues to perform at strong consistent levels. Prepaid revenues were up nearly 10%, we had our 18th consecutive quarter of phone growth, and churn hit an all-time low at both cricket and AT&T prepaid.
With the network leadership and FirstNet expansion that Randall talked about earlier, we’re confident that our wireless business will get even stronger as we evolve to 5G. In short, our network investments particularly our spectrum deployment are paying off, and we’re not done yet.
Now let’s go on to our Entertainment Group results on Slide 10.
Our focus on long-term customer value continues to impact our Entertainment Group. EBITDA grew both year-over-year and sequentially. This was the second straight quarter of EBITDA growth. Year-to-date EBITDA was up about 4%.
Expense reduction outpaced revenue declines, setting the stage for EBITDA growth. Broadband revenue growth helped us as well as continued growth in video ARPUs. The number of premium TV customers on the two-year price lock declined by more than 600,000 in the quarter.
Video subscriber numbers were in line with what we said to expect for the quarter. Premium declined 778,000 and DIRECTV NOW declined 168,000. And as Randall mentioned earlier, later the summer, we’ll begin piloting AT&T TV, our thin client broadband TV product, the best important milestone with our fiber deployment reaching $14 million customer locations, and satisfying our fiber build commitments. This will be an important driver of growth going forward.
In fact, we had more than 300,000 AT&T fiber net adds in the quarter, and IP broadband revenue grew by 6.5%.
We expect AT&T fiber penetration to grow as the service matures. Bottom line, we remain comfortable that we’ll meet or exceed our Entertainment Group EBITDA that target for the full year. And lay the groundwork for continued stability beyond 2019.
Let’s move to WarnerMedias’ results, which are on Slide 11. WarnerMedia continues to be free cash flow accretive.
Our expense management with merger-related synergies are on track.
We expect to hit a $700 million run rate by the end of this year. And HBO Max is slated to launch next spring. Overall, WarnerMedia had another strong quarter with 5.5% revenue growth and solid operating income growth. HBO revenues grew, thanks to strong content sales, driven by home entertainment and international licensing.
Turner revenues were up about 2% on subscription revenue growth, and this includes the advertising impact of not having the NCAA Men’s Final Four championship this year. It will be back on Turner next year. And at Warner Bros., theatrical revenues increased due to home entertainment games and a highly successful release of Mortal Kombat 11, which drove game revenues.
With that, Mike, we’re now ready to take questions.