Thanks, John, and good morning, everyone. Starting on slide 10. These are the four key areas of our 2020 operating plan where we'll be focused in executing to drive our performance.
I'll go into some detail on each of these over the next few minutes but I'll give you the headlines first. Number one is continuing our momentum in mobility because we expect mobility will continue to be the biggest driver of revenue growth and profitability and be a key factor in meeting our 2020 goals.
Second, a successful launch of HBO Max is critical to our plans in each of the next three years. Many of you are with us for the Analyst Day in October and have seen firsthand why we're so excited about HBO Max and the opportunities it gives us. We're right on track to launch it in May.
Third, is growing our broadband revenues by increasing our fiber penetration. Key to this will be bundling our fiber broadband offer with AT&T TV, which is delivered over our software based video architecture.
And finally, we're laser focused on improving both the effectiveness and the efficiency of our overall operations and as a result, driving additional costs out of the business.
Let me dive into each of these four drivers beginning with mobility on slide 11. Last year our wireless network was recognized as the nation's best and also fastest thanks in part to our FirstNet build.
In fact, we did a few of our own spot test in December to see how our existing nationwide 5G evolution network compared to the 5G network one of our competitors rolled out last month.
In three out of the four test cities, our network had faster speeds and lower latency on average. The point is our strong spectrum position gives us a leg up and allows us to execute a different 5G deployment strategy than our competitors.
We have the low and mid-band spectrum to deploy 5G nationwide. We cover 50 million people today and expect to be nationwide in the second quarter.
We also have the millimeter wave spectrum we need to deploy 5G+ and its gigabit speeds and super low latency to more densely populated cities. We're in 35 cities today and we're adding more this year. There's an important point to be made here once we have 5G nationwide.
As you know smartphone upgrades across the industry have been down for a while now.
In fact, we're coming off a record low upgrade rate for any fourth quarter in our history.
But fast forward to the back half of this year when popular 5G smartphones and devices should be more available at scale, you can expect higher upgrade rates and equipment revenue growth.
The timing for this upgrade cycle couldn't be more perfect when you consider that we'll be offering HBO Max on our highest ARPU wireless plans with features tuned for premium media consumption and at a time when people are coming into our stores to upgrade.
It's a natural opportunity to further the distribution of HBO Max, while adding new mobility subscribers and improving our wireless ARPUs. HBO Max's content has something for everyone in the family and that makes it a natural fit for our nearly 25 million postpaid accounts that average more than three lines per account.
As a result, we expect our wireless service revenue growth rate to be higher in 2020. And after adding nearly 1 million phone net adds in 2019, both postpaid and prepaid, we expect 2020 will be an even better year for net adds.
FirstNet plays an important role here. We now serve more than 10,000 first responder agencies and more than 1 million connections with FirstNet.
We expect those numbers will grow nicely as our FirstNet deployment reaches 80% in new devices and capabilities come to market in the coming months.
We also expect a higher adoption of our unlimited plans. We're at a little more than 50% penetration today, but we expect the 5G device upgrade cycle will bring into our stores lots of customers not on unlimited plans today.
Increasing the adoption of our best unlimited plans is obviously an ARPU growth opportunity for us. And when you add into the mix the customers on select unlimited plans will get HBO Max for free, it's a great opportunity to also improve our overall churn which we've seen happen from giving HBO to current unlimited customers.
A reduction of one basis point of wireless churn across the base is worth about $100 million to us annually. Sum it up; we're expecting growth of more than 2% in mobility service revenues this year.
Let's go to Slide 12 and the headlines for why we believe HBO Max will be a game-changer for our customers and for AT&T. I expect many of you were at the HBO Max Analyst Day in October and you heard me talk about the three pillars required for success in streaming; premier content; the technology platform; and marketing and distribution. Only AT&T has a space with a solid footing in all three.
My excitement and confidence in the HBO Max opportunity have only grown since then. The team has made tremendous progress in every area and we're on track to launch in May with a unique offering. Quite simply, we believe HBO Max will be the highest quality premium SVOD in the market with a great experience, better curation, and higher percentage of culturally relevant offerings than competing products.
We're excited to launch HBO Max coming off the tail end of one of our strongest awards seasons ever with new and exciting breakthrough offerings leading the way. We captured an industry-leading 34 Emmys and six Golden Globe awards. Joker had more Academy Award nominations than any other film, highlighting our deep and diverse theatrical content.
The awards are only the latest indicator that we continue to create high-quality culturally relevant content that appeals to a broad consumer base. And our additional investment in great content is only going to expand the appeal of the service. With HBO Max, we'll offer consumers more than twice the amount of programming for the same price as HBO today.
We're making great progress on the HBO product platform as well.
Our controlled nonpublic beta is getting solid reviews and we're gaining invaluable feedback on important but subtle issues like user navigation and screen layout. This work is no less important than award-winning content.
Finally, we continue to fine-tune our go-to-market plans consistent with the unique position with which we enter the market, leveraging our extensive AT&T distribution and embedded base of more than 30 million domestic HBO subscribers. We're in active discussions across our potential distribution partners both digital platforms and MVPDs. We're making progress and we expect we'll have deals to announce prior to launch.
Our focus continues to be on providing a compelling value proposition for our HBO distribution partners and our mutual customers.
Our more than 10 million HBO subscribers on AT&T distribution platforms will be offered immediate access to HBO Max at launch, so we'll get off to a fast start.
To drive incremental growth, we have unique advantages when combining media and distribution including our 170 million direct customer relationships across mobile, pay TV and broadband. Plus, we have 5500 retail stores who will be focused on driving incremental HBO Max adoption by bundling it with premium-tiered wireless, broadband or pay TV offers.
And we'll use AT&T customer insights for WarnerMedia advertising analytics and curation.
We have very high expectations for HBO Max. And at the same time we're thrilled about the possibilities of increasing the adoption of higher ARPU services and strengthening the long-term value proposition of our highest quality and highest ARPU customers. We fully expect HBO Max will have a positive and immediate impact on the stickiness of our wireless and pay TV and broadband offerings.
Now let's look at Entertainment Group. Those details are on Slide 13.
Our EG team delivered our target of stable EBITDA last year. In 2020 you're going to see us apply the same high-value customer-centric focus, while increasing our fiber customer base and launching AT&T TV. We'll see higher amortization cost in the video business in the first quarter which creates some tough year-over-year comparisons for EG EBITDA but on a cash from operations basis we expect EG to be stable in 2020 versus last year.
We believe the greatest opportunity within EG is to significantly grow our AT&T Fiber customer base and broadband revenues.
We have 4 million fiber customers today and our recent fiber expansion gives us 14 million locations to sell into. Based on our fiber sales experience we expect to exit 2022 with about 3 million more fiber customers than we have today or a total of about 7 million. This will be a significant lift in market share compared to our traditional performance in our legacy hybrid fiber copper-based footprint.
It represents an organic market share growth opportunity on an existing product that I've never experienced in my career. Where we offer competitive broadband speeds you can expect that we'll lean into video acquisition given the better economics of our improved product portfolio including AT&T TV and HBO Max all software-based products with low acquisition costs.
Within our broadband footprint expected as we exit the year our premium video subscriber declines will be more in line with overall video industry trends.
Looking at our total premium video customer base, we expect year-over-year improvements in the subscriber losses.
Now let's turn to Slide 14 to talk about our efficiency and cost initiatives.
New work to improve the overall efficiency and effectiveness of our operations has progressed over the past few months. We previously shared with you that we're targeting an additional 4% reduction in labor-related costs including benefits and contract employees in 2020 alone.
That work will ramp quickly and we plan for it to deliver $1.5 billion in additional cost savings.
In fact we've already identified and implemented about half of those savings.
Another significant opportunity for us is product information technology rationalization. We feel comfortable that we can generate another $2 billion of annual run rate efficiencies exiting 2022. This will come from thinning our product portfolio, simplifying our market offers, rationalizing call centers, modernizing our information technology and enhancing the level of customer self support.
In addition, streamlining will have the added benefit of enhancing our market agility and ultimately lead to improved market effectiveness.
Our assessment work continues and I expect in the next 90 days we'll have additional efficiency initiatives underway for some of our network, corporate, sales and procurement functions.
I'll turn it back to John now for his look at capital allocation 2020 financial guidance.