Thanks John, and good morning everyone.
Our financial summary for the quarter begins on Slide 5. Adjusted EPS was $0.83 a share. That included COVID impacts from incremental costs related to compassion pay and production delays and lost revenues from foregone international roaming and delayed theatrical releases. Combined, COVID had a $0.09 a share impact to second quarter EPS. Adjustments for the quarter include an overall accrual for severance and a non-cash write-down of real goodwill based on the overall economic conditions in Latin America, foreign exchange rates, and COVID impacts. The severance accrual reflects the workforce adjustments we’re making as part of our cost reduction and transformation plans. Cash impacts from these severances will occur over the next several quarters. Revenues were down from a year ago, including an estimated $2.8 billion of lost or deferred revenues impact from COVID. This was mostly due to the absence of theatrical and television releases and lower advertising from delayed sports programming and a slow economy. Lower international roaming revenues impacted mobility. In our reported results, foreign exchange had an impact of about $500 million in lower revenues, primarily in our Latin America segment. Corresponding expense reductions offset most of the impact on operating income.
In fact, adjusted operating income margins were essentially flat but were up when excluding COVID impacts. Cash flow was impressive even during the pandemic. Cash from operations came in at more than $12 billion and free cash flow came in at $7.6 billion. A variety of items supported cash, including solid accounts receivable collections and some benefits from the CARES Act, and we continue to invest in our growth areas. Capex was $4.5 billion with gross capital investment at around $5 billion, a difference primarily attributable to the timing of vendor payments, plus we invested an additional $1 billion in new 5G spectrum in the quarter and we invested nearly $4 million in HBO Max, in line with our full year estimate of $2 billion. We were active in the debt markets during the quarter, managing our towers for financial flexibility and allowing us to take advantage of historically low interest rates. We’ll talk more about that in a moment.
Let’s look at our segment operating results, starting with our communications segment on Slide 6.
Our subscription business led by mobility, broadband and business wire line, remained resilient. Mobility had another good quarter, even with the impact of COVID. Equipment revenue helped to offset declines in service revenues, which were down due to a decline in international roaming revenue and waived overage and late fees. Without those COVID impacts, we estimate service revenue would have grown more than 2%. Even with many of our stores being closed during much of the quarter, mobility equipment revenues grew with growth in digital sales and a strong rebound as stores reopened late in the quarter. Mobility EBITDA continues to be a solid story. EBITDA of $7.8 billion was up year-over-year with both EBITDA margins and service margins expanding, and that’s inclusive of COVID impacts.
Our total reported phone growth was essentially flat. We had more than 135,000 prepaid phone net adds that helped offset a decline in postpaid phone.
Our quarterly subscriber counts for the postpaid wireless, video and broadband reflect an estimate for customers who will likely disconnect service once the Keep America Connected pledge ends. In short, we’re treating these subscribers as disconnects in the second quarter.
While this impacts net adds, churn and service revenues, we believe this is the most transparent and accurate way to account for this. About 340,000 of our postpaid phone subscribers were counted as disconnects, even though they were still on our network.
If you add those back to our results, we would have had about 190,000 postpaid phone net adds and much lower churn. Postpaid phone churn was down 2 basis points even with the Keep America Connected accrual.
We also had a record low prepaid churn of under 3%. The popularity of our unlimited plans also increased thanks in part to our elite package that includes HBO Max. In our entertainment group, we had lower video and advertising revenues. This includes an estimated $300 million impact on both revenue and EBITDA from COVID from lower advertising demand and lower commercial volumes. AT&T TV gains helped offset premium video losses and at the same time had about a 90% attach rate with our broadband services. Premium video losses remained about the same as the first quarter. Broadband customers continue to look for faster speeds. We added more than 220,000 AT&T Fiber subscribers and the number of customers opting for gigabit speeds increased by more than 750,000 in the quarter. We now have 4.3 million AT&T Fiber customers with nearly 2 million of them on one gigabit speeds. I should point out our total broadband numbers do not include 159,000 subscribers who are counted as disconnects even though they remained active on our network through the Keep America Connected program.
We continue to drive ARPU growth in both video and IP broadband.
In fact, premium video ARPU was up more than 6% as we continue to focus on long-term value customers. Business wire line performance was solid as enterprise customers trusted the reliability and flexibility of our network. EBITDA was essentially stable year-over-year and margins expanded by 90 basis points. Revenues were consistent with recent trends as slower declines in legacy products were partially offset by growth in strategic and managed services. This EBITDA strength was even more impressive when you consider that a year ago, we had an IP sale which helped both revenue and EBITDA results.
If you back that out, revenue would have been down just 1.7% and EBITDA would have grown.
Let’s move to WarnerMedia and Latin America results, which are on Slide 7.
As John mentioned, the COVID impact is most evident in our WarnerMedia results. Altogether, COVID had about a $1.5 billion revenue impact on the quarter. Lower expenses resulted in a favorable impact on EBITDA. The biggest news in the quarter from WarnerMedia was the successful launch of HBO Max, which John will cover in more detail in just a minute.
Turning to our Latin America operations, foreign exchange was a major factor as were slow economies and the onset of COVID. Mexico was impacted by lower equipment sales from COVID-related store closures. This also impacted prepaid customers’ ability to renew their service. Even with this, Mexico EBITDA improved year over year. Rio also continues to work against economic and foreign exchange headwinds which have become even stiffer with COVID, but even in this challenging economic environment, Rio continues to generate positive EBITDA and cash flow on a constant currency basis. We closed our Venezuela operations in the quarter to comply with sanctions of U.S. laws. This had minimal impact on Rio’s financial results but did reduce its subscriber base.
Now let’s go to Slide 8 for an update on capital structure. We exited the quarter with a very strong financial position. Cash flows were strong, our capital allocation remained focused, and we made large strides in effectively managing our debt portfolio.
Our strong free cash flow in the quarter gives us even greater confidence that we’ll hit our full-year goal of a total dividend payout ratio in the 60% range, likely at the low end of that range.
We also continue to invest. We now expect gross capital investment to come in at the $20 billion range for the full year, consistent with our original 2020 guidance. The FirstNet build continues to run ahead of plan.
We expect additional network benefits as our 5G build is expected to reach nationwide coverage today. The network and the entire FirstNet team has done a great job in building out our 5G network. We’ve been active in the bond market. Rates are low, demand is healthy, and we used this opportunity to issue about $17 billion in long term debt at rates significantly below our average cost of debt. This allowed us to materially reduce our near term debt towers, making our debt obligations for the next few years very manageable. We’ll continue to be disciplined with debt management. Ongoing liability management strategies are actively being considered to maintain and improve flexibility and reduce risk.
We have several other levers we can pull to optimize our capital structure.
We expect to close about $2 billion in pending sales from CME, real estate, and tower monetizations this year.
We also expect to close our Puerto Rico wireless sale soon, with those funds used to redeem some preferred interest.
You should expect us to continue exploring other opportunities. I now would like to turn it back to John for an update on our business transformation and HBO Max. John?