T - Earnings call transcript Q3 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to AT&T's Third 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. to conference like host, to now Mr. would turn over the our I Vice Investor Viola, President, Michael Senior Relations. ahead, go Please sir.

Michael J. Viola

Okay. Thanks, Quarter Third welcome to John. Good morning, Conference everyone, Call. and the

Relations Viola. As Head John I'm AT&T. Mike had of mentioned, Investor here at I'm

plan WarnerMedia. who first, is Communications; Joining XG. for a to Chairman like Stephenson, Randall is the business and Chief an update Q&A Officer; single John to a to in the and me of Stephens, Executive over our the We to do the segment, Chief some for late to segment of video upcoming call. November and comments, going consolidated AT&T's AT&T's John John join It's opening to meeting. Stephens, afternoon just XX. Stankey, update a And now Randall Donovan, today deleveraging John Officer webcast, be going plans. Communications on I'd provide us York it including to call Financial of FirstNet buy-side part is J.D. turn the going in the is, results. Stankey will going event. analyst CEO; of quickly provide our also New update CEO he'll on the cover give on here John comments Also on AT&T sell-side,

And so more details to in the that few days. will next come

attention Safe of statement Harbor your our before It to call today comments the some to may says begin. want that I be Finally, we forward-looking.

of earnings address briefings, that release, AT&T associated we as the X-K, news Investor so page investor website, materials Relations and FCC today. And we're any to auctions, risk Investor that in website. additional is the always, that information such, you and Relations about our and for quiet on and available Results period XXX And materially. want the includes also available they're uncertainty. are the our the can't As and subject may XXX, spectrum questions to differ I schedules. on remind

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

Randall L. Stephenson

cut joining obviously Thanks, impacted us good about John first the this I imposed to it would a Mike, had hand I had the in full a at particularly changes them. clutter, typically what I to a knows, amount very be of straight Stephens. everybody brief in significant is results to over and going was noise flows cash everybody results, of go to I'm WarnerMedia if of third morning. had like Appreciate the to flows. has being year's this cash you And good quarter feel just through number quarter by lot it. We've results. accounting on morning, M&A. the before We've us. And And quarter, look really with But the just everyone. do it for the rule the

Our areas And dividends couple if think down a which get is quarter. look that, was year of XX% a you up billion, just that healthy to over year. flow available debt, over up out. $XX.X pay operations which that very worthy cash beneath year. you is pointing the flow, of $X.X there's XX% cash from That's year are I when free cash or was billion at for pay And the

track to of stabilizing immediately as and strong to a first the which by the share. put seeing growth distinguish deleveraging I'd And Cricket to to very over us pricing go business which Mobility see flows this also comfortable to end by our marketplace. And business, last, we're cash Prepaid build are profits driven is and full and earnings debt-to-EBITDA going accretive with year-end its is be Mobility, TV is years think $X.XX getting contributor XXXX. And that is itself project, this our going four flow. foundation in more we're look we that going that's growing. our X.X WarnerMedia, cash then First John out But to it's that have Stephens on detail. running divisions is times level red-hot. getting These at going number to you is really is quarter the in begin we largest laying exit tune year. all on you're And when was exit the heavily a point in truly Then of near video. being three moves And WarnerMedia objectives, fiber significant what hit in our are because per of growing. I obviously our And for is And to to debt broadband at XXXX. year what made this maturities basically we're old our into

But out. we're And we you today. that confident going lot to just get I I as going we So that momentum. on when the like go quarter through give a XXXX the integration deliver and beyond. together full business blown we a we're into a have plans Mike across at of pointed feel the work on laid track to our move look But out, we're as to November XX, – the of plans efforts going we obviously we've to WarnerMedia. lot with on do,

now And on So with turn high-level that, quarter. the it over I'm my John Stephens. to to going view that's

John J. Stephens

Randall, for this good on call Thanks, us morning. and being Thanks morning, everyone. with the

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

this deal impact referring our and accounting we've certain statements income cash pension receivables. most be on receipts flows recognition, year As costs, adopted basis. a to quarters, on changes cash These few on revenue for and we'll our in certain comparable results of installment segments done with new reported next the that AT&T previous standards slides.

service on made same the basis. regulatory fees at net a to universal policy and So time other record fees the a company decision

as date. Tax Adjusted revenue of positive EPS, than iPhone reform to does as well it. quarter year to full VRIO XX% well of standards some continues volumes share, pressure, WarnerMedia launch a pressured per foreign on which were impact as exchange for up by as to up our getting $X.XX as and smartphone have was quarter Earnings strong adoption was XS and WarnerMedia. the XX% especially of operations. So the in EPS with the impact recognition the more

a and Xandr, foreign advertising new operating declines per third ease at expect the XX%, and pressure. revenues our comparative you We transition impact video the Gains The year. services, reported by flat in we're but segment, earnings smartphone support, basis provides end at were to the revenues up Wireless WarnerMedia in adjusted some thanks Time comparable year solid the margins were quarter be share Time our on consolidated without video. of over basis. When volumes Warner $XX.X upper transitioning pressure. to pressure essentially sales drive range. over-the-top a as up from iPhone of came look Warner, has Consolidated margin and mostly Adjusted in acquisition. pressure. exchange continue that seasonal growth in were margin billion, quarter addition year The strong in Wireless traditional to legacy the biggest and WarnerMedia fourth year and offset But $X.XX our The linear because of impact. to on will over quarter did business, continues

year $X.X when FirstNet strong cash is flow and no consider out. impressive and billion $X.X $XX.X cash the billion date. of in the pointed capital from even Randall to quarter be reimbursement continue flow operations quarter. in Free more spending billion to Our of This free was with you as costs cash

as range expect year. much vendor We $XX the continue But we in the to don't as billion expect our this capital fourth quarter spending in financing before.

$XX fourth range We're the So be in feeling good billion free the now flow we the into investment cash to heading for gross position quarter. about capital in expect our really year.

$X.X FirstNet the since authority's fourth in we've for reimbursements expect billion approval latest the FirstNet contract quarter, milestone of We the achievement. received

you all as free this have employee WarnerMedia. another forward. we remember you $X flow flow last quarter's take plans. also confidence cash cash see billion, benefit you free when of move of growing payments, in and full $X.X included us consider fourth billion can We of our it funding from When employee-related quarter including reform tax together, position cash bonuses this some gives how And

of flow improve the leverage invest critical us and generate our to free part gives and strong business strategy ability strength the in both Our cash position. to our financial is a

prepaid being by Let's with now segment, last. continues. of on quarter But Prepaid its service which in its XXX,XXX sales continued XX,XXX more X%, EBITDA, subscribers revenues. units. of another growth in tenth information Total That phone had X. with phone adding segment still part of Wireline where consecutive than added Business Wireless our X%. year-over-year quarter more and starting Communications phone tide we than the to results, more we iPhones than add adds is more Group, equipment subscribers. years, than pressure coming was talk Postpaid year net definitely consists did XX%. improvement. higher service XXX,XXX at in grew revenues The phones. solid, up those and XX margin year-over-year Wireless. Strong our grew were XXX,XXX about margins, That's improvement, Prepaid Mobility, sold slide net Postpaid revenues thanks second this and postpaid Entertainment in turned best

revenue to in Randall We rest transition Moving the video Group, EBITDA last improve of quarter, sequentially continued. the about talked quarter stabilizing impact told our over margin And margins. of Revenues to some recently continue see to our next you revenues continue business the did expect and the we we Entertainment but the pressure year. the year. on of pressure the that

stability about additional Third event, from work details by over EBITDA were week we we'll subscriber committed in quarter second quarter, event. back John very was Donovan with adds Entertainment are Mayweather/McGregor provide EBITDA next games, on to last are those decline. EBITDA base. see results. in quarter pressured the an we'll in taking we XX,XXX. down also EBITDA of which of SUNDAY steps were an NOW pressures, of year of net We and comparisons our to but how a can lot successful improvement record-setting was Without NFL building fourth do, We've the get week a will year's the year, over-the-top our But been one have the Group to still DIRECTV impact first get which TICKET more in XX% you stabilizing quarter some year. third less XXXX.

our special promotions scaled improving on and focusing back offers. we're profitability; Now

We the toward market pricing in quarter. also moved

We XX,XXX by expected exceeded the our customer on than But actions, a we see year. Rico. be loss cost improve subscribers. year. Puerto basis, elimination margins of lift up to improvement in intangible continue product our TV the these Part cost video the U-verse declines growth subscriber adds a declines. as at was Traditional continue but of Margins to from we up and subscribers these subs net comparable prepaid but over revenue were Wireline, impacted decline in DTV to even legacy expectations. to the by of the a But they rate DIRECTV margins to continue were. slower in revenue improved, in In quarter. due were quarter impacted revenues, were offset revenues still realization those through the year without efficiencies. efficiencies margin some and last Business

third delivered with due foreign at results. low saw with at revenues single Since to look solid which high-quality million telecast domestic declined networks, and efforts. higher advertising declined television by exchange reflecting in charge, revenues. offset TV gains. the markets. revenues films was were foreign revenue decline done grew revenues. for were income gains Warner X%, Turner's for in be a Warner strong the growth news primarily those. primetime expenses. or young had gains by the entertainment of would about revenues with across as revenues subscription Emmy operating the Subscription costs rates productions. still $XXX and primarily adults. also Time purchase-price Emmys digits revenues continue this as kids growth home expected a comps And we Turner to in In were and X% to and and XX of lower higher digits, declined most HBO Rich in and costs, and Turner solid increased income Turner WarnerMedia the Warner tough WarnerMedia Total drive by away were our operating an performance this Turner, quarter. HBO. higher driven Crazy WarnerMedia's EBITDA for declines over due delivery $XXX income and expenses. revenue and HBO, exchange higher WarnerMedia home accomplishment their due specifically The and revenues office ad the work, mostly other and helped accounting by as producing due national and in in box Warner hit slate ago. actual at million pressure a with to the three the Turner's slate the was continue the quarter nearly let's and was with be foreign XX XX% million and licensing higher revenues international comparison Warner those in production initial TV lower HBO call million by in all Warner grow, But Television of up part domestic wins. down to to rates. revenues quarter. year on release to and CNN another entertainment year the Now Bros., during international Turner's $XXX nearly WarnerMedia rates offset growth up over thanks then, even pre-release exchange. operating are due Those gains in a units. reach up amortized level revenues. was TV were year-ago to and our The Content Bros.-produced recognized amortization International even growth impressive increased in ad content in primarily due due content. The and X%, television revenues year, subscriber Asians, companies included X. got revenues excellence grew. pressure. and scored primarily number strong low expenses XX% estimated quarter quarter higher Subscription licensing operating such licensing up in flat, at offset partially amount stable, content and Higher with August, subscription expense business subscription releases and Bros. theatrical Bros. EBITDA. various licensing we've Meg, driven documentary challenging higher revenues Television at of quite $XXX quarter. operating Bros. accounting reflecting on Bros. Domestic were HBO also coming Awards to WarnerMedia added was third additional licensing revenue to mostly at networks, which revenues excluding six essentially revenues higher increased more higher X% well. HBO's from lot series. segment Turner double decline Warner And primarily nearly considering pre-acquisition, slide some to Turner what revenues, we another the entertainment to from Emmy a our Nun

I think for them. was that a record

X% to were revenues a have than Subscriber FX in on growth added America pressure. million as million to slide Latin year. than America the revenue Mexico. Now on business in in primarily we than largely let's we continues Nextel over grown year, the Xandr Mexico Without wholesale our results X.X over Service some well Latin service in the Without inherited would We more strong the look basis. have XXX,XXX past to to XX been as year. at exchange subscribers first down We new due impact, total. and year was quarter from more have X. shut revenues now and that revenues EBITDA and Total more impact, down those foreign decision in due subscribers made be would up foreign year down the exchange. comparable

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

scratching believe of and can this our acquisition when even our than up with AppNexus XX%. Xandr, growing more results. AppNexus were new understand to advertising revenues than by look During for quarter. when we're our the enthusiasm the out, quarter, launched XX% We year, were business. you this you And more business at analytics just the But you here. due XX% we Revenues up in surface EBITDA the partly take

difference You we AppNexus addressable, analyst that John? business. an advertising. And month. growth look update technology meeting revenues between All the our to Turner. and turn targeted targeted like will Donovan, difference the about makes in We're being during to together who inventory. apply this capabilities ad adds on the provide highly can our our excited even to opportunity I'd advertising analytical consolidated have more annual of about $X now John to talk advertising AdWorks building advertising is the step see our rates our a what at to billion in with about critical digital a you Communications portion call over when a and We'll the next Turner more marketplace. of

John M. Donovan

Thanks, John.

our this get close the in as building we to lead our before head oh, an like on updating provide questions, Now FirstNet building sorry. – next Thanks, a and That priorities you update our minutes momentum like we Wireless, fiber John. to moment includes our to into take expanding I'd in video and your our and our transition, on I'd spend to footprint, year managing XXXX. on on executing XG. lastly, deployment, few

with business. begin our me Let Mobility

results momentum service you, the turned corner the of business As a as four quarter. we've confident in industry John revenue transformation, we with delivered I'm off growth. After years third finish in our the told strong Mobility year.

both on quarter. to the focus net saw prepaid phone postpaid, and in success year-over-year both We third adds, and quality continue with

postpaid consecutive John phone than highest our we quarter And years. add in second quarter phone As of had in is net XX more prepaid tenth improvement year-over-year the mentioned, adds. this net

We continue customer to our prepaid with be base. impressed

margins our base. strong perspective, value they year with almost year. look From very X% has to some very a that's over at postpaid pure similar Our of revenue growing prepaid a business stream

about our of year, of adds similar we three through our that net customers. the the see have that characteristics fact, would generate of of first In out Cricket XX% postpaid value some quarters

the to business. video Moving

navigate to pressure. industry continue We

to me plans EBITDA bring to stability have We Group. our Allow back elaborate on Entertainment to that.

video customer refining we're them to needs. tailoring our First, four products,

out. traction. its to viewers. linear our to increase our will plan be and be roll begun This services of is simplicity And of with our expect And the also it in the Our the our we premium being year. use DIRECTV the service mobility-focused client WatchTV time, half trials focus DIRECTV further positive. service. these NOW. over should NOW proprietary premium beta EBITDA cost gaining thin introduction both our WatchTV, a And DIRECTV And TV this testing updated to more is on of acquisition measured service traditional next we of U-verse out lower introduced and and first differentiate like roll streaming We've service. common platform video

made special rationalize offers decision we taking data promotions approach. NOW. the for our Second, DIRECTV tailored, more and strategic We're a driven to

for low lot promotions services. Specifically, a with about we value, the focused virtual price X launching customers. and high our MVPD from churn elasticity behavior DIRECTV customer on NOW, reducing learned nearly we've subscribers Since million

evolving This position like customers example, a shopping know tweak our for product our stable stabilize. approach customer our shows. and realignment base seasonally we set Wireless, puts we'll behavior our us XXXX. For to customer up a we in proposition some data, to more We as with in profitability value see And somewhat optimize see now. continue with

DIRECTV at gives video of and also the the can forward Thirdly, price. want. fastest-growing And being price U-verse offering. lineup. XXXX. any align ARPU cost margin promotion our smaller, This lock going fourth, fresh through a and additional is cost our It's for relief the and lapped. how evaluating significant And video two-year evaluating lineups largest about us want what is Content value-based program we content look packages. customers taking with many growth we're channel We're and

X have already we the customers broadband in improve driving longer million working today plan We cover we're market, substantially We the X million in penetration. more Group than footprint. in the more more higher way locations XX footprint. add the our Another EBITDA Entertainment in have broadband by is to fiber growth to locations fiber fiber than our our year. customer next million now and And

fiber In increase fiber making EBITDA with this by is The pivot video, broadband that This fact, IP Group to ARPU our fiber combined more expect growth. we Entertainment subscribers broadband strategic base execution drive X next our confidence million we're gives us we shift to with year. year. beginning than the will to with stabilize

focus a our all in maintaining we're on businesses of laser Finally, costs Wireline. margins our and in keeping Business

slide X. Let's now FirstNet update deployment, to on move on our an which is

FirstNet Our well. extremely execute to team continues

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service times of and have place, allowing We pre-emption heavy continuous in during priority traffic.

how times these it in our this latest during including and time as our one-third well requirements. with We're already devices the FirstNet responders, devices support preparing the of Because the band keep And schedule expected are the covering XX AT&T These seeing many storm connected the selection for before ahead priority of six were our Band after of we Michael available. LTE FirstNet began are performing commercial continues about and meet We storm in and as being we first ready in even all customers, to FirstNet areas. today. of example. we're bands network area. to real months arrived able deployment work technical efforts, emergency with Hurricane and

and In tight assets through with fact, to affected network the by XX%, areas keep connected. Hurricane responders rolled our out normal operated we of better, Michael. first usually areas impacted our safety, at network public performance coordination And in to

to devices were delivered keeping authorities agencies important from hundreds working. with responders That's to part storm. mission was safe. a can we're praise, community say, the safety of provider about. also and first that identify public help One these out We responder local is their public down, else went first service high their what as such play a That's far helping worked FirstNet FirstNet-enabled in without wireless humbled everything was carry that from devastating a all to we when and FirstNet recover of

spectrum to also and and will upgrade the WCS We all which adding us new We're another our deployment. once. radio continue tower adding We're push XXX at to XG, megahertz, climb. enable climbing without tower capability, AWS, towers to

We the a we've The But the it matters It's core an first our outstanding for first responders, sales to under-penetrated been network than represented. With us. great XXX,XXX community agencies headway. building dedicated there's opportunity a to waiting sales base, making FirstNet of performance and past. more team most we're in for this we more subscribers responder with is X,XXX now on dedicated have area a lot opportunity with us. than believe where when

about which United will year. introduce coverage I'd XG. drive track our the to nationwide Now next few we've we on introduce like XX the end additional This is XG leadership parts toward in next the talk on in mobile XG, XG the be cities by slide services be XX. carrier AT&T wireless to to XG cities States is of weeks. XG to first our standards-based the for of announced of year, We in network. And plan as in

Fiber XX by a theoretical Customers our more than in second. cities speeds XG megabits XXX in year. that Evolution years. by by than foundation in mid-XXXX. in have the plan several of nationwide seeing today end Second, trials XG, are networks. with this completed for place. last in locations coverage per peak more nation's we markets with one to be speeds dramatic we the We lift next million XXX million expanding year are reaching backbone the We've the three businesses, and Including to pass fiber XG XG our XX locations about is and customer of largest is of

September virtualization and traditional on be the by defined Assisted virtualization on are rate. LTE ultra-low fallow being latency key by to that's bringing a service is part Access, year. We're plan network, in than or FirstNet LTE. network or increase also Licensed XG. the having a software the of noticing. study the for spectrum and is which the a and to the largest to deployed towards XX are and dramatic is These units by This of LTE-LAA, positive in leader We're study, is speeds at of cloud put end and substantially into with faster best of baseband our in parts transition nation's XX%. the the edge our build, its network our blocks launch is impact nearly kind. networking rapid to spectrum track the to named building comprehensive We also XG cities amount track going are been on to OneScore in the can This We've others core Thanks deliver our of GWS goals. most

Our network already is taking even it and that, a to back recognized With make John. better. it we're you, turn steps to I'll over leader,

John J. Stephens

John. Thanks,

Now questions, deleveraging on provide to a get moment your I'd take before like Those to update we to our an on plans. are slide XX.

and even year-end the One the way through that to of big of historical flow plan know that by X.X year, to we times then XXXX. accomplish commitments levels this to lower we've cash by to made. the to We get the by range, drop free plan You return times range end end next is growth. year the X.X

ability do and quarter points third to to from just operations flow cash strong free Our results our cash that.

years, look data for do most couple moves under-utilized we asset our to recently billion of ways of spectrum, of over we've centers sale combined assets recent can also our such several other We made where We in dollars portfolio. more. our dollars to generating the of proceeds. large And a and identified continue monetize billions

process. an So this is ongoing

and help of they $X run basis billion synergies end the contribute, on cost on Our rate in target, will merger $X.X a synergies by remain XXXX. also and in synergies revenue related billion

any diverse work alternatives. under under well as quite or We'll looking other options consideration going evaluated. will as are now. be In and that on options markets got tenders, bases. frankly, consider investor will We've market capital make – consideration. be We're whole All addition, going at diverse efficient calls, capital into

we've closed. debt effectively the of how merger at to intermediate-term by year. spread of what to deal, the You managing refinance very we've accomplished end can or near- since managed by we to are $XX looking towers at billion we've the Since maturities see the expect maturities just maturity our closed and retire

that of already. capital can over see As months. diverse done cash and at done hand last the the from We've you on of four markets close the utilizing with this our we've most time schedule,

Our manageable different, very debt towers resulting will look annual much debt in payments.

our we been able lock rate, market a they a us plans. rates. economic in a of with pension in of rates. the pension discount when our fixed rate plan by I value very financial Simply so in increase hedge. us in recent into and a questions. portion rates rise, do With to debt to to business our have effective ready have debt will Bottom interest achieve and your we're hedge take decrease from targets our protecting shareholders. also to continue natural and rising About that, line, benefit allows to And our return as today We strength months, low X% leverage XX% is invest our historically billion, $X our interest have liabilities think put, about

Michael J. Viola

ahead. go John,

Operator

Please you. first, line go the ahead. to Stanley. with we'll Thank Flannery Morgan go of And Simon

Simon Flannery

you very Thank much. Good morning.

the Thanks. think evolving driving I that? XXXX. a deleveraging, I cash And floor, of elaborate how could $XX wonder of Randall, So, the exiting on that the you to you over as free see billion just about recently value part XXXX? you flow talked course getting if what's the

Randall L. Stephenson

Sure. Hi, Simon. Thanks.

Simon Flannery

Morning.

Randall L. Stephenson

we includes billion Warner think it was free $XX the had with billion-plus said was I deal. flow. $X in we do Yeah, what month Time we last costs cash Street, merger The everybody And of that year had told through told associated I this that would

next the $X all also $XX puts cash $XX at only Warner so – And billion And the that Time billion which recur billion. the you $XX couple billion, year, included a billion, of doesn't $X billion, flow. plus

run as Warner $XX billion year get rate. a Time in this So you exiting for full year, you a put to

if here, in quarter at Now was for if want kind billion-plus posted first $XX at you're free the just quarter of test to $X.X rate number, and our at we you you that of a kind that, just look number. cash terms run annualize of what this billion, flow

We that growth number, get kind assumes We we to that you understand And no assume to on so that now. you that's our of of It WarnerMedia. no And a we're just simplistically billion the Mobility kind business. growing. keep how help right path assume TV growth get in to we business assumes in the Mobility get an basis the whereas or we break digits. an Group, year And stable you even and this next positive to now can this year. it's standpoint Mexico then get to thing business from year, double our on EBITDA declining Entertainment right think dilution broadband we that next EBITDA $XX

you So should get drive which EBITDA flow all we cash put growth. that together, growth, good

$XX on And that we're is than there. so number run out comfortable rate better a actually I looks And that now. that just a put billion

John J. Stephens

has to that, Randall, on I XX.X transaction. year, the can Yeah, commitment the really be. far add of some just our locations] of [customer we're the DTV around time (XX:XX) to be along fiber-to-the-prem million out if middle done That'll

there have management. a we support capital So for a capital spend management,

million LTE essentially the Secondly, the right XXX build. about Mexico completed We're we've just edge. there on

So us once that. give again, that'll opportunity an to hedge

that, the money a close spent the billion Third, have $X.X team network They're to ahead over quarter that for. weren't little a them to reimbursed of do been We billion, team and targeted working builds. with this we bit the FirstNet $X.X remarkable. well

for we expect reimbursements had this and bodes approved billion milestones have for proceeds, us And as our in so quarter. to receive contract that that well $X.X

building are about of this all flows. things momentum those are strong what So cash

Randall L. Stephenson

cash said I with of you think free debt said pair take to year schedule about we in the And that that then important exit too John flow. walked last what I and where maturities. it's on our Stephens through terms John

four average will of dividend debt well less years within year billion, the next We $XX this cash the with annual for flow free exit maturities range.

feel very get manageable. stacked And I of. to up right think well stacked so now. is spoke these that We we've like where it targets can deleveraging the debt it's got up And John we

Simon Flannery

for the color. Great. Thanks

Randall L. Stephenson

you. Thank

John J. Stephens

Thanks, Simon.

Michael J. Viola

next the question. Take

Operator

UBS. to Please we'll And John go with ahead. go Hodulik

John C. Hodulik

Okay. Thanks. Maybe for Randall, a broader question.

not for have guys a and voiced the of company. the these in market's But You heard, strategic which just of vision the confidence you the credit lot we giving financial of lot performance, a clearly things.

missing? the the debt? of market's what could just of cash do Is you over stock? performance went versus missing investors, you Or just it that it do flow you As talk you what think equation, of is from the to think you the given if company profile the the there, – the sort what is

Randall L. Stephenson

the of feel like I think right now, on we're equation, I John. from tracking missing terms in plan

debt the and by X.X out debt, I'm earlier, the getting end very comfortable to next of pointed As times down is very I deleveraging, manageable. with year. year the

I think of is that pace. flow the we at assumes that our And and XX% in XXXX have the already a today business EBITDA. growing there. year-over-year cash us flow characteristics our have in further growth no terms Cash of cash

to what the to performance is have we're Mobility business. just continued the market the side think demonstrate to I in of going so And

very have we think I momentum. good

is we're and the doing that an on looks The well. that And ARPUs incredibly Cricket are EBITDA very good. mentioned customer doing well. profitable I in category there postpaid that's incredibly prepaid base Mobility. just And doing really well. growing is As side, defining building and

we four looks the even equation cash and to Group, our neutral, growth the to TV flow like we which so stability, EBITDA get have you broadband Mexico get then And growth an if three, next next EBITDA years. is to Entertainment year, can and good this, that our business, for really

I we executing And will the this I is quarters. am think to so I actually think to with And markets we continue pleased this, do do posting that. reflect and what quarter. have continue

John C. Hodulik

it X.X% that declined growth EBITDA about I a expect mean, part which it about quarter to trajectory story? quarter. on. nice continue? is to be X%, of And Last that you down this a trajectory was is just Do

Randall L. Stephenson

EBITDA is business. Mobility Yeah, our look, by I driven the mean,

EBITDA think more get I Mobility good business Mobility to I'll the John we let we a that. to that color get we growth? can growth. have provide EBITDA Donovan degree so high of And can on solid And confidence But

Can there's we your Entertainment growth seeing the demonstrate EBITDA EBITDA WarnerMedia, you growth to add Mobility, today. we Then to to and Mobility get EBITDA flat? the your yeah, you're you're would need growth. color Group Group? mean EBITDA so, the growth question, sustained Entertainment answer any extend EBITDA at John, us growth. on I company. seeing like And to for on recipe

John M. Donovan

I'd love to.

gets the broadband-led world think So now. right what I components Group, a the at Entertainment of look if you lost sometimes there is out it's

us our at If sell into. fiber you a to portfolio, inventory has broadband the build lot look of footprint given

you acquisition at than dramatically where find video, where doing fiber is We're And we're XX have areas rate we than doing that look of we're is quarter, you our continue linear with meg in fiber video. next inventory industry quarter coming stress got footprint. the do better where we're month back of linear industry's and decline Where first we the greater. on industry just that But half the dramatically we're If the the how the priced each in broadband growth, linear, improve to and got footprint have better churn have actions the with in stronger. sell year, of online we there. lot to take only of not going this to have to And have year, doing we've ARPU within to we part into. a of the

we the So player the prepared through customers could linear broadband what I it a of XX% feel take fiber is that video business about is, video help the most to this the linear draw if in area. video transition. good the market we've will we in particular And just And that minute share very to be as transition to important within. where the own there. the Probably business. thought in important a footprint done thing with We us talk to the business, attention video

to to cable cord-cutter either And that And put of on a I were NOW, were from portion when categories. coming those you customers together from so DIRECTV catch coming our or we customers. wanted we an prior large mentioned calls OTT product,

business. now have like that to enough little experience we So a bit there that is know the prepaid Wireless business

shopping that very for become a promotionally way more in We allows a we're to that profitable. to have It's are of for going curate base. And who portfolio intensive seasonal shoppers roughly shows. third us that continue to

of about the portfolio, video NOW and product product. assists think to continue then to we've the the learnings profitability of content discriminating broadband profitability you We there. to good driven got be more us full-service take feel the is going footprint. is premium as very by of the going WatchTV, that DIRECTV how content. chute our So for the mobile-only, and about And We're a out which about profitable in be right provided that's

And performance That will good roll we so would give EG I XXXX. strength into roll very well-positioned the XXXX that portfolio as coupled EBITDA broadband we video right say as of that get the us overall be stability a confident in we're going with to we're to now into alone. really

John C. Hodulik

Okay. Thanks for the color, guys.

Michael J. Viola

Thanks.

the please? take next we question, Just can

Operator

Cusick ahead. Please to go Phil JPMorgan. We'll with go

Philip A. Cusick

gross linear said. that what follow-up just NOW and Thanks, think numbers, resiliency than on guys. it by the DIRECTV I in and John I surprised we in dig a Donovan, said commentary about add churn challenge? the expected. this Can little could into people or mostly on NOW, the you other more Was slowdown you in but given DIRECTV the Thanks. was trends a better September sequential a you if quarter? were

John M. Donovan

tremendous Live, are us, from promotion engagement. product, promotion generally, base of your portfolio in DIRECTV folks we done TV. that that shown analytics, a the NOW spinning But of it's have if really within industry folks look just Hulu and we've cities. you got, and lot have tale DIRECTV within you the It's surveying, the done YouTube jumping NOW, it's between to of that two Well, a

customers who And so those what are what viewing. are, where we're learning, and people

worse and a limited that we than And promotional overall. not very, so we outcome to of our we at when actually promotions – we promotions resiliency took very – pricing And off were then we Its started or mix. had. we expected product far shift raised all

model being time. to be an that So will engaged, what That we're it find after product the a itself towards is lend are highly able by lot. that over ad use supplemented and customers compelling

that's to is that we we're so what And focus wanted on. what to going base. And secure

forward, the customer growth with base this. Because of of does. the community after team the analyst fulsome using going our introduction of lot I slug own the now learn that's packages, OTT a category to we're big first the think So forecasts than a starting lower

can heavily be or advantageous not so and always go broadband promotionally-sensitive so OTT very to are that the engaged linear result is that you going do and people to going what ad-supported And available. And may That will, it when TV. quarter, in use third going base be models. to of, it's then may you get do you premium given that's if any burned the do we users. in the you that TV, to for to really we ourselves quarter, broadband if about how at into get on instance, lead or as package forward and customer – so well-suited chase that find business you the always a an look price-sensitive, off, It's we economics can

getting And of the changed mix engaged, heavily content in a We've are those taking towards so a higher are that buying with of streamlined packages. bias that the learned end OTT lot customers the on people we we're it. We've about offers.

Michael J. Viola

Go ahead, Thanks, Phil. Phil.

Philip A. Cusick

EBITDA? EBITDA earlier? going us you I was guiding year, video to the in did John, can on I growing say, you say expect up stability now in as growth next just question as well broadband? more follow Entertainment once So to to are

John M. Donovan

Entertainment in get available our the saying customers performance sell by Group total, broadband expect into. stability fueled we to is we're What solid million No. fiber-to-the-prem XX part to see in we the as as in

get about, to ability Entertainment the to overall Group. results, add will in stability our So to the which optimistic broadband we are

Philip A. Cusick

Thank Great. you.

Michael J. Viola

question. Next

Operator

past. advertising. We'll I Amy does one differently? of you the then this your Can the EBITDA? receptiveness differently? What's up think have Entertainment cable's seen last I Research. doing on thinking Macquarie Thank little view (XX:XX) in And maybe about terms Yong Frontier this how more been JV of the with What bit Capital good us go shape talk Yong go as community? Amy Thanks. about a the and recently in the with ahead. you a Macquarie on of Please Maybe - question, (USA), those to Xandr? Inc. are two And Altice. ad you then How signed think part you you lot morning. are and

John M. Donovan

is this John. So

in. stab ask take and a it me at to to try Randall Let jump

we've been first to advertising really First opportunity, and well out our done at different analytics as regard of capabilities, that us has data go the a available, the all, and that. different collection thing with when was we we at opportunities can the as give information to get established of that looked insights, talent the that had and Xandr

– and that The gifted or data towards to towards the capabilities the then talented analytics included space. was specifically second are and piece advertising get those so

develop capabilities. and that, data get platforms, it's then Secondly, advertising space, with to a slots, the whether is only data platform what assets need significant both driven the from a was slots, to minutes talent, us to when with inventory core and customer side this products. Turner this the and technology with or inventory ability to engineering the side XX supply those base DIRECTV, have in you for not their of frankly, in quite have about. video AppNexus continue combine dealt the data That with key brings capability with which and great the TV, X have you is group. the demand combine you When you million but their minutes tremendous we that XX their there. time, the from inventory an that a engineers long of a have this hour experience That's

double those results, TV growth. AppNexus, digit We seen it quarter specifically from The legacy with tremendous works the was And have without that DIRECTV. started process And space. you've in that XX% revenue linear that AdWorks, performance. proving we're

with us both announcements couple distributors regard had to you and with with will, this, regard we think I other, Frontier. a if of the Altice joining to

positive. and on the continue flexibility our it has work being in on on the from generally positive. your think from reaction – provide view this and you The grow term, the resources we're I TV, the DIRECTV longer But frankly, The highly efforts. some NOW, much on think this Wireless community can to So and I get and your and been advertisers, use if to to then from the Quite of industry customer traction the our other We'll that continue it's linear capability, attractive. other those team capability with participants moving base can starting reaction on it as the over-the-top. been business so to areas.

can we're we quality. team which are our opportunities add? can particularly certainly do, the if results to you'd continue And to the to going us say join we that think need is the focus do similar bright, proving like well move we as will on we to anything overall participants Randall, I – across what to total of other to inventory attract towards we with ads increase doing. as

Randall L. Stephenson

build without a campaigns, as today the think tools marketplace lot is and I of AppNexus quite of we it put campaigns, can in – the a does in what people human where mechanical could which measure and covered intervention, design digital have it just we place lot a you world. do We – we confidence well.

we our is this inventory we – we're on As a base year DIRECTV growth just over mind, subscriber that declining up, the growth can on stand DIRECTV inventory year. X% in that's saw XX% experiencing that that and keep on XX%

subscriber And these degree of and have translate And side? the time so of declining does develop very degree really you put Turner look attractive have And have here. We But the high growing confidence that actually fulsome base, enthusiastic if that a in we we can. we're revenues are confidence a – into can on XX% that over a drive we about growth tools take rates high on a capability. Turner? more This to this in the to inventory a will opportunity. high place

Michael J. Viola

just Yong I up view and – you business. follow if have and Inc. Capital question Entertainment all I EBITDA Macquarie on Xandr see actually wanted there? Amy, advertiser asked Did another Amy group's the stability? about know hitting shapes you your at - in (USA), Thanks. No, to

John M. Donovan

think as focused to And stability John video be in we're actions covered, both and improvement we're I from XXXX. out well going the in as continued improving John and broadband products. on that's laid And marketplace looking towards our Yeah. trends earlier that that EBITDA as strategy coming from fiber-based

Randall L. Stephenson

other is the think that on really a that important us John, is we past lever rolling traditional formal And I two-year the base. can of a locks linear the pricing it that for most rolling forward. move notes, that And video price that – are in going mentioned of us add place to would in ARPU I off. thing, the we is have result as market

John M. Donovan

Even if costs the to content continue at XX%. escalate

Michael J. Viola

So next question if Amy. we could. Thank you,

Operator

go Merrill of Bank to Barden ahead. Please America with go David Lynch. We'll

David Barden

for deleveraging. guys. taking the Good first Thanks the on one Stephens Hey, questions. morning. John guess for I

relevant things are – spectrum-wise an large just two are target enough John, you on wave, deleveraging? of Amy's you with to focus item, the two advertising. the deleveraging to relevant kind the exclusively have following housekeeping like on asterisk deleveraging So, specifically and to on Or kind be spectrum conversation? I could you of assets spending? Could sub-parts. can where on you And a elaborate more up ignoring guys and the it a magnitude specifically millimeter things does then guess, of also to And what And CBRS comfortable are question you C-Band. next

being think up places. lot being is I It's kind places. other double in counted in showing some in a advertising places. of eliminated different of third It's

kind of through, run advertising again, seeing Stephens just being what's where? reported John of much. we're kind you show could where Thanks so And So up?

John J. Stephens

Great.

are is advertising one Advertising linear million ads let segment, And at the pure take just So a and that the AdWorks, sold the me $XXX up in advertising first. is DIRECTV. that rate. legacy showing last business, from the TV, about on TV in or run

month segment. is corporate well segment the base Entertainment Group. in is the eliminated revenue a the company customer on as $X at about in eliminations under the then And that showing up advertising just So as through

advertising revenue reported only $XX from of about this segment That's worth there's quarter and AppNexus. Secondly, business the (XX:XX) in there.

or total a And capabilities internally. do that we for picture show supplement streams AT&T. together Third, WarnerMedia quarter reported not is And manages is what because advertising of a supplemental in manages to $X That about billion, maybe Turner there the advertising this That's in provide disclosure that in WarnerMedia. adds in the included little advertising sheet. our bit Turner, and those is there. full that's that, numbers than reported or of about we it's two segment – in we then run you that, less revenue the a

is. to give So an regard with full that's just we to what you our advertising transparency total make sure effort

it's media in compared gives for information So that's participants to they and how it's you advertising, how the the for DIRECTV comparable compare to recorded. and how the it TV information information gives you reported WarnerMedia, you appropriate in appropriate other industry. for gives others industry, the That's

effort you So comparable you make as to look can other companies. we an that sure data just it's give at utilize

David Barden

Great.

John J. Stephens

the of that. But and Jobs regard just it With we through you opportunities Reform regard the we mark. [times] come in go going go, I [times] Tax means Act X.X sounds sales, estate range no [times], we're X.XX the predict to what That's know asterisks, this say if X.XX there which through to, on – Act] [Tax new if range, or if are no for bit the there's asset asterisks. to to regard met say Cuts we with did The we about. can that – With this We're our that at (XX:XX). not our and it's [times], – is way. about or jobs. that We have, don't purchases. example, across knowing not that It's that little a credit asset we X.XX listing will, asterisk as any real want forward X.XX to and came [times] we I'd come (sic) we precise being process

We into have the estate falls that real country those. all over

category sales that. that real estate on whole We have may may or a different be qualify interested of

quite new administrative total and, about think got across you've buildings our the If whole you AT&T, a frankly, opportunity.

into plan. is But amount can work that continue not of and And we're got assets it. for at as focus and we'll might say, transactions. anything dollar Certainly, not on total going do I'm a us, get to needless great to you the We help any even everything. that total imagine, to valuation listed looking material So to major process. it –

from way synergies and cash That of these cash solid and go are But sure meet get managing The getting our flow a improvement so we forward to business, make generates of great we've today. this and we asset that CapEx ops, way as sales additional assets have exceed there. our on that We with call free with goals. got to an EBITDAs great no list completed. in merger projects many

David Barden

Great. Thanks, John.

John J. Stephens

Sure.

Michael J. Viola

question. Okay. take more We'll one

Operator

And that Bank. will Niknam from Deutsche go with ahead. Please Matthew be

Matthew Niknam

that think about or more off another Thanks about the the saw Thanks. quarter? Wireless. in. seasonally, of sort Great. ask in you you me help pricing was for quarter? in X.XX% backdrop? competitive of the the then step-up you change Whether And quarter. seen actions it I'll there's us that churn getting anticipate to Can tied Do the I another fourth think in typically step-up been past this step-up you've any

John M. Donovan

second up feel occurred of as the We Yeah, actions your through five a late – if result we kick we and of expect the we lot of has price subsided absolute action, a start When first formula, just not in revenue. so the those to took price go last we the actions. that to and growth, base churn tick quarter. And price the now because or side that's that growth to with the into with revenue quarters the strongly year-over-year that pretty start of have of four you improvement.

all out heard you've yet there. we traditional so of were excitement business carriers customer at, And the the now take by right about the the Cricket, are if the good good you we provided by we we both growth today. feel a lot way, postpaid looked third believe least we And promotional the where quarter, some And both very acquisitions. which net on data at in of that about

promotions, all out the smartphones, the And of in look to performance on our growth get when And in getting and standpoint at of core look business. if good starting Cricket. a incentives customers. quarter. at carriers, the we you financial really had We're total share advertising So of from growth voice we're the for phones, both the you we're promotional the of least

executing things with and and be rates stores effective close to up. and So tool. like acquisition traffic-driving – continues bundling That very a we're putting still

how So look we've start here look at adds, if you been to run sure that, you call I'm you share and doing. gross folks at on the of will

that availability year launch the in is that thing expensive coming is timing strength iPhone results. than is where sequencing has that's year share very The business The of the last of year. of say last different device, flow from. over those, I'll improved the difference more the the share, dramatically into Our And year. this the does net

a confident we that net was So feel business quarter. forward. And of third that, we're the strong that very momentum in of that business going

Randall L. Stephenson

Operating again, and with just quarter our thanks, growing – So flow flow And And feel nicely. flow cash recap, well XX%. XX%, cash have a that, good belts. everybody, call. with as WarnerMedia for full is back we joining Mobility under the about We growth really well. free executing really to reasonable WarnerMedia first XXXX. a a and very by plans end And at full next into track, headed year $X.XX deleveraging the quarter executing it's is the with getting to where exit well, our about to X.X the year. of on year by portfolio to earnings going very share. first place, times debt debt-to-EBITDA cash accretive

And we're Thanks, So on seeing joining in us New forward XX for everybody November and well stacking again. bottom we everybody York. appreciate look feel line, XXXX. to like up

Operator

participation, and Ladies for teleconferencing and today. AT&T's conference using service. for your gentlemen, does you your conclude for Thank that

You disconnect. may now

AT&T (T) 24 Oct 182018 Q3 Earnings call transcript