T - Earnings call transcript Q1 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the AT&T First Quarter 2019 Earnings Conference 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 you also is this I’d recorded. being Instructions] to that remind conference [Operator like the Relations. to your now would I turn Viola, Vice host, conference Senior President, Investor Michael to over Please sir. go ahead,

Michael Viola

morning, everyone, call. Okay. Thanks, Greg. and to quarter the welcome conference first Good

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

initiatives, the going is John XXXX Rand on with Chief Financial John to AT&T's the Stephens, an then Officer. AT&T's of Chairman me follow Q&A. a to operating Joining is going Stephenson, call today Rand provide update course, that and cover and Then, results. is CEO; we key our will of

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

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

I'd to now, over now like Stephenson. so to And turn the Randall call

Randall Stephenson

six what appreciate areas tell do those and could morning. I is of the by we this our have we I track summarize, us you ahead paying And slide. on on retire I first you joining and be Mike. XX% one, target these all six outlined you if I that January third to you priorities on back are $XX Time year-end. debt the billion listed would top that I in remember, And of took to Thanks, that in we priority, either for quickly that of would Okay. on again schedule. you well But we came to the down that acquire Warner as in or told we're and XXXX,

for working flow then we’ve cash arrangements, down our Hudson here least restructuring the also to brought down and it’s adding This cash at John target well of second that for in collateral additional sight our very giving the free is clear driving cash That full-year. $X.X stakes They’re and track capital flow doing job. line billion generating some reaching great is sold $X this billion significant Stephens’ typical flow of And and free And by And us cash. bottom quarter, on on to around of right year-end, generated ratio $X Hulu billion already by we puts we committed to to $X.X net generated monetizations, achieving line, $XX quarter, X.Xx our from us billion debt to net for track billion EBITDA of asset $X.X Yards. our debt of are we an billion. and and team that. in then driving so their and

quarter, strong and continues build with was priority momentum it customers. we really grow mobility, another and to Second had and

revenues service and some grew by increased wireless Our accounting significant X.X%. that’s pressures. even with EBITDA

churn phones and across and products. prepaid postpaid nicely remains low very both Our grew

I was a X%. excluding only There around growing it they item removing was by think this was exceeding profitability and from are team stabilizing dispute Donovan carriage but for tell X% So, pleased but you, wireless nearly of a us very I'd And not stabilizing And EBITDA, in performance. do even our year. a all, then entertainment that. to must John in our And growth all have one-time small there they’re settlement, I’m very healthy, are this that, with expectations. group, his

to got led was that product marketplace. I fiber product, you is tell doing broadband growth revenues. the well AT&T so, very And in our by the fiber X% in

On side, segmentation costs, doing and and ARPUs. driving costs, some terrific targeting is are costs. all controlling customer promotion work the finally, content higher on the And team then, video aggressive the some cost other operating

get the through. think work top There think year. streaming you And I to product. the quarter the a what What half And customer traditional much so, we in some the will as roll I should in thin should of We lower we expect for TV into video particularly customer I is pretty think NOW increases get as our rest year, the second with through the broadband, areas is out base, DIRECTV where marketplace. see then year, the continue but price you'll that’s of see be should will in might the subs, we That second losses be we we as the to those slight client XXXX. as our flow the lessen losses declines see subscriber product. bundle stable over product into we continue price can't

half or entertainment going to remain full-year year. groundwork been as Operating income our double target lay Revenue of by and either year be WarnerMedia, digits. EBITDA should growth we the continued At meet for we exceed stability move it's a really to start decent. to going group second grew was Bottom strong I The XXXX. are beyond the that’s solid. that line, the the comfortable for

the year. track for rate we running tell you, commodity. He is are the his content. I We team the run merger-related known we’ve reorganized service. excited the in streaming best be excited to and prolific expect Warner to this his service, new world will SVOD enhanced more and board. a as very, that business HBO in him library, He is this around compete which have service development this of great got to is the of some deep and have by get. Our significantly to of $XXX one brought to get us. I think And we also and hit Bob The very new I closer couldn't centered and discussed, on I is on Stankey our in Bros. like and on a and library. streaming And the top a project by end synergies Bob leading is talent, is is and he WarnerMedia Entertainment, be launching priority team's Greenblatt. develop to more million a SVOD

October from content. and We a the give Day includes a look executive across product, to for to and WarnerMedia detailed September the going that in are planning everybody you the at existing of bringing team and we're all new and we��re WarnerMedia breadth the timeframe,

we this product. and significant going are love think tuned stay just making we're to customers for So that our here investments and

delivery in first highest of on connectivity. made it to foundation the we priorities go built set and facet catapulted is halfway our And with and the among build now of we leadership build growing. and into strategy have of our FirstNet. after win well the dollars country network This and passed responders. best signed of platform with vast subscribers, numbers running X,XXX across ago, than ahead it mark few to every FirstNet billions Now years are our network the along has That’s the to schedule. today, AT&T up agencies the and position more is has XXX,XXX world-class a And of now more spectrum video invested world, securing those our portfolio in a spectrum quality. than we out licenses, for initiative national We

build few our Over best out. the as has the XG to been has and fiber fastest months, the last as AT&T network, and as recognized accelerate FirstNet both wireless us well enabled

in now is service year. cities we parts coverage XG Our XG will and of have nationwide next XX

carrier only consumers And AT&T and that's and investments our now yet. network XG paying our businesses. to the offer we're well network XX million surpasses and to businesses ahead And our in both consumers, done not off are and are We we're competition service of locations, here. short, fiber

grow to and we new as XX% were Brian ad strong his business. more acquisition. EBITDA in the we're our invest and Turner's advertising Revenues Finally, development continuing including up Lesser to inventory. integrate had product Xandr, that's capabilities team of They AppNexus margins continue

we're pleased very we're progress with So, the making.

is strategy Our working.

you expect execution continue the and can as these priorities track on strong ahead. are quarters initiatives on key in Our we

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

John Stephens

for Thanks, call the Again, thanks morning, being Randall, today. on everyone. good

Let and impact we and customers on the X. in Slide WarnerMedia signs $X.XX EPS is Entertainment summary reversal deferrals. in fulfillment EBITDA rev million financial Mobility non-cash about rec with quarter. of me was growth adding Adjusted accretive. saw was our our continues from the these begin $XXX to positive Offsetting be group.

spectrum into Time capitalized our we headwinds those included included those in all from expect mobility throughout a our as expense interest the in non-cash guidance. Warner Adjusted put and impact we’ve to continue to acquisition additional and interest We lower year higher the earnings the business. of service continue

plan basis entirely Time up pro legacy wireless were and ongoing EG's full-year and revenues impact $XXX look were improvement us gains significant forma little our reflects in adjustment to for showed to down of the Without Consolidated we a were target interest EBITDA $X.XX exchange up lower and revenues pension points of product approximately quarter, WarnerMedia $XXX $XX.X lighter operating were in of revenues, equipment puts had consolidated and growth also mobility on our due and in mostly of strong the Entertainment as up. EG. assumptions. revenues million income about Warner. you plant or distributions adjusted the XXX margins our for impact the to or based foreign expected and sales on impact broadband acquisition a service bit mark-to-market as During shape Operating The meet be billion, returns in our equipment by U.S in a WarnerMedia Thanks When growth we The a impacts, those pressure. revenues. mobility coming XX%. first offset exchange the quarter solid foreign our came EBITDA our though slightly asset year. basis, XX.X% with to solid million well at group. significantly even exceeded rate lower of at

also be continued to flows impressive. cash Our

flow up and growth. Slide cash strong obviously an mostly XX%, those was at billion. reflecting flow operations look impact. from free our cash WarnerMedia. $X.X WarnerMedia saw made from Let's Cash was addition in operations X. Free of Both operations The cash

in a billion cash our XXXX lift overcome in from refund range securitization taxes, months, meeting of passage cash a $X at exceeding you got or with more look million have flow over well received our reform. a pressure the When year last past XX our billion. helped income And free WarnerMedia Time in full-year for $XX confidence This where to December guidance. the $XX program. of tax the are our to first $XXX we from from to example, of than adding we efforts flow For quarter significant Warner, billion we

about was quarter, another in flow cash free of XX% the payout dividend Our healthy amount. first

We to invest levels. at also continue high

was arrangements. from CapEx billion and include you $X.X of $XXX billion vendor when capital was total reporting financing Our $X investment right payments at million

put We been you which payment in from with We several of vendor to us financing suppliers, won't the allow during see in capital activity. favorable the CapEx million had to in quarter included $XXX for receiving of And be aren't our equipment our that assets the quarter. pay we new at first number spending. have terms more our because investment and have that service these efficient

billion declined cash payments not under our more a made later, into activities. leverage flow investing obligations the little $X.X financing but the get are in debt about a reminder, activities, will statement solid financing our as quarter. I detail our classified As in net vendor

to In post years And billion cash return most than agreements foreign cash posted arrangements. more financing which quarter, expect The these with vendor for the much our payments. addition was our additional our during currency many net don't us of in the support offsetting of $X the allows collateral strong lenders, to reclaim amended of us, collateral result our in fully free collateral to we hedges. to we flow five

in get fact, the or $XXX return In quarter. collateral expect we to to million second another in more us

margins operating Slide and service postpaid turned at X. phone another results, and communications with our prepaid growth, solid with on quarter solid growth. Mobility revenue segment in Let's now starting look

good Our off start Group and EBITDA stabilizing to year. Entertainment a the got for

In cost the quarter, fact, at X% broadband we revenues thanks tight to growing grew more X% and nearly controls. in than

headwinds lower broadband you slightly and upgrades. fact, legacy margins exceeded And change XX to In the accounting up basis were exclude to smartphone EBITDA. in from continues up transition growth even margin with a revenues Communication points were be wireline quarter. revenue our Business low declines our by legacy business when fewer and services. revenues then equipment impacted the lower the

and amortization compare year-over-year and a higher wholesale but a we billion had tough of we for posted had quarter. this EBITDA quarter first year the still business The deferral default, customer $X.X

X. at a Now results our mobility deeper look let's on take Slide

postpaid even revenues of growth improvement to $XXX consecutive customer rate and prepaid postpaid the compared nearly and in FirstNet to and prepaid, We even by get revenue Solid be grew by a to Service growth. headwinds X% $XXX grew In or as XX,XXX year-ago revenues gain wireless a the drove significant tailwind quarter, net in our quarter phone had our X.X% XX,XXX by upgrade gains service continued adds grew growth. million adds, about to revenue in phone with subscriber phones. accounting lowest in we and XXth EBITDA net quarter equipment history. of non-cash million a

and XX prepaid. brand our here its strategic XXXX million than customers of the the less Prepaid more growth AT&T. with mentioned achievements, revenue generated than as Cricket umbrella already focusing I basis was network year-over-year. we solid, that FirstNet growth point to prepaid on more We more customers ever new many and than points rate subscribers, subscriber lowest new company well, X%, but than have XX now shifting fewer when had million churn quarterly in continue to flagship migrations. prepaid is will double also Cricket We the more of we had total strong high-value under XX market. AT&T up in acquired what Randall of than percentage our more to customers is out It the X%. down be

chart our at by Slide that $XXX is XXX Entertainment contribution. a our on drove meet operating will grew target And stabilizing Group to margins the EBITDA saw more few things expanded EBITDA that we’re shows. year EG trend and or as The last we A by results look confident, Let's than points improvement. XX.X%, X. and full-year. Group million in the Entertainment headline we EBITDA basis reversing of now for growing exceed

expense good Also expense operational we spending. $XX the control and cost First a moderation advertising settlement about a lower cost renewals was both that dispute of first prior million. carriage some promotional help recent quarter year content by such as from had on and one-time

event, had we of So one-time even without that growth over X%.

the revenues increased ARPU grow. and customers, service top market as at continue on offerings. focused to promotions Third, higher our video we for to our move Advertising value pricing reduce also both premium over

have was up declined on promotion time still XXX,XXX premium the quarter. more Our year-over-year. and X.X DIRECTV first more about The lock through left premium of price by and X-year number ARPU grew in for rest the up in than $XX than for TV year. the X% pricing five ARPU the NOW customers quarters, We work those of customers a that on million about we

fourth net Changes adds moves as focus adds Secular on subscribers. packaging to results Our top DIRECTV on is NOW video customers. pricing well, long-term stability growth. stabilize contributed -- both grew broadband the impacted ARPU revenues more and pricing in did but value by and and was us fewer seen and year, declines we've and in to Broadband significantly past gross helping the the over EBITDA improvement XXX,XXX made, in grow quarter. fewer and and continued less than X% We’ve for than EBITDA. video the

of quarter IP the we the than broadband expect but customer bringing passed in million rates now the that more as XX X and customers gained nearly in saw in to fiber. somewhat more fiber million We quarter, up last locations second growth continue, lap AT&T We more step we than total XXX,XXX to we service moderate the with ARPU year.

For the customers. XX,XXX we added quarter, broadband

in cost receive end as higher back customers. they well last billed billing a customers. Customers and TV the we the of change, the policies when about for and XX,XXX process month customer video gave win which and full quarter, This in of with for premium industry. of the generated broadband. -- at broadband the the were as rest for to consistent because revenues in the time updated and Customers in subscribers of stay content is they premium period this mobility our additional are now additional XXX,XXX are when service the During us service, month and us service our

net tremendous We the in will team. a quarter expect EBITDA add Achieving we saw our growth the in first Group video first challenges accomplishment the Entertainment continue. was quarter for

to continue our confidence have or We will that exceed full-year. the we for meet EBITDA target

year. move all nearly double-digit HBO Bros and related over and Aquaman. Theatrical had increased once and accretive with be HBO's to Television growth initial earnings costs. XX. Warner and Let's income carriage operating mainly XX% which strong revenues first in income free primarily one to to exceed the to carry growth continues our both operating to operating start WarnerMedia but primarily continues with showed lower a WarnerMedia's due up revenues to revenues grew revenue results, quarter distributors, for flow. than three growth again income due gains quarter. programming to Slide more expectations still X%. are on from was to increased higher realized and WarnerMedia Revenue our nearly revenue a due cash units, by up the dispute revenues. was declined telecast to X%

increase to quality investment in We continue high content.

timing continue expense. from by of and offset growth were shift rate. releases costs games. domestic some amortization But to every programming primarily to due primarily higher subscription NCAA content Turner to was revenue of revenue lower the the However, revenues Final declined year grow. down other ad revenues this affiliate the Thanks declines, Four slightly,

the income ad virtually Turner's With the up Final X%. million revenue. turned WarnerMedia for Thrones interest was year and in our Four years the participation of difference people not the as CBS a that. in is Four the quarter explains share last underway as difference, records. operating XX all than our and breaking More reported reported that, set of in That first have people games, reported premiere season which year watched we and broadcast ad million with solid that We year than date revenue. is This XX final more all are season ad the episode. to the Final revenues. in Game CBS viewership games for

added than numbers we X the Thrones accounts. history. of up in In fact, other subscribers customer show in Now in up Those week Season the to more premiere second the the Game of any quarter leading will in services week HBO

and the playoffs are successful this Madness, well steam full Shazam! at We domestic airing earlier month doing Warner going of the also NBA the had TNT. March Bros. another open and on both is international next released. box Joker, the be of year, the a and X Godzilla office. And we to just movie. movies our Chapter later slated name this have to It, few great

Revenues in driven with we let's Latin were and three continued as to Slide ramping up continues at quarter first last business be growth strongest the such much and and this execute in very to the days look years. the Xandr XX. our be margins in than growing AppNexus, EBITDA including continue Xandr, results XX%, election strong America for event Growth rate advertising tend and but our more Now expand. developing on early year. in it throughout Still growth platforms. days to seasonal invest

of with blending help content of We’ve a recent relevant we’re targeted our help our excited integrating and result the advertising data Viacom as to We distribution distributors, optimize negotiations, most These is marketplace about are across and Xandr progress, Turner importantly, content opportunities. advantage inventory. times joint providers content of Xandr AT&T. of our potential can premium working will that. helping take the agreements with making so be discussed also customers. Xandr many now all and benefits

primarily quarter. challenges. handset and revenues we saw exchange growth, excluding in grown economy revenue year-over-year, offset .X% currency Latin America, to a the continue foreign were deal with Latin sales But basis America Total and comparable Venezuela, would and revenues by EBITDA on service local In Mexico, we which on a have lower to to pressures. was due Turning those basis. down constant solid

$XX have still making million in EBITDA our are on for Mexico. We achieve progress to more profitability plans good improvement, We year-over-year. improved goal by

third-party are the year. the double operating sight Coming to of in half of of line We subscriber for count income a maintain in base improving to and Mexico from our adjusted breakeven sunset of reflect the and XG distributors we certain second into EBITDA the services. XXXX, impact

changes improve focusing We targeted higher includes customers, quality dealer and commission adjustments grow the improves the higher subsidies with continue value pressure these value volume continue to of Each of take structures, our customers, profitability. our on but reduction our of and subscriber This sales operational steps long-term on to in XX value increases. on base we Even million to price our nearly comparisons. puts of to focus the business, subscribers.

quality, as our we focus net continued on see improves. growth Given expect to add churn

but flat revenues were Foreign exchange significantly Vrio sequentially. [ph],

remain year-over-year constant the of year you customers. The group adds look for we adjusted revenues beginning the but be base business total nonpaying up from the the identified positive stable off currency, was and If and continues year-ago. at subscriber flow. to down, of generate a base results prior Vrio in a were were profitable and cash shut our after year, net customer

that's before get let to give questions, Slide you Now an deleveraging, me on update we XX. on your

EBITDA asset really this off year management net good our by to cash flow, of X.Xx we As start. free the a range to and is you sales end get through know, to overall debt cash goal the to are and

down the First, help in debt. generate quarter quarter Remember, net free to the cash after our We about initiatives collateral free flow. our billion working first this reduce toughest is flow, free expect use usually dividends and first us it to the capital billion $XX quarter. expect $X.X agreement and our year cash cash pay still by to flow for debt

us of billion, X.Xx in of announced. our This billion on was $X.X our to sale end XX by sale range asset the put puts includes our $X.X of the target. pending on to position Second, target for our which us we’ve the solid our interest just year. closed and Hulu leverage of the monetization way asset meet which it Yards, sales April in interest And that in well significant Hudson the

continue teams focused questions. we the We are job have expect that, that The a so superb sharply to ready to through this of with done this. year. Mike, some on take rest far and we're

Michael Viola

John. with start please. and we our Thanks, Q&A Greg, will Okay. will question we the take first

Operator

comes of Instructions] from the first UBS. John line question Your Hodulik Please [Operator ahead. you. from go Thank

John Hodulik

Okay, great. couple Maybe EG. Thanks, guys. a on of questions

First, to the John, trends growth, on and the a versus than the was believe we led bit year. the the see as we price maybe actually for progressed adjusted X% year given were improving EBITDA growth thought, quite better changes that would you first later

sense? in of the change would could system losses losses. how should with you sub traditional the the didn’t I said Thrones of what’s adjustment. understand drilling really of So, But given -- given some we on to HBO. work it on as sub through guess, get we how make I of cadence know traditional for And you then, side, we Game these think increases there. upside, on some some but XXX this maybe going price we’re to guidance, NOW moderate be going that $XXX,XXX quarter, is the using down continue there the

said Randall, in million during that to you challenges. remarks half. is going cadence of all, of the the we guys on quarter the What of those think your improve how should John, what’s forward? in going the this XXX that? at see forward? look of line that to base Just churn? And X.X of cadence Thanks. things to said as promo, be the coming losses that? you'd using off still we you remarks, First expect still that your way the is and And adding Should would then second And the

John Stephens

Yes.

let John, So, try me this.

maybe of what kind clear. clear I up don’t make Randall Let

First, was -- to on mentioned, EBITDA have one-time growth. about million. but We the adjustment did $XX $XXX really close million, EBITDA, it great growth was was as we

it only small So, part a was it. of

good. was goal to that -- What that pleased we’re confidence our growth, stability. of and it meet really and So we're have going

that I going we said our guidance, it's with we're our but of out. not just not that being raising repeated, are are Randall as line clear so only and representations careful exceed sight We meet on to but target,

John Hodulik

it. Got

John Stephens

after and to balance value We out, suggest measure that will growth. really are leaving can where draw ourselves we’re but customers, costs, we I feel on that about to I are you but wouldn't continue a on go high track. continue good so straight to EBITDA flexibility, things we clearly and you line

my good answer. feel about best make very to that’s attempt a So, direct We it.

continue expect to our understand would you We meet going this stage, happen. we'll to we're At think it, that guidance. exceed why to let I

understand out XXX to [ph], continually the going out an respects. change always on is that understanding the the I it I billing -- there. the right in that's but guidance number. the it’s think today pointed remember just are we is and item as that with gets refreshed stick regard it with as outperforming We our many we're a the With of to sub losses,

not In it second quarter, quarter. a adjustment loss an just each refreshes So it's or each the quarter itself.

So, just on timing the it's of a item one-time kind basis.

basis price an in Secondly, on January. we annual increases did

price about price X-year some by that we had And affected. So lock. linear. customers the affected got All increase, the the XXX,XXX impacted customers that

we per we annual year, have another through won't se. the price increase go As

get as the of get the we million less the see rest of through through year locks, beginning just won't less will accounts down about the we price million So then, And now the process. on because that impact that that to from necessarily those have there and be a we'll impact X.X we light. customer secondly, X.X get -- on at in as through those,

X-year That's lot that this, that see second the November, expect anniversary a of but in activity the continue the quarter the X-year of the sense to last of through want we'll first the increase quarter. going as the lock. process and which rest by to time the customers would the you XXX,XXX the hitting offer largest on We is the well price annual price what year through add? difference between in group Randall, we the an as had of

Randall Stephenson

seen and subscriber the we’ve the effect in streaming and the NOW, quarter DIRECTV the on fourth product, losses, we’ve particularly said that put first quarter. price on our the Yes, that I’ve of increases

you'll actually the of Second and that seeing in NOW. and on based half see DIRECTV decent should of and the have terms new we product, second a market moderate, on half year I in we're the platform the uptake the believe second on year quarter, of what new

this allows us premium at It of churning. important? half see losses get I the is high product is of satellite see client, the broadband. look launching What end point. it's be as DIRECTV, terms don't end you that through we of the our the think year so why should at to On you It's but at the you this lower market DIRECTV we thin low and ARPUs is to churn, second not will where which disproportionally said continue that expect And people a traditional move replacement in year, we price into have are the interesting. the When product. at

we market And of product the to to particularly a appeal to XXXX, so point this really this is client And low we thin start think terms better video meet should opportunity pricing. as that good in an expectations going get this moderate a and of down for losses. their people us into gives end subscriber with price have

John Hodulik

guys. Thanks, Okay.

Michael Viola

take will next Greg, please. the question we

Operator

of America. Your the Bank line comes from Barden David go ahead. next question of from Please

David Barden

Randall, mean being of of lower-than-expected launch DTC DTC a expected weeks would on market. kind and guess, platform kind could at Stankey, think you Hey, opportunities good product vulnerable guess, came a and announce for A at about that little guys. losses looking of a flowing strong losses. topic, of size on. could pricing, about if business. maybe dissect or inside sale I little I picture stage about so could bigger related a see for questions. the Disney of the launch Thanks to kind about what statement? how question similar I couple people with kind Numbers Hulu earnings you yourself And jumped and for with if less a be respect And we of you to guess ago were this see the financials strategy, XX% talk because than at that, that kind anything John the a saw he's bit approach Disney kind guys this that their if helpful if and market you announcement about to or bigger wondering a of think much. of the taking the My react Netflix the to kind And address come Disney. into you is to of might us. guys was you will down stock incubated AT&T? what if the Thanks you bit through standalone you'll how that from as announcement a could what first is the

Randall Stephenson

David, this Randall. and is On less losses capital fewer requirements. Hulu,

in cash away, longer goals it, so we're but received no So and obviously. go $X.X -- in billion we capital the and

terms pulling that of bring in about appreciation by they an is original content be customers, will just Disney back market it the launch, library around a what content, reaction I viable be have good yes of to So people product, look was I was that of think new content the what to content, in number was and direct-to-consumer would in on what did I I impressed is Disney market able also and and the world. a licensing strong U.S., would -- indication an this deep appeal and thought original the for broad Disney brand the market but talking gave did. at that not that the

standpoint, From that instructive standpoint. in September, to premium thought the able of brand. bear. HBO I about to own what from be bringing be But will so about opinion in content, think terms very your And it you'd October formulate was our

And at the we're this the content, like, and producing original creation original really as for content and that to Warner of pricing that capabilities details new productions. forth. we out for believe you product, Bros., are we content, generation that we and will what breadth terms will new uptake. of lay of what that we of expectations including as scale quite optimistic impressive terms library of of have consider breadth a content, is magnitude customer creation and of depth library, TV actually Bros. the can our machine of market both bring terms Warner in think looks so have significant something depth well we those In in content, machine an theatrical And which from

more work into just of be gave think to all terms and to hands that announcement ready Disney We and is optimistic what we fully very tell a done. working but we are yet. able There's of this Greenblatt bring disclose to market. in will I his Bob not being optimism lot us But the will getting at we're aggressively. nothing, you very,

David Barden

Randall. Thanks,

Randall Stephenson

David. you, Thank

Michael Viola

Okay. next Greg, we the question. will Thanks. take

Operator

from Your comes the Simon next Please of ahead. Stanley. from question go Morgan Flannery line

Simon Flannery

Great. much. just year, you to the turn and higher bit despite around be the wireless wireless. you I for performance could the turning continuing to ads good if rest on revenues the service very little outlook update you Thank wonder another the us of year-over-year. Perhaps a churn on could

should you’re seen the We to us to going XG that, year-end? improvements advantage take how So talk color of rollout? lot the really during on network haven't site. a shape through market that the commercial how on and updated the Any

do see plans of chipsets more and in pricing X when out? gigahertz Thanks. that opportunities forth? come So when Is of terms kind the sub so we

John Stephens

Sure, Simon.

quarter I I in first some me great it saw X%, at up. almost back will me guidance, take -- service outlook But revenue when the out be new run had a point ask and revenues. on quarter. growth. and service a first last positive. the by revenue Randall continued to stand X.X% expect is wireless that second our growth we Let We

of will So tough to the year I little a just but because in tough Because the growth. phone little had time we first do I first has grow? positive expect prepaid years we one. why was and to that's five postpaid our the that’s quarter we then expect It This customer growth year, phone compares it. quarter get solid grow third still we’ve think, how in, last more bit compares, a Two, next tougher second the adds. little in and net growth expect quarter do

close or in In changer having the the really XXX,XXX to think a it's the number I great first that adds marketplace. game so us impact we’re voice shows quarter. for and in probably total,

going good that will we and that give opportunity momentum forward. about I of you a the coming So feel sidebar. out

in quarters, as I losses should Our been were they’ve reseller me. in say, small excuse years the --

it's showing that hallways walking even Mike forth. before presentations multiple speeds from So and emails We that the heard impact item. a we that test an revenue know that’s our do From service awards presentations Randall -- down getting. get mentioned we're revenue on the that so investors network I the working. and improvements perspective, Anybody's and

to take will understood. So impacting optimistic benefits gain impact ability so it's I year. we're real customers. it people, while get to convince It's our while the we mean, It's takes going that having to a the to fully story make is we believe see sure a and -- later that that in that retain a we

We of for out quarter. are the first the at end our build FirstNet of XX% of as network

-- get you, as clearly We expect done. we FirstNet authority. And billing to the the milestone next milestone expect that reimburse that’s because told with quarter first get to of to we’ve the payment going by to XX% end third reimburse and

expect we do to that. Now

all but pressure, working doing that. Team that a job some plans We will we still use it's operational expense of at once XG it's XX were that caused spectrum working quality are in have great the a of is Putting in interest gigahertz millimeter maybe to couple you, the at markets into schedule. using well and XX network. get today tell wave. hundred. I ahead

will, you million by end hundred XXX POPS end network. year over a XG of if have, of network evolution our million covered have our the next of couple a this on year, on we will XG coverage We but

we will, revenue until Whether really XG, expect after, leading working progress are a but the optimistic, earlier, medical see whole of quite centers, campuses year the one and we it's for in We it's customers, -- we're of in of big we the a come company -- automated, -- that revenue are are if for So it's seeing our size, well. next But to netting perspective year year host with a we're that. it in XXXX in plans going you but good revenue impacts next very over XG from hospital, number still doing we'll as don’t for factories, on things. we or core whether into lots we're timeframe. a growing our those our the of mentioned

Randall Stephenson

area we’ve where that our about else. And investing piece network anywhere add I just business than is -- a this within take piece. billions. more I coming, been has Simon, wireless the would The I the would probably time long this quality been is satisfaction

as stay just XG that The promotions virtue of the customers implemented. it the and quality and having is out it, billions come delivery to would As there video value doing we you portfolio, proposition exactly of on out of speed you but to network. bringing for having to all try of new organically on and to get that the begin up it we and of The not is exactly one evolution doing and have dollars proposition and going spectrum know, forth, pricing that FirstNet is strategy It going across aggressive up country tens of put invested not building we're this MIMO so by the we're the up having spectrum in have. changing we’ve the have effect the is we and of hate our is turning and so FirstNet all the the product to impact value lot we're and and opportunity we that is hoped wanted happening now customers. turning spectrum technology turn competitors a to it that on our and and

step a tag speeds effect they having depending this exactly XXX XX, check are. see change a on speed customers in difference Our its product XX, and XXX, where the go that hoped. truly we do is seeing that meg they’re And and It capability. had they

this am is accomplishment and But about good look us. I’m that for areas really right one important Group And well. we’re at pleased growing say and Entertainment the I would area feeling and actually that that this all is number be I really pleased now with the really, as getting second most with. the Obviously, EBITDA an so stabilized

Simon Flannery

you. Thank Great.

Michael Viola

Thanks, Simon. Greg, question. next ready for the

Operator

Please ahead. Your of comes JPMorgan. Philip go Cusick the from next question line from

Philip Cusick

guys. Hey, Thanks.

Randall Stephenson

Hi, Phil.

Philip Cusick

for Can a expand the -- on first with us and the exclusivity quantify subline? dig video into relationship what particular and you ticket? the second, your And is two of follow-up you. Can on the Thank growth you then, FirstNet follow-ups. help NFL, Can the you side. doing wireless on Sunday

Randall Stephenson

heard And only Sure. you we’ve of Wireless terms completed of the hit XX% lot to we're where a the network, -- are there subscribers to with with the very attractive community. FirstNet even network for more threshold the nation on And is FirstNet having finding build. of articulated those XXX,XXX on a John we now that just growth, migrations more success what and We we put not some are network. they’re our new families. and coming out their in offers

on so FirstNet John to comes latest the is we’re network, think that And number subscriber … the I getting every two

John Stephens

Yes.

Randall Stephenson

members … it. with family

being The driver network quality is being a this driving so, a it. and of FirstNet And impact on the inconsequential gains. subscriber main best not

enthused to about going are want when continue number be it to we important the we we is bid very a -- for be and FirstNet to won for than deal. a come So to element of years and strategic us more

In the we're think as NFL, I exclusivity forward allowed much, terms discuss go to the not DIRECTV. but should of remain we on

network DIRECTV. Sunday NFL limited network. the that was we're in carrying ticket on to the NFL but taken look, on we're invested on news saw U-verse just the And DIRECTV, heavily down our probably You

And so so to Sunday the make just ticket. allowed all the have tend can our watch it When on the And that NFL the over network, customers it's affinity Thursday was Draft we to NFL network so DIRECTV. to games a you to the high our and not at It product carry that. we overall carrying on customers that you games the ABC, attached the them to the there's watch NFL or some didn’t the NFL costs carry and can have stuff consider Draft, Fox, continue for was when NFL sense a look night on NFL, network they on really U-verse there.

to DIRECTV. centric the through and So customers really it some NFL our save a will cost content NFL are access move other customer, we we to will give them will they If mediums.

Philip Cusick

you. point about you one cost And bending content Got curve talked Thank DIRECTV. on it. the had at

Viacom. sort looking you here? it coming might linear be of You that at we curve, from should that something think bend there re-signed Is or

Randall Stephenson

are nondisclosures but content have And are we’ve coming good cost few Entertainment reflecting the curve margins generally is all the negotiated on that So what I last in tell that. the you feel we content about we -- deals been or where months these the we’ve Group over and deals, on would are that we I benders. think

So his and make curve. on various with line, sure controlling platforms am content progress getting I bottom satisfied the them the are making the and team are re-crafted up and Donovan them of our can to deals cost that all coming John we to distribute

John Stephens

more them have that’s advertising than at Remember Phil, all. ability we not content as work minutes distributors distributor The do. with -- to the the on

our is our then content There offer dollars, advertising -- and we growth, So that solution advertising there with can different to we Xandr's a resources is our guys. increase you’ve can and a like ARPUs to the seen that not use and And and do we excited situation both the really revenues advertising for have are cost, content where still them, the to the us frankly, about but can quite Viacom. they of as revenues customers. gain if the benefit

just things at we're said Viacom like we on working As Xandr with that.

that distributors, advertisers. here are mutually content and parties, to three the all be of So the the the those providers solutions beneficial,

solutions work of doing but lot team here everybody. there we believe are is a a for makes that and sense doing we’re great it's the that job, So,

Michael Viola

Thanks, next the take question, we Greg, please. will Phil.

Operator

comes question from Feldman Sachs. line Your Please the Goldman of Brett go next from ahead.

Brett Feldman

Thanks for taking question. the

that could example, been slide your bit makes sense at other us what into any gradual success out? that fiber the insight little with Thank of performance give broadband show then you've mix can really customers. the For if you there's products, will what that On How build new was had I you’ve been give extent is driving which in from do as the trending fiber fiber network. winning the of maybe to fiber a insight more the net hoping building shifting we see that? you And adds, just you be what’s helpful. us to see bundling that that that you improvement where has upgrades you out your into can some because complete you.

John Stephens

Yes.

So, appreciate is in me Group look is question. the this a a up, prior Broadband at in really let broadband you I take total, shot really at you margins dovetail our a this driver. Brett, -- Entertainment I because bringing grower. for it. should And When

growth voice the revenue. broadband you exceeded headwinds If other from my the the this challenges, equipment remember local faced year-over-year we quarter of comments, the

broadband's So put that's actually that. growth there, you exceeded -- when broadband

margin specifically improvement throughout just is -- continue see Group. third broadband, Two, like the to And see second the is at broadband growth. revenue wireless it growth and fiber more well. still year, is derivative in Entertainment ARPU That's we challenging itself it compares a quarters, to we growth on doing helping will So one. drive some get EBITDA revenue and expect little bit but we and -- still

you're requirements have least add finish a that X good put So pretty about million X.X will at and XX% matter continue quarter, right out consistent adding million available the we’ve We’ve or been FCC off July. a we feel of there. fiber continue in capacity immediately we've how utilize and much we out that. XX% the we to because to Yes, kept no really about more we of that, capacity that from

further then that to market. We will start penetrate

So be grow able we like feel will to it. we

bundling continue space. in areas pretty think as where opportunity a keeping see fiber in well. We is add rate going XX% up market It penetration take participate when about much the give we to together and broadband as is fiber the to good you it us the at share an to the continues If a wireless, have had. timeframe, video, you we’ve the

and But share, continue we we see stages past attract to get said we to see in in to migrations once more initial early as of able again, forward. we that stage, we’ve going the on take You to and passed continue will are the which right, existing customers. get that be

continue that million competitors maybe total. the we'd market locations there to we very So million or our up expect get customers. range we timeframe to I share around with by under FCC and requirement. just customer to give that as XX will or the of end said, XX million move But us will kind see in par of get July fulfill a that with expect That being June to take into penetration on more that quickly from share convert and XX% XX our and to

add Let or anything me if want stop that Randall, there's you and I at to forgot? anything see

Randall Stephenson

powerful. of all XX% beyond in this premium is I us well. a areas Group to that and we the to exciting we we of get of you, are turn candid this No, and in element heavily EBITDA business keeping to I’m product, important XXXX where XX% penetration, really, covered we value probably as more the services completed. seeing fiber, the This of that's investment actually we And Entertainment you achievable. were and this And churn and the continue And really mobile fiber, effect whenever invested fruits of of now going year the with we terms and love drop. have Customers one almost the services the is and a in it build where telling and so be go as a think up AT&T really you getting of we terms it comes get rates be is rest we neighborhood To mechanical. just product a hopefully into XX% will get go fast think through stable. video can XX% of is eminently the

Brett Feldman

Thank you.

Randall Stephenson

Thanks, Brett.

Operator

from question of Guggenheim from go the line Please Partners. comes Mike next ahead. Your McCormick

Michael McCormick

adds? the comment broadband pricing going the appetite on should Thanks. laughing you on that side, year-ago.? XXXX on be offers. going for side, And Thanks. margin we about promotional today Maybe grew a basis the -- the the -- guys. and on sort business. broadband then, you active like just a guys aggressive through think impact, spot how a that trade-off know change, buy sense say Hi, fairly you get how versus, the XQ should -- one forward activity secondly could net to FirstNet I we you’re Clearly allocation quick phone about think wireless the revenue between in one is give of allocation a us broadband a positive It sounds having are but in

John Stephens

first me take one. Let the

are the and our On perception really of revenues remember the mobility BOGOs forth, down. margins so and equipment

So may the in but on it BOGO -- this effect so me our upon let have on any promotions how of way. say stuff, depending done an that are

$XXX from rec $XXX making If $XXX Effectively, of or adjustments. you look then the about so million rec line and bottom almost million revenue, commission million, of that accounting our results say $XXX accounting up noncash $XXX $XXX you rev and at and about rev to and service the service I about million, EBITDA $XXX it $XXX of had million amortization in our -- revenues million -- forth our was were And say that million. and million, million. you fell $XXX about

and controlling advertising promotional prudent it really perspective, be at effective from being expense. So that with controlling cost, won't promos,

I very thoughtful count So you -- was leave with -- want value and I a are impression about do the ability of good customers. believe of I focused to feel we question, this quality on process really our the the I to customer somehow we understand and your And net mean, don't successful. that. that but adds we

our with new and you points would in we there stores. stores of out making further up that line it coverage, line. stores we're places that quite that opposed experience distribution and the of sometimes that's in the we're quality the the as market tell where investment part and But expense the our value opportunity we’re before. frankly expanding more geographic But in So I of provides CapEx shows have FirstNet, opening the putting

feel footprint, based based will, good that the you first geographic this of quarter results, on solid solid on distribution based going all if So and very forward. on FirstNet, footprint we really very, wireless expanded, about

Randall Stephenson

just John point the That’s made.

having distribution distribution these deploy, of one communities a out and taking success rural market we're rural we As communities new option number have up to set communities, we're years. smaller share. these FirstNet move in tend build of as last that had And these into we and the as we for into turning communities, be new lot the up

So that’s just another FirstNet side benefit of the build.

John Stephens

of bucks out that got the to at the with year-over-year quarter you over the quarter quarter this it published it's I think regard X% next you quarter growth. on being With ARPU, jump about just there about refer we ARPUs, broadband quarter XX regard to to -- see to the if second I side, IP kind XX last will -- year. next to compare from broadband But we you first little

fiber project. tell we It's at about. not we’re we to all like the the trying put really good sensitivity all that's about about We feel in it you so the a do success service. And as of and more feel get of

for they those a will and fair pay We be will to price -- want opportunity higher-speed, to higher-speeds. our have willing customers the

about optimistic it. So we are

being just numerical are We perspective. careful a comparison from

wireless those look the year, sure If we up broadband second last a on the on compare at step ARPU you make is first saw numbers, and in right. want to to quarter just both quarter and you

Michael McCormick

Very and good. in price the against you your top video this And lot how price does can a customer? set that for up over comment, Randall, just How sort do now of of elasticity board you across and DIRECTV landscape seeing maybe we’re view the streaming increases products.

Randall Stephenson

I there Yes, at. Mike, the rationalizing our the whole in on the out that seen place look pricing now and content the fourth we a have of other product where we a streaming OTT you've most made follow. And OTT product product, we're for players our And quarter. to move all getting think lineup

and a get pricing. this to we you're advertising had highly think segment level. This if It So, that seeing product can This a revenues sustainable is market, the okay, the by market because you a place can is the linear price-sensitive. where them. sustainable of large left was probably get we is of as

you in saw a people you early and in who there. you get was now market. new but saw had to the out And of some left the pricing. the as we're significant equation platform it market on but we're new and fallout, getting seeing a very so came in out end It at move right, the $XX profit terms pricing this price with on we begin uptake new largely the product, came as we’re the And I point $XX try and platform, of uptake think March, the good to

on base. increases to I with new price seeing new may see during subscribers, second you of be point on uptake giving continue price a we confidence. OTT experience the is As negative of to said the product quarter, But what still product in the as we're us terms the the

of the growth. to decent ought the to So thing half do we get this year, second

And so actually it mistake Mike. no optimistic, price-sensitive is we're very Make about but product, a it.

Michael Viola

Mike. Greg, Thanks, we will question. last take one

Operator

Please Okay. of from ahead. That the Michael from go Rollins line Citi. question comes

Michael Rollins

and Thanks I could. morning. good Two, if Hi.

described the you opportunity the higher fiber segment customers customers how quickly of for fixed to you as the higher-speed upgrade DSL and charge growth packages. get -- thinking made a of higher multiyear need model want you broadband your ARPU the and there. relative full to performance you in as fiber-to-the-node, XGE full then subscribers you Do And and when implied how to decline what you secondly, pricing are about rate, the fiber in homes see full ultimately capability bit get to portion change the XG? bit especially look are at then, wireless with introduce eventually and up as of the higher prices buying the you First,

Randall Stephenson

Yes.

the fixed something will as doesn’t regime be pricing line. pricing surprised. move On the and I Mike, into regime very like the piece, wireless, look XG you in wireless If we see

speed, there If offer some meg you willing premium are are XXX to and forth. a so to can a for gig customers a speed pay that gig

expect I case. to the So be that

from a tends away years two Right are that be three terms of we're in play from now or seeing standpoint, seeing business. adoption We what out. XG to

turn we're service the Its for product becomes router land want LAN business saying, replacement. demand XG a businesses as really replacement impressive and exclusively basically to it's it now. where fact a we us up right their put and having In we serving from in,

really LAN now laptops as to truly it or it begin tablets a so modems which about whether happen this replacement. And that them, become then and starting the will equipment, within you does pick or year, XG next year up that over that think be have handsets

that don't You router stage. even the need at

more environment, that move for XG the price be idea there is so, will just into to going that be there environment. line as more fixed a and differentiation in customers And that for a demand business we speed pay like speed you expect

as fiber have last of X most you aggressive have fiber deployment X, terms know, In program in over probably upgrades, United we the States. the years plus the

And in putting so been going fiber rate really hot out. we've at a

deploy As I McCormick's question, a It adoption this doesn't out the what take is was mechanical. science mentioned deployment share of Mike I rocket customer think as to to on fiber. earlier, you looks it in terms and taking market upgrades fairly fiber figure like

first for fiber pushed capillary or going for it's business going network. you’re continue. our the that so new deployment years. the builds, this last not next you’re see And off same see I and continue as deployment it's just locations fiber of and between to this natural to we're of four, demand to pace going And fiber go on desire been preference continue phase into X while see of a fiber, to going fiber over and at kind our seeing but just FirstNet finish going to be And you’ve X stopping. don't to And XG

XXXX move opportunity for as our So grow to the I see XXXX. Mike. questions, we continuing Thanks fiber through just

Michael Rollins

you. Thank

Michael Viola

would is basically Okay. quarter to punchline we reduction joining is everybody then guidance. track. Debt again Day we And at appreciate Analyst this have I do once on January our us. Well, the right listen, you exactly and again, we what done told

right monetizations Asset asset are track. sales on and

Entertainment and as actually schedule schedule ahead of ahead actually Group on is well. of is forecast flow cash and track free Our

tuned. stay So

and to We will appreciate you details to Thank you. WarnerMedia Day be to come look again. timeframe. you getting terms in our talking October time in forward more September, your of And I to

John Stephens

Thanks.

Operator

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

now You may disconnect.

AT&T (T) 24 Apr 192019 Q1 Earnings call transcript