T - Earnings call transcript Q2 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the AT&T Second Quarter 2019 Earnings Call. At this time, all participant phone lines are in a listen-only mode. Later, there will be an opportunity for your questions. [Operator Instructions] Just as a brief reminder, today’s conference is being recorded.

like the now your over would Mr. host, I to conference turn to And Vice Investor President Senior Viola, Michael of Relations. Please go ahead.

Michael Viola

Thank we I’m of everyone, quarter And and you, and welcome AT&T’s Randall the on to morning, and call Chairman and will our will joining today results. me conference of our update Mike and Stephens, Relations John an operating Investor call. with up AT&T’s CEO; that Head Viola, our XXXX follow for AT&T. Stephenson, good Chief John initiatives, a provide And cover Financial then, is Officer. Rand second session. will key Q&A

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

subject materially risks may on to is available results uncertainties, and Investor information they’re Relations differ the and As website. additional such,

we’re to questions quiet Auction so we that I can’t FCC also for you today. Spectrum any in want the that XXX, the address remind period about

are afternoon Investor earnings investor always, on that schedules, at Day we’ve X-K, our it scheduled news to item I California. over Bros. Relations AT&T Burbank, XX the the our turn etcetera. available in website, associated before As for page briefing, one release, of of Randall, more October includes our materials And Warner WarnerMedia the Studios

come, more on will and discuss go but HBO details the details more ahead will your Max, We new streaming and service, mark calendars.

the to over like so, Randall turn call with I’d that, And to Stephenson.

Randall Stephenson

see close X. is with for leveraging XXXX, down which debt the on Good commitments made of is you are each second net last we new and the can we’re our Since Mike. quarter the first Thanks, The June, year our those half I’ll billion. of headline track. $XX morning. plans, the Slide merger of we right start on and hitting

year-end. debt to take the to a in range year. that extent adjusted and we can second in net expect us X.X capital of that should to expect get that debt we’ll hard billion overachieve the about $XX a by at the half buybacks And allocating reduce on can another the of times further back net We share to look half year, the objective, you EBITDA to

overall on half investments cylinders. our Last it second continues EBITDA, to to postpaid is with Wireless revenues, see Wireless payoff EBITDA service phone the network. we revenues grew X.X% about up and subscribers of all were and fire on quarter a quarter, and prepaid. our in we’re and the continuing both world-class

most the named by been independent wireless reliable testing the and has Our network services. best fastest,

the the XG driver now FirstNet coverage, continues we performance by targeting completion as FirstNet the to be ahead well And of quarter, end at And we of complete XX% with our about XX% our year-end. plan. were network are our of leadership. as

XG accelerating And to our upgraded simple we as be deployment, can installing deployed software our is XG a FirstNet FirstNet, that release. we’re build hardware with

coverage As we’re half nationwide a for first on XXXX. of XG by result, the track

all on synergies XXX was three nominations Primetime had income the most year, That XXX business and and we its operating there to nominations. Turning across was history. in strong This scored WarnerMedia, solid alone record merger growth WarnerMedia remain another a HBO units. was quarter, for track Emmy

of result So, what was the all this? of

Max HBO’s content And next Mike in a about launched half we’re Bottom subscriber spring. really line, setup stepped had and more investment up is of We working. this And to Max be in critical in quarter, year. HBO for we HBO very look forward as digital mentioned, the strong October. the as share HBO second well will growth we the

that’s AT&T just actually TV the quarter. our we’ll in make markets, progress, service Later summer, we live to grew stabilize it TV solid launch broadband. didn’t few this continues X.X% EBITDA, Group by beta we Entertainment in over a Our

really to learn expand we to cities then from We the we’ll go pilot, as expectations this have and going some for more we’re and to product, high the year.

in IP now continue XX growth our customer Fiber reaches AT&T growth broadband see remain million to locations you about product. revenue businesses. a That product solid million strong, when or we XX include

So, all steady exceed commitments meet we against we’re progress the the into in commitments for all of year. that going year. even more to those full made And appealing the solid, or coming confident each

$XX billion we’ve of our billion we’ve fact, guidance up free our $X XXXX guidance to raised morning, this flow other for year. and reaffirmed range, In for all cash that’s the the

over the this to quarter, to John, I’m So the going take on results. now he’ll through more and turn you for detail

So, John?

John Stephens

Thank you, Randall, and good morning, everyone.

with financial on X. begin me our Slide summary Let

areas, As was mentioned, many we’re financial targets. including in in EPS $X.XX plan. from of effective we’re a And our Adjusted on higher tax Randall track $X.XX impact the ahead rate. all quarter, with

as continue year, the full second low-single-digit for We to solid expect are for we half of the growth set performance. a year up

pro forma the in and reported a quarter. on both revenue basis grew We

a Mobility, continued growing was points In addition operating currency on our basis. basis Group. Entertainment and constant are in margin fact, growth in the XX strong all Adjusted up WarnerMedia, with improvement of segments

Our cash flows were very strong on the quarter.

The The at X. made as flow at impact, by free did to receivables came in of operations this from Slide $XX.X on billion. billion, securitization adding cash WarnerMedia and was that’s cash efforts. operations record securitization $X.X XX% lifted strong a their Let’s Cash flow addition $X.X free and our billion. up look

to Our impressive. ability to generate cash be continues

a free the Over billion or in XX $X flow $XX months, share. about last cash generated we’ve

have range. benefit free we the $XX confidence our year for our efforts, flow With to raise cash guidance securitization billion full the the of to

prior was us allows when was and you billion $X CapEx invest Our investment for $X.X strong activity. cash financing the $X.X reduced debt in levels. to billion the of vendor include capital we billion payments total also by billion, at leading to quarter. $X.X continue And industry position net

when This debt our we’re EBITDA And on speak the deal. leverage track just X.X squarely me X is close to the we X.X of We we being on quarter target Slide to our net and times. year-end under times down deleveraging hit at the billion $XX ratio, debt times adjusted since from merger, Let closed range. in paid-off X. ended in to more ratio the we with

reduced includes we’ve and billion sales of by $X by flow no in billion payments come contribute $X nearly other net purchases have monetizations, Year-to-date, about billion, billion about $X and $X from assets. from these vendor offset free cash asset that EBITDA. that debt assets And of nearly

extent, the we’re take share that back the capital Looking we’ll buybacks of expect overachieve at leverage a to year, our at hit with that the the the target can allocating To you target. in will remainder can look year-end hard we year. half of confident

operating starting with Communications adding our of stable subscribers. [Technical segment segment segments is our margin at X. The while phone on our revenue Communications Slide EBITDA look growth, results now and Let’s quarter story this Difficulty]

Our Entertainment revenue managed $XXX services Wireline licensing. and IP Group But from and EBITDA about in And delivering trends improved quarter, the growth. strategic in is million thanks strength Business to even when without Business you our in Wireline were grew trends that factor Business revenue best Wireless proceeds, Solutions in strong the revenue performance, years. those licensing Business X.X%. And we’ve seen

great between, costs. other On side operating the and doing cost team promotions in controlling content, work the is

in units. throughout Solid was Wireline our business, Business and especially the cost evident Entertainment management

Slide X. give more you Mobility with some me starting Let on details

points even X.X%, Mobility EBITDA was continues by with well. margins Our EBITDA business and revenues perform to XX.X%. margins at service grew X.X% higher XX growth very expanded of Service basis by

XXX,XXX XXX,XXX postpaid was with And a XXX,XXX net phone further strong XX,XXX quarter we prepaid. trend phone the customer smartphones had quarter adds, and to sequentially. strengthening base. We was down up but including our slightly added Postpaid in X.XX%,

we Cricket and growth, business, continues prepaid And quarter especially same revenues our Prepaid had consistent all-time levels. phone both prepaid. cricket to at nearly time, churn low at XX%, our up and the consecutive at strong hit of AT&T an XXth perform were

that leadership particularly off, our will wireless to short, network stronger we’re and expansion FirstNet our spectrum In yet. business as are talked we and Randall not about earlier, deployment confident our network investments XG. the get we’re done evolve even paying With that

Now let’s Slide on Entertainment to results on go our XX. Group

continues quarter was both was sequentially. Our Year-to-date X%. up Entertainment grew year-over-year our EBITDA second EBITDA growth. EBITDA to Group. customer value on focus about of straight and impact This the long-term

revenue number lock customers on outpaced XXX,XXX in by the declined than premium price setting helped Broadband declines, well growth growth as the continued growth. stage EBITDA of us as quarter. the two-year more in TV The ARPUs. reduction Expense for revenue video

in NOW declined locations, build Video milestone DIRECTV line $XX XXX,XXX of said we and piloting satisfying Randall forward. important our XXX,XXX. were AT&T growth with our thin fiber will be what product, commitments. expect client subscriber customer numbers Premium earlier, million And and declined the to later TV, an as best broadband our deployment mentioned TV we’ll fiber important for quarter. begin the with summer, driver This going the reaching

broadband revenue by more net had we adds the in quarter, IP fiber XXX,XXX In AT&T fact, and X.X%. than grew

comfortable as our expect for remain penetration lay for year. line, or we’ll continued that the the service target And Entertainment exceed that meet XXXX. fiber matures. Bottom We groundwork AT&T the Group full beyond grow stability to EBITDA we

move results, which be Let’s accretive. XX. continues WarnerMedia cash Slide on are free WarnerMedias’ to flow to

are merger-related on Our track. synergies with expense management

strong growth end to revenues had spring. quarter a revenue run strong this by X.X% grew, expect and hit next rate We HBO another to HBO international is sales, to content entertainment with year. Max home WarnerMedia $XXX driven operating growth. million licensing. Overall, of and income solid the by And slated thanks launch

NCAA includes Men’s highly at the and revenues. Mortal which growth, advertising Kombat about Four a Final revenues championship Turner X% It And up be this to entertainment due of revenues the Warner theatrical XX, impact home and of will were Turner Bros., release back revenue having year. next on on drove successful increased game year. not games this subscription

we’re to With that, now questions. Mike, take ready

Michael Viola

we’re for ready Q&A instructions. the Operator,

Operator

first, of line [Operator UBS. Hodulik Instructions] like Thank John the you. we of have looks And

open. is Your line

John Hodulik

the did another the CBS in you’re on on – promotions you subs. EBITDA in if a you having continued that half expire? is impact Great. some the the Nexstar. disputes year? we with for into on And Thank of could promotions. as comment and expect how million bit Thanks. that you Entertainment and to some sub look the those trends driving the got said little is X there specifically, of belief Maybe When And video do resolution expectations you’ve One, John, maybe second about And you. the the programming segment. then, subs segment? questions on growth left this

Randall Stephenson

CBS with take you. kind just hand of on it are the and I’ll carriage to that let numbers Nexstar Randall. It’s John. going him subscriber John, I’ll Hi, reconcile and first, disputes for the

And probably off Nexstar. DIRECTV different As their has very signal as CBS knows, everybody has there are two pulled situations.

– not On over and an them. CBS, candidly We a days it’s with interesting wide. is it’s that offer dynamic was ago, interesting an of sent five But asked situation. been The reasonable it’s bid that kind kind of fair Cricket’s.

are, we now, interesting We haven’t yet here I find response to still haven’t a a not guessing negotiations they’re we’re had with offer. as little When anything, and with but sitting other don’t probably I’m you’re know. dark having close we the right interaction heard CBS. as distracted that

increase. were situation. significant different asking big very for it they to bid the opening a increase, point is Nexstar, XXX% as XXX% in they out, that And it’s broadcast I they’re own assets a negotiations a only basically you don’t four a but that rather their on trying Nexstar, content, They stations free-over-the-air the the acquire like not their yet increase don’t know was and own. might broadcast, assets product yet.

a nonstarter. with their dark. and So, signal pulled of gone kind began it They’ve

a the Now for channels asking the broadcast air. XX% on over free again spread that increase they’re are is

but longer, And be just take so that resolute one a one. have may this we’ll on to

kind We’re type signal. just of blackouts unlike have price their our increases of impose we pulled those to where through enough, gone And companies on times interestingly going these customers. not other have

are and access other Our streaming content. finding ways customers of world this to

technologies ways in other and there’s rate content, table other this customers are optimistic, can the of to one significant right at programming technologies, to but lineup so, the flow a to CBS, a and into that getting And back while. just our DIRECTV going so these that pretty closed. we’re even some I’m get guide take could finding hopefully

John Stephens

November, I we’ve locks, fourth as quarter. of to on and ratably taking continue taken impacts expect closed mentioned this in the a the expect by and of out, half I’d trends we’ve million and customer value of the they see customers Pretty that so of have the same long-term we’ve we year. to end the those about we’d the got in year, price value through the of this see second expire John, seen. some to to based those to some continue getting these X process on left, much that say locks throughout But forward, as price customers approach

Additionally, certainly of my being but performance solid we EBITDA grow mind. as have – you’ve stable, seen solid, business in and the the really the

long-term approach believe is can that value that; working. value customer this of You see we customer

and us going So, the we’re working will of continue on that intake to continue the side, that, through some this also file to to rest year. to lead

TV. that said, encouraged about being AT&T our we’re the But insights in early

about learn beta, We’re it this to the from encouraged ability out it, forward the of take year. the and get of rest

we’ve at locks, So, and use been year XXXX, potential been value a we when customer and I full price adding the look we’ve through of the through year to a long-term based have AT&T TV. two

year. optimistic XXXX basis stable be continue to the that us to for expectations our gives We margins that have more next believe will

Randall Stephenson

cleaned come of And just back just most XXXX end out importantly, up. what is through the as is, we of and John base customer went

that for is had got to HBO. driving we in And Max second the saw base HBO, and more HBO customer tell what next as quarter, HBO suited going be a we on second DIRECTV as added, XXXX HBO particularly we penetration of for suited you really have I will on ideally a Max. to we’re year. confidence digital quarter strong subscriptions that perfectly going that launch with is base, to out really more be were we gaining And come We the that this

John Hodulik

gentlemen. lot, a Thanks

Randall Stephenson

operator. Thanks for We’ll next John. the take the question, question,

Operator

And in of go line Cusick next we’ll to the with Phil Morgan. J.P. queue,

open. is line Your

Philip Cusick

Hey, guys. Thanks.

do and wider of think you’ve Following about should seasonality of versus we came AT&T that in losses TV around thoughts video you second in to given And in versus about the XQ XXX,XXX. get up through sort How level losses expect XQ the XQ, there, typical until in video typical some you quarter continued a XQ? through promotion it subdued launch? video

John Stephens

Yeah, Phil.

subdued call focus you think, expect value I what at we the think you I call long-term that’s activity, should – or as promotional it right.

that. You expect should

summer two-year of price you though getting is with customers video, the normal some that balancing of What change. I the expect activity have customers, We the these to wouldn’t amount with same of number would tell I off locks. that

this and together, we’d are, get level predicting what and to that we Putting are to through continue I’m through to those end X need if less promotions but will is, the this prior losses say million what do base expect other, some We take that we’ve years. trying that that. they the of to value-conscious-focused get of done of you will, in the to us through need the year customers

The to is of is, positive I side don’t what know that AT&T TV going do for us.

we’re be to of because to can the focus to on in it. test we’re of you But going it’s think, a assured, it I this real results out focus to continue roll quarter customer. we’ll be going this going later then XXXX, value long-term and

Operator

Stanley. next Simon up And we queue, of the in Morgan line of Flannery have

Your line is open.

Simon Flannery

Thank Great. you much. very

you X.X, going sheet flow to you you balance are you’re to the like on and to you your where to free end continued on going can how buybacks Turning do balance the the up get how think sheet the the once where you to – versus divide deleveraging between cash buybacks, two? help about, balance would us

to us And Thanks. $X you’ve asset then obviously the already. at sales, see trending sold But on update if almost where $X $X do point? of this billion you that you billion could billion net

John Stephens

other activity. the impacts collection Hulu whole was Yards, done $X of – and securitizations, a two WarnerMedia that good asset the a asset billion. I The whole where at. – them we’re I So, Simon, kind also collection buckets. and But take of them sales, working to sales really of is first. just that in capital like about we’ve I put Feel want Hudson the straight bucket and a One

So, really we’re good where at. we feel

the sales, to still still we’re U.S. our there we I public – cell it’s X,XXX that knowledge about regard of we’re out think, asset With have, selling own. collection that we towers

$XXX contract. We a couple a towers the estate Mexico. have cell over of XXX in whole with X,XXX have a real of parcels collection probably in We million

investment their CME their is have strategic called and company We independent reviewing board an equity the alternatives. in

collection got regard whole $X a and but us billion range, things all we’ve hopefully meeting $X So, that’s confidence in target. them, that billion well of $X billion to to $X that whole not a collection we’ve very to with of billion got that things of doing gives

on net investment you remind this the cover XX I’ll to too, expecting And auctions. we we’re that in a basis, that’s millimeter wave in the so made year

that lot just So, that opportunities, We and the I’ll $X got billion leave with to going $X the billion that. to pay feel include for a with about good being is of we proceeds. target to it,

the about year think expect, balance as cost be our and deal. what down the debt if or talked we’d the after – a to than around close We X.X now range regard sheet, about great somewhere of gives I capital. of of us fourth think, – the to to can you capital debt be pay the we take flexibility advantage the that look is of after cost cash With below cash I’d higher equity

very basis, flows on you your out when of focus repayment shifting operation dividend basis some of So, look methodical after now, the overall buyback. can be at from of enhanced to cash the an right debt by

our stay [ph] focused make there achieve focus sure I we we’re And But our focus going we’ll expect we – primary guidance. to fact make to now to on sure, that achieve, the and that. want look right we that get to is

we on We’re well feel good. track,

But think guidance the we on you our just think cash it. I just free that by flow. we that’s fact about can tell raised that how

very comfortable and historically do at rate levels we about. periodically reasonably something very been environment, feel are interest can these these low has So, and operating we do,

Randall Stephenson

Simon. Thanks.

Operator

line of Barden America And Lynch. have next David of with the Bank Merrill up in queue, we

open. is line Your

David Barden

something be the it’s the to Thanks guess, that to while would of Hey, the been be is first evolved competitively an anomaly? first of the Wireline more trying it, data maintain – side might upside, just it structural has this there Business that a is think guys taking been point I since kind and I for surprised it, or one be you in the the have Or trend? but might questions. guys.

John Is second the to down to year? going increase WarnerMedia guide. of then as on the Or And a the working shift of cash It’d flow Could kind would cash the things in of lower CapEx, is to guidance? question, of you vendor you financing? related the come parse through to be that Stephens, get it flow from free other CapEx the picture be capital benefits sale kind to related just it or are asset that. helpful Thanks. kind the

John Stephens

guidance take But range. good is. ahead So, free what they We for quite suggest our quite about about. even and to you very is team, $X.X me what one still frankly the that that cash higher guidance more we $XX securitization quite in FirstNet did really the our to And [ph] told we’re sales] [putting They’re range, first. frankly frankly, raising going invest being flexibility of billion billion have network they billion at billion want capital, the need the schedule. could that do our network, I feel to have to we’re – But meet raised we’re continue been – number the flow team if efficient. to some And than let $XX could frankly, that would $XX quite that.

put in get want retain that. I those can the releases we to XG, to place, do out quicker to flexibility regard If and software with

retains is for And So good flexibility very raise and achieve, guidance to that’s in quite reasonable feel us. yet about frankly, it. the something

are continue So, ahead last some have is If business customers had X for sure we we just months that this keep this level that make quarter. that impacts achievement the XXX,XXX in and to schedule. but of last voice your at nine – in in the XX% this to if year, the really question, build understand up lower can showing of million we’re doing at at We’ve overall in customer. reason the wireless churn we retained can a I flexibility

about So, it’s good feel what doing. really

it. support to ready be that’s quality efforts, really to those that want I aspect of So,

Randall Stephenson

like the tracks The BXB And business has we’re didn’t discussions. doing is really to now best quarter us the for I to last – the very but last six look the result reform, it’s U.S. And This like with quarter our fixed been and or Dave. a talk trade pretty On two Randall. is China what of is really really, about Look, tax U.S. business uncertainty. business that trade as think, front, strong. we And with very, businesses. little or soft well administration a for that, into the investment healthy, quarter do. healthy of in with so in pulled since

us. increase said, that But of tracks with in investment robust it’s been quarters well pretty and fixed six all that business very with

pricing has rational been off in worked is those of as we legacy this especially pricing and a products, whole had this lot pressure. Second pretty we’ve incredible industry,

in been doing We’re pricing market. type and has are What’s sets the marketplace the now the growing in and new are services. the products IP new the stable, well. pretty there And reasonable

saw those them, You plus up I which a healthy for as quarter, we service for those. is think but nice rate X% really special growth the were call

then And the some quarter, bit. little that profit up and had in sales IP a we

for those suspect, us. good have time. on have had blocks, these as in bullish couple really, in quarter, that, come know in this – probably, not IP sales a we We’ve I strong way, become in had and by keep as I we’ll are be more positive the on I they’re here. one And the mean, we’ll We a future feel past trends nice little but some – without the investing, this in that’s time. So big this opportunity the feel And quite but businesses are really as the continue to about we really even segment segment.

on costs. And the talked predominantly, costs. about The not deals But Microsoft particular deals And were P&L AT&T’s item are it those a IBM biggest the multifaceted implications. network we activity call and just we announced last we with recently. it’s factory absolute on, addressed And then, those consistently area. And cost that the are the iron even inconsequential have deals. XX% haven’t Those IT going those down very on seen years, you big consistently. an costs, network basis, X%, very and have consistently very X%, as the cost driven the year-over-year over have few in have the we the all levels the

to of kind where leveraging applications taking What for curve getting cloud. what house, at AT&T, over place scale We’re of going the productivity of and continue is increases. allow type to And type large the IBM cost a doing there. deployments. getting side to network hard moving it’s those momentum those capabilities they’re continue continue is with their in cloud that us both we’re IT this to of of is on Microsoft a And the do and to reduction and lot

opportunities go-to-market securing companies, revenue strategies. each That are revenue side. seeing wireline we with the the actually those us to on have you’re addition, continue will of In allow keep and to momentum

BXB that we tell the this. that have you, of bullish economic and become would relatively continue trade distraction doesn’t side to on all, I situation can businesses in and for the we’re continue we all So, the house, a hopeful improve on growth,

John Stephens

Thanks, Dave.

Randall Stephenson

question. the next Take

Operator

Next Sachs. Brett up, line of Goldman we the Feldman of have

open. is line Your

Brett Feldman

Thanks the taking for question.

go-to-market both of significantly the on those had Mobility your few an about without be think gas bit on business, seen about do and going being the in think quarters, that’s opportunity there’s little more we’ve execution initiatives are how talk you a deployed. FirstNet next maybe a a over year, deployed XG. chance you bit over a much the whether few Can Thanks. the more? having in really yet next with and step to last to you For to been lot steady quarters, the without wireless a But fully

Randall Stephenson

Randall, This is strategy are FirstNet key day in as feeling the you we the elements. in Thanks, again. on Yeah, look hit side you the future, and about as we think house, network more growth through the strategy. the execute the confident of Yeah. And Brett. wireless every more

few have to we hundred moved a infancy, in FirstNet that FirstNet. is just have its subscribers and

The first very it’s is market, share. into rather we a and where responder a community large with market it come small

opportunity these itself FirstNet our But we’re build you’re had have this out share moving First significant, so, a quite markets play Responder pretty out. as is past. as These in a everybody comes communities. penetration on we numbers brand for who’s this what into are network, And the many knows when are new move to we communities, presence in this a community. like rural importantly see is we a distribution communities. new to Network that into and standing entrant the into up And build while as grow out we the just as where And that call, we starting look followed thin business

we communities. on first coverage. as of very stand XX% share new we’re starting distribution quick; well told our quick. built up to And goes out The we’re we’re It you at that as in comes market you, to see we the front end this as

go. XX% to more have We

there’s a of lot here. left So, opportunity

ours, that’s mantle. is this. who rated as of been reliable then marketing high that people quality about important the the be. to network position, an very independent fact this, best, is And is the network by Network now most this great AT&T the inconsequential, you, feel most a told have And and basis. strongly do that’s on living we claimed probably fastest And I has as and we a a for not place in all the piece the of quality

strong quality And customer terms a just to a segment the and of we’re in starting in add marketplace starting we’re growth this And by having itself capability. to network is see of see brand churn, message gross it in the key impacts strategy.

John, business would And right you now. add so the about bottom we’re bullish anything? line, pretty wireless feeling

John Stephens

participate to community, X potential, million Brett, first has that. think we of the responder little very in

necessarily secondary don’t quickly to and and responders, the brings that’s growing But in and firefighter XX million adds We’re it that another work that police also badges, in total guys environment it. restore first restore or wear who going million or the that X hospitals, hats now. power we about – that almost

that’s about So a community totaled huge we million. opportunity That’s XX – that that the brings view.

multiple devices having having whether it family And and or members. a phone, them then think a about think tablet them then you about you be

scale. is So, large a it really very

We we’re in to that existing very, by agencies else, adding And but customer authorized great also and are customers. customers, going with making serve progress it’s as outstanding, somebody were getting previously this and our is base. network said, served adding Randall

benefit this it’s XX get quality customers for so, price That’s today. opportunity give us to to and for. difficult phone that I better us benefit quite lower on the giving a have But to shareholders, to service a predictions going – tag customers. existing have customers real or the a frankly we I churn for for this a putting it’s real And time million know

So, really we that. good about feel

And just XG we’ll smooth our XG XX where transition Plus the the that year. markets in This we’re coverage middle millimeter next by have today. wave XG. of in to the XG in going with with our a And on that leaves us into core nationwide we year, expect is the now very and Evolution network,

lot So, this, to going we it. – a to really FirstNet in benefits it’s enabling is and have We of really are leading are and XG.

optimistic feel you can and team is doing performing, feel We we they’re and So, going do the good. good do targets meeting understand forward. about why about how what

And on get before. the you it, our XX% complete is me guys have positive Last side thing this say the year. I’ll side this by end accounting of of network surprised of the

upgrades, the to the so process would this us the remaining going of feel we of on software side. build lot financial really be a And about aspects also. good behind We’re piece the have CapEx

Randall Stephenson

take next We’ll Thank, question. Brett. the

Operator

Guggenheim. from the of line come McCormack Will of Mike

is line open. Your

Michael McCormack

to last Hey, lot obviously I dramatically thanks. and out guys, fairly like there it the the wireless of about game guess, seems business. in news Randall, change, was a

thoughts your thinking, new share more does of what Wireline are there coming you four circle it impact? three in? forward? something How also guess, that like over around secondly AT&T change Just to Is you feels positive being that, that’s years going as much that. Thanks. stemmed the efforts it having like to to are see entrants back Business just retention sounds to a on with on – there loss going guys next potentially And sort on the I side, the strategy regard

Randall Stephenson

Mike. it Business say I’m That last on sorry, Wireline again, question, retention…

Michael McCormack

hearing in Wireline to just a I’ve and there’s seems if any on shared on to better probably you guys Just doing the I commentary side, been see much that customers been Business want retaining competitors. that? job it

Randall Stephenson

be and – it happens to That’s accurate.

up fairly job big and good I’ve marketplace. very you pricing retaining as deals as a the done has been the come new have told those, in We rational

basis, And number also so, yeah, on logos a so. new only in year a picking up new not of really logos. but retention we have up the acquisition or We’ve had picked last an basis, on

but economic business surprise to to was again, And it just quite it’s I now. that right doing. good it’s American all terms in of but health. I’d continues won’t XXX% of so love And us And it, dwell on great say how healthy that business, just all execution, is

are to so we’re lot has who’s industry Ergen T-Mobile doesn’t noise if – a there’s of doesn’t three anything to structure. now the your Sprint industry is structure But who’s a of for terms right this to – It’s a ifs just the not. deal close going do directly, there’s next structure, market, out news maybe with In or DOJ. happens there many to and having T-Mobile there question wireless to it be change I years. And the in morning Charlie happen, actually in around industry the or it. answer that going candidly, assets to and and respond distribution hard

strategy FirstNet continuing that distribution, to I getting a Our just up from relates a drive as changes in is, and centered strategy the new well wireless is resilient pretty and quality. built, network around new strategy market baked, capability that and industry It’s standpoint think foremost, standing deployed, the tapping is FirstNet, to it first structure.

and is we unique the a year content deployment our then obviously, Also, XG very priority. be and in wireless strategy high, high will into this next a It’s Max Max. TV part pairing even with that with business. get broadband content video of here pairing then, key yet, but HBO our wireless And HBO premium and unique a not as

that So, whether strategy. with not, anything doesn’t it change happens or our

the M&A a on positioned And through will in I’ve not they’re happen be this obviously go where on themselves, the And is these AGs state does deal kind DOJ so one change say or going many they they’re that seen part where not. not Now and of watching to done position last the where this in closely, there say set the it’s status grading we the is up the very industry before, be have last the it’s of probably that any this. where deal. the gets be but interesting to ifs deals, we’re going are work structure around, DOJ’s as

marketplace, making, so, state be they the take in and forth see that’s the of the so to and then antitrust that thinking in the interesting fix into is how Ergen react wireless it’ll comfort so about And rumors been what to that. and coming level the they’ll concerns Charlie business, decades AGs

So, of anything hard the a end doesn’t doing. things to this it which the we’re but day, thing in way air. lot It’s change at the say goes, of up

Operator

Next up, Michael of Rollins line have we of the Citi.

Michael Rollins

other SUNDAY in can TICKET content revenue how As you the WarnerMedia performance HBO and future content like think for rights, and then in monetizing Max will you sports distributors DIRECTV, First, basis, discuss through play NFL AT&T in or on it’s profitability, distribute like that exclusivities an whether through balancing that consider on X the you the respects? in content separately, library you Netflix? about the exclusive second, role

Randall Stephenson

Mike. Hi, Sure. Yes.

years. with the DIRECTV So, start that That’s well something NFL many TICKET exclusivity. served SUNDAY for

product. our is However, unfortunately, satellite content tied to now, right that

in so, of be And But a a of into value it’s important with as retention good kind that, our when it. hard to It’ll it’s product, it the terms business an an to come satellite anchored to opportunity tool. fall. we grow utilize serves

on to over it other I a piece can our that of move So And think platforms. can our really hopefully, it we other growing time, be important address and platforms.

As important or to HBO of important that have assume ultimately, put platform. fit Max, NBA HBO unique you well, distributors, the and content as market playoffs Turner been our Final are variables. early they’ve be as but stages Max think but is it very then on content about rights content the those – and a companies, NBA, whether lot that by held Turner the TBS that of X, TNT League really And Major – Baseball, content are that that in very begin the we be making as will This elements. will other it you also live HBO we at Max should to very, obviously

premium to those sports, for elements really, ones really live And going through, NBA, are live unique went HBO just both sports, those League Baseball, important elements, Major of be go with NCAA through that same well of basketball, the quite areas are think HBO element The you and and very, can news an news, Max. we the important, we Max. will do very as

should important changing, exclusive Bleacher for We you content around. TV the as forget has been and has long that opportunities, advantage Turner that of don’t take will we Report. So business and been don’t see as both assume within

have We Bleacher some European live from in NBA soccer exclusive forth. to and so great content Report, soccer,

a lot take that deals of the So, have opportunities advantage of within content to WarnerMedia. unique we

Operator

up, of have of Barclays. Venkateshwar line the Kannan we Next

Kannan Venkateshwar

relative this expectation the losing just look well on If then. I subs, of you may course, did if despite and quarter, at performance EBITDA to particular on the revenues Entertainment Business, you,

the be the launches, video and just Or line it yield And is behind focus So, to you NOW, where these better a subscriber more growth, and central product how even at and costs? for going product that? price growth guess, margins of stability, more and when that manage should top from it’s perspective it DIRECTV the overall. vision point – it? than thinking is you we line focus really forward? because the is margins more assume important And the Is will Or on some are a growth? going is new the about therefore, forward look I sub-losses getting device to what’s

Randall Stephenson

Randall This Yes. Hi, is Kannan. again.

on be many you where the customers, points is valuable content one mean, like the very how network, customers is. that high-value And very that that margins I what equation. equation it customers we a they is the expand? staying company. about – ask, tend has are this subscribers about It’s can as distribution through and And distributing are exactly going unique to as nailed as lot be to says a as tend to it that think the You’ve decline that’s possible.

a what And that’s so, the going as The for interesting. you’ll going segments to you have long product those address and portfolio a long of of life, literally acquisition point, just TV content up, it half. linear and the how customer is of think the the about forward, market, teed is which a that problem to beauty be it’s really you This the and with but to but going grow. segments the to business, can fundamental that have the it bringing And to were you market DIRECTV that current product they’re is time, market. price takes that product cuts continuing address costs in is begin client thin costs the

talk about me heard broadcast on increase rights and their wanting You Nexstar XXX% so forth.

a so longer-term into product keep this got find people cost basis. on to get way for we We’ve product, the down can a curve to the

we’re product value customer the margins So, still the the as bringing AT&T acquisition same half hold market, can new and points down standpoint. have price equation on costs TV, from you and in bring a drive customer to you then

will a product, long for good DIRECTV, be So, there time.

churn some of we our years. to what will into digital and like, and get those. product to we couple digital Game WarnerMedia will shore we AT&T over we the workhorse because the numbers haven’t giving shoulder subscribers. shouldn’t put HBO of like lot a of about muscle characteristics until guarded had subscribers. looks we’ll give know we we��re the kind TV, be we Thrones, we the visibility a But next just TV, of point, the lower as this a And couple and be this missed, the up Day, then a years. of our get added going you little AT&T will, price subscriber should given And assume, customer base of that next this be on And part behind any over

That that more gave carrying we content. in tells And stopped year-over-year, HBO capital up Thrones was. how because hanging HBO we’re and what we subscriber DISH is here’s know, churn do HBO HBO. – thing as performance in And went actually you But them to of off, digital quarter folks, is strong this the the invest there the in Game third strong of pretty subscribers.

new was Little Big After season last blowout Big performed the So, of Sunday. well. very Lies. in Chernobyl It’s comes Little a ended Lies success.

coming Succession online. have we Now

of Barry play, and is this new good. The coming is into feeling just season pretty thing

TV, move we’re going a DIRECTV, Max And can pretty as more we think, our put to about those our as which we more we’re HBO, places shoulder the that forward. getting profitability, conviction AT&T HBO that and of imagine that meaningful, are video to and are be you And you think portfolio, muscle the to important. so, going implications is

listen up bottom visibility to on the October. go. our in we And customer shaping line, portfolio you muscle begin But expect Day give marketing video like to is and can more the where and acquisition here, WarnerMedia that and how so, appreciate you would to we’ll discussion

John Stephens

strong performance? he’s are How made all at content HBO that new ties digital without the X% add. It’s if revenue you could, those up, Randall and All of exactly to talking like was first all you’ve these investment Randall increase to investments. we’ve said. what thing doing showing Randall, talking about about, one that’s shows that that that new seen I these all, shows

invest included like that is the year included year. in content and that in our up is flow just We in in continue – And cash those CapEx this free numbers already guidance. that to shown throughout we’ve through

making are to we decisions invest. to continue So,

We’re doing today. that

today. on XG You’re build seeing the

$X the today. You’re we’re only that, cash for year. flow, share of coming XX for this of to a And kind investment but back seeing still free this trailing with months, in this all content of not

I still this, in we’re but important types, around on in made not It’s in flows, cash to that also mind, and generating but HBO in WarnerMedia those total, the across investing say comments the are really tremendous only the board. I’d business, per-share we just on So, keep and just and basis. a particularly

Operator

of Tim Horan question last line Oppenheimer. from Our come will the of

Timothy Horan

the and strategy few grow maybe to more? gain the the like you be software ARPUs could bit it are deploy speaking, will a ahead you XG share maybe can so just go-to-market to end about bat perspective, the you FirstNet a next network the Will they little And has but And you peers, like dive a into be great capacity more going seems the ARPUs? to or to practically customer will build a it as here, does look gone opportunity latency share, can feel or your strategy XG now from be off and you XXXX? years It grow speed starting able will look in more gain how by soon Randall, to of really or like? what talk much of as year? see

Randall Stephenson

Tim. Hi, Yes.

You bet.

We sales FirstNet, allowing about deploy are one of us the on pretty to side. and it’s the with consistent talking advantages this that touch in XG hardware

climbed we number of So, doing and sales the things. side, we’re a

beta the that the tower We’re turning and put in spectrum, we’ve climb tag XG the own for and putting And XG alpha as up latent data FirstNet the FirstNet the place. hardware we’re Evolution. we on the we all hardware spectrum other phone then and turning up this

some know it proving our would to be what but that exactly of market that, didn’t we be. told like it’s I competitors the And

that seeing alone a the by our just market all slide because place up there we by unquestionably had performance the served. turn literarily from we end that of churn XXXX, the inherent in experiencing, the are spectrum, a and is And and network, our this, capacity this. just John have is speed this are are and we’ll increased the on new of you in we’re total fastest network reflecting And There capacity the You customers are of of, enhancement. put technology improvements in process XX%. that

Now year, put nationwide footprint we as your will a we’ve ready? place, all will software – all of XG. next in hardware this By mid-year be XG, turned question, have a to

will a nationwide So yes, up. mid-year, XG. the turned software And of by we’ll be footprint have

I you lifts, you millimeter our process XG when you speed when get market-by-market We wave And band. into wave some into over start up gig when that as Samsung and do occasions. put the in get that also speeds. these of example. when And millimeter it the we here spectrum are routinely, here band, speed And for I speeds, gig I in get turning up gig-type areas Dallas, that’s tests spectrum to radical that around. that’s phone in X get Dallas, in you have And I XG carry know, on a X have

in up going turn year. the deploy some top you’re so, And our we speed spectrum radical course performance have of as on over of wave we step-up this the next lower-ban millimeter in to where it

take really it will to come a the high-performance spectrum. really is wave to and going while spectrum deploy The millimeter market-by-market, high-speed

be you technology. should connected think because will services applications, focus roll Wi-Fi see competitors. go-down. their us we begin the needs operations, or that. we’re out the deploy a replace at a will replacement you really it If for this different to turn can And focus our doing our we little in factory it’s we IoT is this we up, needs somebody we and plant, deployment. kind can somebody with now, this commensurate business a we As do a important business-driven If deploy can connected some that. of has If can It of Tim, network Austin somebody to deploy and these expect

at And will be first. business-driven it so,

– marketing see and into broad coverage significant handsets hands dozen exit aren’t That handsets number the but their get As promotion. be right year where important, is We now customers technology, go as course and significant the don’t use they’ll can the be then there of happen pretty people handsets consumer millimeter ratchet where there’ll which limited next the in year. as to there more of isn’t wave, is the this of aggressive we as coverage. use we get begin and really right the we too us get our to it can with this a in want technology, this you’ll marketplace up, handsets, next will that now, the through

do that we an advantage we And agree with here. have you

to that’s think deployment XG broad have important have nationwide, we’ll and advantage, deployment this We going be a customers. we for mid-year, and our

John Stephens

our then our And in EPS, we revenue mobility. and cash free investment growth, continued Quality we growth. strong closing And flows wrap results. and in and But specifically, Randall EBITDA solid let up, met both service in growth over content quarter, me are solid it for revenue comments. some up on network had hand the showing that for

optimistic forward. was feel we good very remain and are very and it we we So, a going like quarter, –

generate we it. sheet feel let balance Our turn good and is very and cash Randall, you. over it our ability to to without about manage question, me

Randall Stephenson

point, much have stock through am year at each place on year. produce. I of this course would we go year, the end them. the each gave of add. very of gaining the we year, we’ll of to we at as some expect the and through debt as flows continue buying that exit reasonable and be – a have of I’ll this those back this fully The as we we’ll cash we’ll we to to be go don’t I all the of hit I just you every last we’re those. hitting we year, commitments confidence greater the checking I are And greater box one

look be October. the give of together doing hope WarnerMedia forward this there. you’re why I something all important us to going you And to get that, that more so this for cylinders. us is to for and terrific. great that in on we confidence you. is Warner business, great This We And HBO Thank seeing the seeing call, to it. is look is great is look, in you to running talent, we’ll seeing forward in everybody Bros. thought coming to Max own. a to firing special more joining was great all marketplace. people And asset HBO

Michael Viola

Okay.

everyone. long, So

Operator

Again, you And you using may this Management. for does conclude ladies much that morning. with system participation for disconnect. and time, now your connected, of thank this and we At still gentlemen our presentation Event for all conferencing very the

AT&T (T) 24 Jul 192019 Q2 Earnings call transcript