T - Earnings call transcript Q4 2019

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Operator

Welcome to the AT&T Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session. Instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded.

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

Michael Viola

quarter Financial Stephenson, AT&T. Officer John And Thank to me Chief on Viola, morning, Operating good today joining Officer. and of conference is Stephens, CEO; call fourth Stankey, Randall Head for you, and Mike Chairman call. AT&T's for Relations everyone. Investor AT&T; the Chief I'm AT&T's and our Welcome John

through with a and walk call and we'll then overview plan of our capital Randall plans. you John accomplishments allocation the our presentation will take plan. XXXX Stankey on operating Stephens close will results brief guidance. financial your the our XXXX fourth a areas three-year will begin then and will questions. John quarter Then at key with look of XXXX then the John an update Stephens discuss

in call says comments safe want Results so and quiet FCC on is our about your may Investor and I we're to begin, uncertainties. Relations be may differ additional subject today some I that, such, to period forward-looking and risks to I Before want we they're XXX, attention to you that as which Spectrum of materially questions information for also Auction cannot address the today. the that remind website. available statement, the harbor our any

the of Investor our other investor page schedules. AT&T and on always, That are news Relations associated available includes release, X-K As briefing, earnings materials website. the our

Randall? to Randall turn And the so, call Stephenson. going with to that, I'm over

Randall Stephenson

years. for laid one A year a the coming three plan specific to three set the growth. slide and map into road exit series exceeded necessary single detailed is on plan is every met I Mike. XXXX, summary sustained out on close slide the on Thanks, a path the XXXX. to to that steps of was those for start three And out of we objectives that of we simple next or XXXX and want

for to year at around priority exit top our that XXXX you our debt and EBITDA, reduce told was debt done. X.X to times I the

now XXXX, the debt have EBITDA times. reduced net Time debt to about of was at end Warner. closed $XX billion And our about We adjusted since net by X.X we

We to what for you debt gave the exactly would it to formula take get level. this

year. First, we We flow, free exceeded of record generate handily, a to billion generating the $XX done. would need that $XX billion cash for

already than generated assets of generate Second, billion, $XX we $X more monetize close in non-strategic nearly to billion would need double $X which additional We done. target. and our And to actually billion XXXX. $X cash, we've billion, will an announced

May. right XXXX the came growth. On the and wireless in was adjusted to merger At critical on launch we Growing preparing HBO EPS, WarnerMedia, low full Max synergies up revenues year. in service single-digit revenues those we for were we're X% and plan, achieved nearly

We and in capital stabilized exited United network States. Entertainment the fastest AT&T on investment And our wireless in right with XXXX network, Group sustained EBITDA after brought plan. our best in the investment and

people quarter. million to XG the have in coverage we today XX network Our second and covers XG expect nationwide

we performance XXXX three next for As look years. forward, positions us our well the

and adjusted CAGR growth laid out X% for every on is about four. is free we've it straightforward and to see flow adjusted by EBITDA grows by XXXX. cash between expand We $XX billion, and $X.XX points, through basis $X.XX. Our $X By $XX between three-year X% you EPS billion billion very and to slide plan margins EBITDA grows and XXX adjusted a revenue expect year XXXX,

drive Board three that has And allocation very will a and balance of over the cash plan years. value. next is approach solid that maintain thoughtful sheet a lot This a generates developed a the capital shareholder

top-tier at into and to levels First, core aggressively businesses. our we'll continue invest

We expect $XX billion to XXXX. invest in

XG build We're down. continue. our that more in XX% than And for will AT&T complete FirstNet is on slowing deploy Leading and fiber. not we're we're and critical continuing to

In we've the acquire the pay issued continue of Time share capital much at months last And a pace. to Warner. retired of over slower debt, we debt XX the lion's our terms we'll to structure, but down

from will Warner the the XXXX, be to Our we By cash XXX% transaction. of have retiring the next focused Time three end debt we on XX% years of shares of will Warner. acquire retired issued our over shares Time the and the

we million retired these of in XX fact, shares XXXX. In

billion XXXX, year times. plan about comfortable this share adjusted also leverage to more debt X.X By a net repurchase is retire $X accelerated agreement. of X.XX million very to target We EBITDA to our first quarter to of XXX ratio the in a

can executed agreements as that will this expect $XX And streamlining us $X continue our You to this year. additional already portfolio said monetize assets billion year. I we of also to $X earlier, as billion we've billion generate

quarter later. fourth John our steps But to he's specific Stephens cover first, will going plan cover in results. the the

turn John. I'll So to over now it you

John Stephens

Randall. Thanks,

Let me begin summary on the slide with X. financial

we As hit XXXX all our Randall mentioned, or targets. exceeded

We up cash was full a Adjusted XX%. year. record from operations Cash for a X.X% up for $X.XX, for for came in X.X% quarter and $XX $XX.X billion flow take billion up the billion full-year, EPS year. the at the the the Let's earnings. was look. for strong grew closer Free $XX.X quarter and

made as securitization WarnerMedia our their adding an did to of addition receivables The efforts. impact

Our ability a cash to strong our provide generate capital plan. foundation continues allocation for to

the payments. year $XX.X invest. aggressively nearly $XX FirstNet to other was when billion our was investment capital you billion, CapEx total in full continue gross include investments for vendor and We and

in operating revenues a exchange foreign been Max quarter year. and year year. quarter $XX basis all, the our with fourth XX in and points for we stable good hit about quarter up HBO the in were revenue items, And year growth these Even All launch, without income the the targets. very and would as margins XXXX the our licensing $XXX billion, both billion full representing and of have in of and forgone advance impact

our results the in mobility now grew quarter segment for segment, both X. Let's deliver In starting with on solid quarter. revenue year. grew slide by segment Communications Service year, momentum our quarter to build results. EBITDA a XX look X% and at about and promotional the our margins continues service even Communications for fourth year. And expanded for heavily and the margins by with EBITDA the while were basis the points in operating stable

phone adding Postpaid the in quarter. growth was solid XXX,XXX

our and This even was and the both For phone up year, while network driven ramped prepaid. as came promotional million postpaid industry-leading adds phone had we up performance competitors net about one efforts. strong by was postpaid churn

points. prepaid year-over-year churn note total improved and combined You should postpaid XX by basis

continues hit full to of target Long-term stability. as XXXX. its year our drive we left ARPUs. AT&T That us to to XXX,XXX focus to has mentioned, grow adding into broadband have brings customer video lots continues EBITDA focus nearly four grow. value million growth nearly Randall Group of we customers. and and That IP As customers room AT&T Entertainment in helped be our Fiber head Fiber

more to but our Premium losses losses bundled impact especially our numbers, than continue XXX,XXX subscribers, improved video broadband net by customers. video sequentially

trends Our new term simplified long video improving. subscriber offerings position us are for and the our

Business Wireline margins the in and year-over-year. The when Revenues Let's include X.X% EBITDA up Solutions EBITDA in turn wireless, grew down quarter grew steady points. were continued to improve. relatively to And X.X%. was just and Wireline. were sequentially you Business XX trends Business basis

to a America consider pressure. lower to X. Warner and helped WarnerMedia production revenue. that Subscriber content decision at which offset with growth great quarter both Turner cost combined slide and are Latin Let's move results, HBO and Bros. you television when the WarnerMedia had licensing forego revenue to film at on

and to decision strategic the Bang the Theory exclusive rights give including past, made We programs for In streaming HBO have we these popular would other shows. top Friends, sold Big Max externally.

about impact would have if these grown been quarter, fourth the revenues the at would sold. on shows have Looking WarnerMedia XX% by

an about even long-term. represent cost about In EBITDA that Max XX%. have growth HBO would XX% rate has stronger years. pay in fact this WarnerMedia's million the three for but that and as organic will Obviously off $XXX an this see by growth would increased over us, investment makes best upfront we And or

the The done environment. The operations in growing costs positive big an our American reducing job has team excellent in quarter. challenging and a in revenue turning is of Mexico Latin news EBITDA

more Fourth for million improved improved quarter year-over-year $XXX Mexico million by EBITDA full nearly year. and the $XXX than

press further gains. for We continue to

wholesale will new revenues both to with and add EBITDA. A agreement Telefónica

forward Vrio we work to against this it environment, profitable expect and in even continues But improvement. to generate continued continues headwinds. Going positive economic and foreign be exchange flows. cash

allocation John then discuss Now, plan let to turn back a over John? operating and update. XXXX Stankey me to it capital I'll cover our come and

John Stankey

to morning, of XXXX our John, plan the in key everyone. where be focused performance. on Starting areas drive four are These good our and XX. we'll slide operating executing Thanks,

continue one Number next the I'll because driver on in mobility headlines we be profitability of but be I'll and go is in biggest XXXX and momentum first. the over into detail give factor the to each our continuing expect some growth will key meeting few mobility goals. a you minutes our of revenue these

in successful why are about a for you opportunities We're to with Many Analyst launch Max us three of on Max critical launch have HBO HBO right the Second, and it it gives plans in firsthand in and years. of excited our us. is seen October of the next to the we're each track Day May. so

over with to our our is our broadband AT&T based growing be is Key architecture. offer will fiber penetration. broadband by which this our increasing bundling Third, delivered video revenues software fiber TV,

focused laser our both improving result, and of on costs of business. overall the the we're effectiveness out driving efficiency and And operations additional finally, a as the

wireless also four part fastest into dive beginning FirstNet Last build. me drivers our our best recognized year thanks was Let nation's on each the of mobility as with in and slide to these XX. network

in the our one nationwide fact, XG out network of existing competitors we network own how few evolution rolled did our compared last a to month. December to our test see of spot XG In

of is different and strong In average. us our our and cities, gives on four a up The latency leg had us speeds to XG point a position the deployment execute three competitors. spectrum lower allows out faster network than test strategy our

XG mid-band spectrum low people have quarter. We and the cover million expect in to today We to the nationwide second XX nationwide. deploy and be

gigabit millimeter We're this cities important We need adding more and and also XG+ populated cities. its densely wave here nationwide. latency we're speeds point have an There's and be we more super we year. spectrum to today made to to have once deploy XX XG low the in

have for been the upgrades smartphone down know industry a you now. while across As

coming any off we're fact, for history. a fourth low upgrade our record quarter In in rate

available back this devices popular when revenue fast more growth. year rates can should be and equipment XG expect forward But smartphones the to and of at upgrade scale, you half higher

upgrade. this our consumption media premium consider be and that coming stores couldn't wireless are more we'll for on when The offering ARPU tuned a be upgrade at cycle when into highest people our for HBO to features plans timing perfect Max you with time

distribution the ARPUs. something adding new a lines further to improving fit than HBO in content and opportunity Max's subscribers of HBO our accounts average natural million wireless our makes and it everyone Max, the a family It's per account. three for postpaid nearly while XX mobility has natural more that that for

in revenue for higher a X adding our XXXX, As rate we adds XXXX. expect will postpaid wireless phone an be we And year growth net XXXX in after result, expect both better and net to adds. service million be prepaid, even nearly

an FirstNet and FirstNet. serve here. than agencies XX,XXX now important X first million plays than connections more role more with responder We

our and to the We grow as in expect in deployment those new FirstNet devices numbers market XX% reaches months. nicely coming come capabilities will

we than XX% lots our not plans today. more a plans. cycle a of the penetration unlimited adoption XG into customers expect We unlimited device our bring of higher stores expect We're also but upgrade on little today, will at

seen plans giving select Increasing mix us. the adoption the for the opportunity HBO when growth unlimited unlimited of on current Max an unlimited to obviously free, opportunity also is And from our it's which improve overall you HBO we've churn plans great a best to get will add our customers. customers into ARPU for happen

X% expecting $XXX A this worth the service of reduction point in of than million revenues it across up; us is basis one more base growth Sum we're mobility year. to wireless of churn about annually.

be for we expect why believe and HBO required space has Only pillars AT&T. Slide customers a go Max Max Day the all a Analyst technology were October three. streaming; and premier at our the content; I three a in will of and XX and marketing to the success HBO you the you and distribution. for in game-changer Let's heard many in me for talk headlines solid with AT&T about footing platform; for

My unique in with highest Max than track the quality Max only offering. excitement believe SVOD made simply, the a will curation, premium and offerings since and The team has Quite percentage in HBO experience, culturally May in with grown confidence in then. higher every tremendous relevant to and competing products. launch HBO market great have opportunity we're of area we progress a be the better on

coming of film, leading awards. off exciting industry-leading way. new tail Emmys our XX Globe diverse We're strongest excited with more theatrical Max an to Golden ever our end highlighting than the seasons launch content. HBO and Award and the one breakthrough other awards We and Academy of offerings deep any had Joker captured nominations six

as twice only are to continue awards today. relevant to is service. appeal appeals than Max, With our the amount latest the going content price of high-quality The HBO for the we'll that expand we offer to great the the HBO base. programming additional a that only indicator culturally consumer content investment same broad more create in And consumers of

as well. progress great platform on making product the HBO We're

beta we're than user content. screen issues is no on and layout. work invaluable getting controlled This reviews and gaining but important important less Our navigation subtle feedback is nonpublic solid like award-winning

our domestic We're continue to HBO position expect we announce subscribers. potential consistent deals the embedded partners to discussions with both digital active platforms of base leveraging our distribution making We're in enter market, have we and and and XX Finally, distribution which to prior fine-tune progress with our across we'll million we plans go-to-market extensive AT&T MVPDs. than more launch. the unique

providing Our HBO proposition compelling focus on distribution mutual and partners our continues customers. be for to our a value

off access to be subscribers at start. more to distribution HBO get so than offered AT&T fast launch, million we'll Our platforms XX a Max HBO on immediate will

TV drive growth, with media XXXX broadband have mobile, have HBO Plus, focused TV it on million our direct wireless, incremental and be customer stores including will driving XXX premium-tiered relationships advantages adoption broadband. who pay pay To unique by combining when incremental distribution across we or and bundling Max we offers. retail

curation. we'll for and WarnerMedia customer use insights AT&T And advertising analytics

will of expectations of and at ARPU and Max of increasing We customers. long-term and of services possibilities our value highest have and very HBO strengthening our quality the the pay and a HBO wireless same on TV the Max. higher have impact high positive for time we're And adoption We the broadband about highest expect offerings. stickiness fully immediate the thrilled proposition ARPU

Now let's Those details on Group. look at are XX. Slide Entertainment

from the customer-centric us base and TV. Our EG amortization be last cost to delivered to quarter EBITDA increasing first comparisons the higher EG same in basis target in focus, the EBITDA fiber tough we team but creates stable while XXXX video see year-over-year In our going apply which year. stable EG some our AT&T business see We'll year. versus for of XXXX customer operations high-value on you're a in last expect cash launching

customer EG Fiber the greatest believe significantly our within base to opportunity broadband and AT&T is We grow revenues.

and about hybrid on be we to us our performance locations with a lift million. expansion of or X gives total have experience to our than into. footprint. traditional about We expect fiber a fiber million This exit today X Based recent X million customers to market in sell customers share fiber significant compared in XX sales XXXX fiber today our legacy fiber million more have copper-based we will our

improved represents product existing video all acquisition software-based organic share the AT&T never better portfolio growth that of an HBO can on into It you experienced low broadband lean product TV with my costs. we'll an economics speeds competitive career. acquisition expect and opportunity Where our market that we Max in given offer including products I've

with trends. as our Within in overall be broadband video video declines premium our more exit the expected footprint we industry subscriber will year line

losses. the we at improvements base, premium year-over-year expect total our Looking subscriber video in customer

to and cost talk efficiency XX turn our about let's to Now initiatives. Slide

and and the reduction progressed the effectiveness efficiency an XXXX we're over overall in labor-related improve with past has previously months. New operations X% few our of benefits We you work employees costs in that shared to targeting additional contract alone. including

That work for to plan and ramp cost in quickly billion we savings. additional will $X.X it deliver

of those and about identified implemented we've already fact half In savings.

significant portfolio, can our market level our that of XXXX. comfortable from $X product rationalization. we self centers, come efficiencies Another customer and information our us generate is technology enhancing product simplifying billion information another annual for rationalizing rate call will thinning the support. This offers, feel modernizing run technology We opportunity exiting of

will benefit lead and to improved ultimately streamlining the market enhancing addition, have In agility effectiveness. market of our added

we'll continues next expect Our days some additional efficiency and functions. for assessment work I XX corporate, have the sales initiatives in underway and our network, procurement of

financial I'll guidance. turn it allocation for back XXXX capital now to his look at John

John Stephens

and of at asset was still Strengthen allowed our last us and monetizing teams top priority end John. year the goals. did sheet excellent begin shares our debt net ratio while an Thanks, This last our our job balance reducing retiring portfolio. meeting to of our year debt

In XXXX, for to expect flows. even flow We had that year with It in cash cash expect be in costs momentum payments the strong medical range funding and with to continue. a retiree fourth year. you higher starts and last free similar free tax this can voluntary some record quarter. all We this achieved

asset on We also monetizations. overachieved

expect do traditional long-term net purchase the monetizations already preferred we We more more to we our $XX We At options. added to tower of with $X.X this time, than stock. $X when underway. our stack $X same another billion year continue efforts And we our preferred evolve issued to also monetized capital billion last billion of to capital billion significant year structure.

it but investors The AT&T. preferred provides publicly stock new another it market a with there alternative traded for is is invest to and us to

us. In which what this for common to dividend are And par. dividend than at a less Investors returns, exactly currently for secured make fact, rates our stock offers. premium are it shares at is looking these trading attractive yield dependable

assets cash tax-efficient preferreds manner. allow very us generate to in long-term a also tower The use to

of and targets. focused expect the end asset debt net of fluctuate full the will in see share timing and the to intend our XXXX. but our debt reducing retirements by two leverage we three-year debt to monetizations, year We to ratios reduction the on also range Depending on adjusted EBITDA you to the to throughout year X.XX be continue for continue target

of we share to quarter. billion our told you already about expect and Our the what and early Thanks we've million earnest. in to begun possible first remainder as shares retirement XX wanted you're that XX is bought million year shares $X back has We seeing. January to in another buy the the as see in ASR, in

year us meet expect the remainder million can we our retirement of to bought That's XXXX. You of shares the on the exceed for XXX top or share in to back and during buy shares continue target XX XXXX. back million

We have our last a and debt showed with can our of managing on capital lot year. of pull have wealth structure. sheet optimize focused levers as a we to we We're opportunities balance

You us additional a shares. manage continue in including preferred it to can issuing prudent way to expect

let revisit Now XX. me guidance on our XXXX Slide

year Our results so we more you guidance what will remains of in most, with consistent weighted be This to the second than October. more told half year. our the

in example, the which begin investment, from the pressure Max HBO quarter. fourth in first of expect For you heavy the we part year, saw

as noncash well year will build. higher momentum and half see pressure you costs on But second EG, in amortization continued in content the And as the of subs. video our

throughout have flow EPS example, continue been aggressive benefits will and and increasingly share the For retirements the year. will

later launched And our more HBO in year. upgrades been strong XG plans visible. subscriber Max will clearly guidance. revenue of the and this HBO will our have be Max to all combined reduction run with into full Again, growth. stronger growth The rate wireless benefits year drive factored leading has of cost will

doesn't XXX $XX debt our revenue in in cash investment adjusted range range, include continued monetizations this free asset a content; billion. our X% to here's adjusted common dividend the billion ratio in committed million what shares in $X.XX margins; and billion investments $XX $XX or growth; of with stable capital share more reduction that and gross $X the With flow between of $X.XX to: and XXs; EPS the share; in with low mind, our payout XXXX; billion X% in to net we've retirement EBITDA

Mike, We're for our presentation. that concludes ready Q&A. now

Michael Viola

take the question. first we'll Operator,

Operator

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

John Hodulik

first fiber you. in What in you Thank back maybe the in to Yes. a a trend I sub all, Stankey. clarity. sort Maybe expect John quarter. you of And, questions Thanks the of for guidance on saw a was more guess, Great. conjunction more the commentary mean, couple trends, but entertainment the little for driving that I with that? for of slowdown reverse? do adds end improvement year, the of the bit in

when in XXXX, we Or what of sort in those expect over guidance And adds the play impact And your of terms the saw does $X in you of million do guidance, billion drives XXXX? out the acceleration? course the the Max the expense -- HBO in that then, Thanks. year? to how for incremental $XXX

John Stankey

New Happy Year. John. Hi,

the fourth of all, December XXXX, the the contribution part quarter. of slow to pretty like, a for in services, the holiday seasonally the first of is so slowdown. is general month home-based that's fourth a dynamics So, of issue quarter slower of the given quarter and

wasn't strong. gross second The is, on performance video add our

You see trends. the subscriber

combination As dish with fiber, to as year to start natural you're this and more than gross performance get And software-based and put our a we've when we a AT&T product naturally, add it's you, we satellite to a AT&T stronger. shifting much able starts fiber. through much TV, with TV, move shared

And in to we're move much see side. TV and now stronger on so, as markets out we the start AT&T in, we performance to fiber going roll

feel I'll to that good we need look we're case in current tell hard at to I as the going trends, be sell. a not you, in be now product that. it's pretty a that customers great I fact, are customer we product. right It's on a It's like. that's, Frankly, where and where

it going continue with see I well that very don't do expect through. and to we're that could we think, I

I that's what tell would So, you.

recovery to see going You're in XXXX.

to going a on any Max of to dilution, to range to gave side, a On in with we're a terms that's for expect the a years. both, grow XXXX of not and changing going range in introduction. product market it's you what we a range that lot continue the The of on is coming that moving subscribers of There's a Max It's combination over reason. parts range.

content And balance and we're opportunities market be we to want to look or acquisition things out. able going it's may be we for management flexibility the those team And other the and like. to be at for entirely something looking possible, to have in that the opportunistic,

growth We trying we coming well are We have heavier subscribers what and things up subscriber our a working with strategies. it on to expected. build little make and

I building new think, of that's the and subscription-oriented business. a nature

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John Hodulik

John. Thanks, Okay.

Operator

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

Philip Cusick

declining quickly strategic WarnerMedia Max? here from video see over us there? you away can update John, away pretty does from strategy Thanks. and the thoughts the on bundled guys. How that time decelerate. as We even units your Turner change value you on industry Hi, you from

much. can should few Thanks very over on are remaining come video those low-value next base in the give then an that and update also And us quarters? the you how subs out the

John Stankey

do to Phil. Happy Sure. that

a of TV And kind pay space mature life that's think a the bundle percentage the cycle. mean But everybody we if not step So, is the back that of and the would product in in in the size sold position the that transition. traditional stand it's like universe, relative to working buys of it's end I huge. where knows customer its goods we total cost I our the sit in I back -- of you about way through of that call what and that

portfolio a concentrated fairly Our portfolio. network network is

the a and general CNN. of from If part it general profitability I And its TNT performing networks, and TBS, TNT, hybrids. the entertainment nice general and not networks sports. are bundle primary we you all three entertainment and at bulk and know about our well if trends, think comes is of two TBS, the They're content look that you these think about our as really entertainment combination

And at perspective attractiveness so mix and ratings historically perform have. advertisers' because they content an of of that from from desirability upper perspective of that the we a end

ride resiliency. of one more mix portfolio; some think and this two, transition basically important contained and having through have content I is to So, having that

of And as my agreement are we that most to down more even things and negotiations, and about moving people see those And forward distributors value forward. place what's the that on we're those been see back renew is a that feel happening out continuing pretty important a carry to our in skinny view in in good carriage networks go pay or and smaller TV things understand market universe that.

with are very that what do spent that new to how dance them. see think And the natural have a to we're get strategy. that to linear Now, right. and is entertainment a And to key choreography time be of consumers need with we're Max between it's to place want why let's and in platforms and be match We important the positioned doing a we happen. out content feel what pivot It's distribution that networks go. clear, that growth that part explaining know there we we're well the the WarnerMedia an reason doing Investor we also of lot and Max doing Day we make platforms that is general we're

expect like you and occur invest What we they're make -- news them. see sure little in continue we do, with they like us content keep a viable We'll sports. should start to but will what the relevant. bit. shift that distributors, that you'll subscribers networks that To obviously socially to that's see continue content to the to relevant for They is also our

a like probably bit And starting HBO are it might And that cause entertainment-oriented unscripted been the office have to supplant hours. cooler. a so see more up water more talk things forward. and going come people content in, that Max SVOD little will general go into to see to start showing mix of platforms that probably you content about around It on moving the

doing great that a the where either place direct-to-consumer ensure across we're with in we maybe us through allow think relationship our we market mix studios customer. the in And distributors constructs to we're what or will fashion our monetize with with producing direct through that conjunction will end traditional the with have brands in we have content that a Max can to different user

I you mostly we the to more the quarter promotional low-value And pay on going show tell that as going we've continue that. will as subscriber -- shared time in some you quarter trends roll-offs do by subscriber shared should going think you're On through. a bit we're we we to exit I our of through improvement TV decline first to work I would at the subscriber look up. to is continuing year, construct, happen see got the expect earlier, when what's to that trends move more little rate on this in be each

the industry ratable and get that's decline think kind path with by there overnight. can't you, year. I we're on why to back to the time should And tell flip switch TV that the of exit just suggesting we that But base get glide decline will in I'm aggregate a pay you subscriber you a

heaviest by time what's to we'll churn improvements, quarter is seeing on its base. improve its we're we hits our in just at I probably to to availability the perspective add And operational the really first what stride year. AT&T as get that roll customer base, terms and indicated see what see gross from look improvements, When in across trends of to rollout going performance doing those capabilities the in start the in subscriber exit of quarter. team those the We're losses what TV the start an I we'll second incrementally into happening the

Philip Cusick

John. Thanks, helpful. That’s

John Stankey

Thanks.

Randall Stephenson

Take the next question Greg.

Operator

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

Simon Flannery

XX% you of XXXX Great, I the know year, short-term the we targets beyond. year being for of put the good Randall, the KPIs here are about Perhaps lot up last short or was incentives executive deleveraging out morning. just think and of you. Thank the comp. could a are. I metrics how XX% what and share set -- for

focuses So three the any could two you color or for are year? key around give the what

investment Stankey, John the about there. capacity for in one then talked the network, you And the

Perhaps opportunity in are going I think in update how could and some the Thanks. companies. sign on perhaps market. you us opportunities you've to up about there the talked just the cable give the an things wholesale past

Randall Stephenson

was compensation is Randall. and ratios articulated of and to Simon Hi, coming leverage for this our to for And it Yeah, reduce XXXX told who as all our XXXX into you one priority down you I times number debt get that aren't going those X.X was And flow our debt-to-EBITDA. familiar, debt-to-EBITDA said, cash executive of All selling some team as instrumental was amount for significant really strong as that drive require get non-core we home in getting assets. you to set focus management the accomplished. to and there. and mission a the that generation, at target

those working place just of think for done. What one repeatable. prices an I we're some and not strong are that driving opportunities in at initiatives are asset capital team dispose, process, all advantage that impressive assets capital these identifying initiatives getting opportunities then things we're actually flows are through and good and most the excited these taking to level are are about those getting of executed negotiated of amazing working and driven the cash terms in put capital working

And XXXX of another investments Max so generate in even HBO cash free to good with about I ability $XX the really flow. feel billion our

we're EPS more Stephens cash at a what million our our coming that and strategy, opening quarter. accretion year. in this is part debt get continuing least sure John working to we million to Time And focus, Coming I retire to be the into the the is XXX objective at for flow this broader out as first shares and least And as of Warner. will throughout year, generate that making in more about course What move X.X articulated year towards capital additional we shares the the execute we're XXX objective year. million comments there's specifically knocked generate issued towards. nice working those the the of in of the the retiring back of both meaning we're allocation XXX We'll isn't times to is

targets. generating we to going flow really be compensation execute will that the earnings overall team it's be to in we've all hitting the and And these to that on is said, focused what share the capital objectives for be so think cash focused And strategy. you the out laid management and cash need effective on. I the buyback And going allocation programs that's

John Stankey

as Simon because have important already network that really year, we're we to grow strength you that next thanks of for indicated performance highlights how revenues asking the the going question, because perception. a and I think wireless it aspect

market research do is the the grow to starting customer out amongst we now base. As

fine-tune plans right a which move even momentum perception, bit And we that into we see as subscriber growth. we have brand positioning to messages think move we as this happening now, know is year in we some that I our more. little

And second behind will And subscriber the allow that And would in economics us, lot that. things There's there, help some get to occur our distribution. of are business just that starting I ago wireless minutes revenues. just direction think shifts We've what to about grow got launch. us a the the of so as the Max the on we're to then of and which into talked help core us phase a we've the what doing pure through cycles going organic we I good of few moving FirstNet call dramatically. move us the part upgrade tailwinds improvements got FirstNet are make we coverage to

up of the investments able years, key these didn't to And a turn because we've been wholesale frankly over we headwind had last have flash a wireless business, the with over now bit in the last capacity X.X business several our years. been our that

where we've position We're our guarded largely needed and support much capacity been we've very about now wholesale be had because a our to in to different position we than historically base. retail

no-deal And we're others holdings spectrum a can what people happen in when wholesale flashed are a fact now, look has that in at in and in the think way a different we we in than space. probably play more in to deal I spectrum situation their position I with or in the either in industry And the industry.

We're not cable. on just focused

options deal we industry space, that's there a the it. opportunity an out there's do we step and indicated possible. that think was something might into there accretive general. can I constructive we But to lot lean previously as to up to in deal, for do expect do want we other expect to right if a in fashion wholesale of the in most I've that Certainly I the

that occur they to would or way need round going what to you help T-Mobile, you have that networks or and understand differently. that whether partners things are in some in whether either in or Sprint deal merging to a try out industry do think I not can I on believe partners occurs industry side. And would industry the wholesale doesn't the other to we partners to And the also we we indicate be with need the

plenty been that last we've of So, of pulling the there go that to it for lever number managing we've I are incremental start and years an will what couple up. us And difference for that down. wholesale us than and options over driving think that seen be

John Stephens

year. first year-over-year add the fact what reseller fourth And sequentially, to we've in the quarter. year revenues in to the and grew this stable had Simon reseller said, revenues throughout and we that John is

about, to now it's much is year. in starting occurring growth a with had we that John way in bigger. but only and right and It's already quarter the that small talking it's both opportunity not we've positioned but are the what contributing the So for, revenue make service well to

Simon Flannery

Thanks.

John Stankey

Simon. take question. the We’ll Thanks next

Operator

line next the comes question David from Barden. of Your

David Barden

for a cycle. this guys guys. Stankey it I idea John of it between consensus phone have chipset guys -- debate guys smartphone the our and not XG question. that here two, I and of Hey is Thanks our bought your view. taking lot sounds you really a into about internally tech there's like like our guess first feel And I super guys. know that

a lot if some helpful? enough I demand of what that to that buying perspective on from don't know could than so really kind a be that, would where already for the different that And conviction going you consumers of that products give super understand we're that in get it's us comes they're boost

us deductible walk Stephens, John the odd then interest issuing Because seems of this you preferred stock stock, behind and securities? could through little the embrace back but at it debt then and science new preferreds has preferred be buying same the And kind time a to of don't.

is looking confusion kind you. to net that as Thank of stack? think kind there's of preferreds what and I some of to so the at holder And equity benefit the capital

John Stankey

cycle. did change. plan changes. based we've expecting a did that the foundation area in of that look I that expecting I I couple that is similar And step-up done the know so assumption interface But the super say, the air super time. or think we're point what's UMTS look LTE different I cycle. were in use I at on an air interface on are a the don't of discussions there going We interface We change. occurring. Dave don't term at And would a we and increase think

somebody is I awareness getting tendency have raises speed devices. you amongst test see And on And will because sit we naturally occur fine. works step-up the speaking somebody would a them Well this run really It to around need it over to next when performance, the tell increased subscriber LTE people do perfectly speed better UMTS? their base. and

of a of performance folks going certain a is notice to much performs And it's I are simply expect a And look of base at that say to to going there's degree because there that is better. going that devices of perform access who to these swath and degree as number we a uptick of that. result etcetera just because that broader new device better subscriber a because the see be going bands to have

Max advertising trend some dollars to said with advantage business out tying increases more our support I in as what are we market aren't number we're And going for crazy going They're plans. be ourselves. the in our we're moving HBO promotion plan We're and and into that when to more of to the pretty year, at Secondly assuming put step to better our there look to going going of to taking changes. silly the be you support some and on driving of Max into be fact this the aggressive we're unlimited of XG. these function customers the

our migrations get into what plans we'll And unlimited nominal in are. higher-value some those uptick

be in going We to year want than market maybe in think upgrades. bit yes. And So through at to out of too we going some an renewal word historic strong uptick the upgrade lows go season. we're better cycle set the to uptick There's We're there. given, be there's the cycle. up end the little off stimulate coming the basically expect is networks we a It's promoting. to of coming that. cycle of holiday of do how an Super a

David Barden

Got it.

John Stephens

John said, just we have had of add very rates. here And to to upgrade what three years low

Just to going some extent need phones. people new to are

multiple this this has so the over also occurring just is aging And years. been of base phone

very networks in is attractive going really really Max this three there. available the of before XG going Secondly, The out, first HBO time convergence to clear, well. and we things is and to a other And devices John for have of be those the products we're all the next-generation meld made network have the and up running are us. would they as

there With yield. X.X%. science I today's Investors about a simply open of that's the it. a is X% X.X% The it preferred certainty. a preferred am out market seeing today it's is below X.X%, it. want actually about this. to rates, They like to yield this trading regard At our

dividend, So there. that cash our cost money common that's lower than so saves us

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Third, it's us. diversification for a

gives to investor different into it so opportunity And a us go an base.

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realized. us once give get below may to not people assets X%. recognition So allow again, that to have well And those costs they

much to of I For $X likelihood cash example, option billion getting, that real that our worth high and a anybody don't know tower paying over that. attention have was of receivables we

to put value. that already us that gives that achieved really it Now opportunity spotlight we the

that's is they're So our clear common allows us second, is it preferred is; and third, going than out the common that which one, to common; segment, reliance are lower our dividend science to stable the investor continue base the on to helpful; market the gets share of another base the grow; fourth, – and to but another costs reduce us there.

For all that like perspective, our of move really I feel for good we shareholders. very a feel a good it's – about. it's

Michael Viola

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

Operator

comes Rollins. go ahead. Your line Michael from Please next of the question

Michael Rollins

Thanks and morning. good

industry a more Thanks. meaningful can have you look strength haven't net and If markets XG to then you see your and differences customer that you broadband those as the wireless it wireless coverage? at in CapEx articulated, look just XG add? going phone postpaid fast are little seeing your own received given any customers And in the mobile, you forward capabilities what trend that that secondly, like network plan to And financial end of fixed unpack versus are of evolution driving you in what yet? fiber-to-the-home coverage, the you XXXX you've the for can frame

John Stankey

Sure.

can things let Mike, hit laid see, you So, of combination me out. a I if

we'll of get by better the going – miles, – kind of improvement getting is on stuff. of network where think XXXX see things support first subscribers is said, turned interior in driven us think we but So I of you're this significant of up the better core how this year was we the given and of FirstNet footprint lot I the a from work last number be coverage is the in umbrella, – we I and performance the to is in And you'll point the year this as where the there. have one that square densify agencies place shifts a macro do by of all, a to getting a our really to make not in position lot I coverage only year macro a on much being coverage FirstNet we and think see time

site been And the of sites the acquisition, up all going just we make start inside turning better we've network the square make miles So of make a the It's all fill-in. better. and better on to that's that to to the network covered. doing are network terms the building going the going in

only wonderful you speed and the that when test you're that add makes spectrum of that seeing getting position things back great performance And that and on stronger. the we're today, reviews to already

filling we're wave. continuing Secondly and turned we opportunistic do that up we've we to markets with where with be as to wave can increase are of in millimeter very footprint. XX know over already We're you millimeter going And offer we on that. infrastructure is especially a can We're as in advantageous densify unique we way that's a position in fiber forward. that economic in and to our wireline places a really businesses we structure where cost move the

unique millimeter going It pronounced characteristics. probably of cities. fill-in be areas That wave you're the is performance more in obviously, large where get will to urban

don't would right believe be part not I We some the need plan we're of broadband optimistic as base that are there'll obviously wireless subscriber decide might a what is call they replacement fixed as that connection. on Our construct. now the maybe fixed some

spectrum when a more see a consistent. mid-band start more wave coming density little get in as millimeter more make performance I think couple bit the bit to little support robust, think take you I that's to emerge going to a of we to the the place and years

space. tell plans. increases you the the push fiber a do of in wouldn't going revenue should add and footprint. in wireless what you I the the fixed to expect continue from to wonderful we me, to business space, out excuse any we're our On expecting our financial We're – there So fixed plans that wireless

there. think can that and right need return be ensure practices aggressively business working got to shared locations, get penetration on better a to consumer what with as return million because of XX our practices little is we have you in. that between about deployed we And now get to we and we business we've out Right the the goal we've footprint that's marketing we've

the get on well we on probably is that soon and actually release the ticket I formula And on the as right it, additional that have indications as team we'll some bill. executing

you'll somewhere of I natural the growth just portfolio. should to Right just between going the kind that's new locations would happen. million probably now population, into by XXX,XXX natural coming that see is You expect of call what to X.X the growth fiber rate

be up could team think step embedded the we bit, if place. feel this entirely we go million how that footprint we a it it's have that. we're about felt we a because in we If will million year, executing build like build. exactly and the on place had another next to know And the operating good that momentum X And as little we incremental possible do to we I operating where X

base situation looks looks a in industry more as difference postpaid prepaid is postpaid and lot between trends, a we look frankly we closer the prepaid the they're On – base there's base – We've with what postpaid like getting getting like. prepaid our may It's changing. together. be been broader shared you the a in where

these postpaid. seeing are what get get we churn we very accounts we start Once folks that once have smartphones, we prepaid, multiline on on similar characteristics to in with them

base as being to because starting of postpaid into opt between think I available, as worked has gotten little the smartphones we so, less cycle construct. as now differences phones their the And products economy previous the of two customers a generation improved the maybe prepaid have the into a see way have

and the if it we a possible. a differences with – driven by we the they about and very offer, that That's between careful our way goes a of comfortable move them when economy to postpaid the characteristics is see postpaid little the what networks look we if whether the which reverse two But is and think we more two. a headwinds become or of that lot people the prepaid are there's It's a Does is what itself, performing we hit maybe similar have can in customer of places. products. catch at offer net I some can occurring, But transition between largely economic do? both feel the bit you more

Michael Viola

one We'll Great. take question. Mike. Thanks more

Operator

That Okay. go of from the question ahead. comes Venkateshwar. line Kannan Please

Kannan Venkateshwar

you. I A if could. Thank couple

does? guidance. say on the If Firstly, the it I at decline about over becomes of of think get cross, how mean, cost nation because does rates the video kind of point, on course because lines others and those you your some impact and account if video that impact although DIRECTV losses will your most DIRECTV, Comcast an the at that your of on is based there scale? any when it than stable smaller you And clauses moderate of margins programming and XXXX of

it And secondly, are. is? for in that line the attach within the video when the broadband year, That of lower? average? where last of what think you sense could sense about lost us is homes And higher the will that give with homes, loss you help you've or result trends of a get it a Thanks. of is base promotional us rates a in as Or

John Stankey

you're the first all years content business the we cycle particular the part given five to -- as the of to and we're in to so XX the are those answer the of Kannan don't short and not no. on size through went renegotiation the a in continue our rate months, scale of We any move significant your pay baked best of forward. question I through bag at the all, would suggest agreements. last as nature those to going is, of fairly depending I exposure aware, see over card the the So, three first we next any

I about there'll be what's is what more moving the I happen forward frankly, think of pruning trimming TV likely in some I talked market. to earlier, and offers where in think pay

programming move or costs, traffic cost from it will dropping folks shifting on be their less manage goods As of forward away networks. to sold

we're cost I bigger be baked well that structure than around that's anything renegotiation going in pretty that. or driver a to think But of regard.

and the significant of 'XX, in I good bag things have work cost result the I years costs. that we're in in through And one our content you'll last we're of you have the going a is, As But in what shape. think on on we more to step-up through year. see pretty that subsequent working We're us traditional as to renegotiation step-ups year-over-year programming know, would XXXX. in things in 'XX, call those industry a we're then work we did

product would a the changed. combined On broadband they step-up rates, see are in high rates as satellite offer we with attach necessarily move in broadband Those attach away we get and we broadband over both. modest attach to I extremely We not rates, distributed the rates. footprint typically expect selling, into and where we haven't our from will significant broadband. sales attach are us change a software help When gross successful on think

fact this The that necessarily of We we the software-driven helps That trends. want rate. to attach -- change don't that through things us reality gross. those gross We those subscribers help for those issues get of one helps move we on us is in have intake example by more more is, year want satellite. They footprint, on of gross solid that's product. and the on the line won't XX% related subscriber us as have that change sight

Randall Stephenson

Randall. This Okay. is

now achieve. all, for the gaining what we et exactly XXXX we XXXX. repayment, feel can business, for that morning very box. and of debt a to momentum capital for where feel every which operational very in interest do. of about our that. that given We've terms us performance we through good in want checked wireless playbook We're playbook It's we confident allocation, our from XXXX again cetera, call just you now your in I we're going We're thank we everybody of First joining told AT&T. coming you off this to And

execute we we'll next the We have have a confidence to an of a even years. a transition. in have degree level that's capital high be allocation that's and very And industry able a three business we plan over that performing in media high at

years. over coming Max growth for HBO the business with it's vehicle this three next just investment confident and another there, we're we're the And making that

that So, confident management look team We our in think nicely. we very bottom joining to forward thank us stacks the execute. we this to ability for have you XXXX. love a Again, morning. We're and line, plan up

John Stephens

Thanks.

Operator

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

You may now disconnect.

AT&T (T) 29 Jan 202019 Q4 Earnings call transcript