T - Earnings call transcript Q2 2020

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the AT&T second quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode.

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to Amir Relations. reminder, a Rozwadowski, President, and Investor like Senior go is conference ahead. over I would being Vice As the recorded. to Please conference now this turn your host, Finance

Amir Rozwadowski

second quarter good head morning everyone. our Amir for Welcome Thank call. you Rozwadowski, conference to of AT&T. and I’m Relations Investor

Joining liquidity update me John take Stephens, by Stankey, Officer, launch, and capital John that, and transformation questions. provide on come our the Max then Chief John we’ll followed our John comments Stephens call position. with After covering will today and a will John business opening AT&T’s discuss Stankey are second Chief quarter your back HBO Officer. Financial the and Executive results

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

may they Results risks are to materially. and subject uncertainties. such, As differ

information on the Investor Relations Additional is website. available

call remind AT&T As the Investor the that With XXX, auction available address always, to questions also also cannot in Stankey. any over website. the quiet we John that that, on about I today. the earnings want of page our NCC spectrum are Relations materials John? I’ll to the you for are period so turn we

John Stankey

Thanks on Amir. board. delighted I’m you to have

retirement. as leading some expect team with continue COVID-XX, all the I and many side-by-side I’m Good him which of well that hope ever miss live are I Mike Mike going his their appreciate time. around he working you’re great Viola be did. us IR with going Safe But to we for with wish better impacts all for doing did we delivered to Harbor the than and him. seeing morning the You seriously, job and years in best everyone. much statement family our to

the the into that sharpens accommodations the focus unfortunate on under We’re strengthens be reality planning we’ve significant path norm chartered COVID well operating transformation and focus and business we’ve will resolve for investment and our our assumption the next adopted. year. simply The business

Given our that, you let walk moving through forward. me priorities

company, a create and connection. is people other, to with businesses what every That purpose us leads As focus. need day, matter. thrive to our stories to with We create our with and experiences market connection that purpose and each

a for people wireless as form speed and live the the First, and that broadband broadband and our provider, networks fiber businesses connect foundation high how we work.

software-based relationships meaningful as ATT households. through deliver entertainment Second, with the and TV, experiences Max us compelling of opportunity a giving the HBO entertainment to majority we provider, U.S. establish

platforms and on and loyalty our customer insights and emotional Third, our drive drive engagement product we attachments share the create stories tell lasting that across set. customer can fantastic direct long

better of to We’re our executing across AT&T. great with more plans drive engagement and customer great and along value service content all connectivity to provide

forward. day, every customers engagement hear more investment we and goal bringing be to to a know day. things future will touch represents and set-up, actively guide to execution. That’s the going and opportunities supported that’s times insights about Every and and Our To efficient for our they us and together more a products. in we what talking learn the allow grow, new for point you’ll subscription give connectivity us to with fact open our in advertising to reason our about is multiple crucial want, engage a effective way chance have

including and that greater mentioned. products competitive not deliver how in pricing achieve underway work service XX work drives our together to key improved initiative, streams transformation only we investment our growth how have I As momentum but customers, those and than we targeted different part that levels more we will enhance value market of for

AT&T becoming and quickly that’s in relies agile markets. success evolving Our needs a competitive efficient meet more on highly company and our able customers’ to

transformation progress a next Max. HBO ago, of to Communications around months step A organized changes the know without expect to today. this like with could a launch AT&T on last that make year AT&T of than focus WarnerMedia moved We advertising, entertainment and sheet accelerate content successfully software-based together rationalize launch on so the teams and couldn’t sales. began model to platforms in our our will and the subscription areas, fully new WarnerMedia simplify our Xandr and this to supported entertainment balance more around the next portfolio speed we us operating place and operate improve we made month, transition work live version with Last allocation we’re service, at Max affiliate that put Our production, by took AT&T I our year. and and product our we allowed few we different look plan efficiency. to customer solid and and deliberate in That emerges operate at capital we transformation and across organize we all advertising plan. what to how growth from building networks, programming, WarnerMedia work both HBO AVOD

effectively. cash allocate capital us We have flows strong to that allow

which and invest dividend, XX our by nationwide our We a of XG to we’ve which dividend of We with quarter payout is finished committed areas Max. fiber, growth XX%. HBO significantly to consecutive years. continuing today, increased We’re ratio of remain the as in about FirstNet

XXs, of payout range. ratio the end year that the likely at We end low expect our the in to with

and reduce obligations metrics. near term continue high debt to maintain quality We our debt

of can committed no businesses an business. disciplined ongoing remain our to those portfolio they’re and to review Finally, our of to core longer we because we assets identify monetize

Now the offer it Stephens I through let perspective on to John you me to before turn details. over quarter my walk the

of the downturn. economic the businesses in face core subscription proved resilient Our to be

both well, Our grew margins wire mobility and segments in line performed business EBITDA areas. and we

fiber though ability to homes limited installs. customers into COVID customers’ to new for our some We add continued go

and quarter better was than launch, its software-based hit HBO TV TV satisfaction, the track on we legacy ATT services. strong targets highest to last Our you we out Max growth full performed video fall. entertainment expected our it’s businesses performing customer a had subscriber well. o its of product for level double our first laid in

seeing how later on production, shut revenues, already imagine and on refocus more theaters broadband moment WarnerMedia With last We’re to I’ll and down. that, advertising wireless our and adds the impact important reconfigure and operations a with the our significant talk Obviously I this can direct-to-consumer to COVID WarnerMedia turn content all in a cannot HBO Max had absent segment increase little growing We’ll ARPU. our that about we made but John. business the being at presentation, over the year opportunity. it moves increase

John Stephens

John, Thanks everyone. and good morning

severance on deferred impact theatrical Revenues the foreign for billion plans. absence revenues these releases reduction include our Cash over transformation we’re of included reflects real overall second sports non-cash about of conditions quarters. Slide revenues related had estimated quarter primarily $XXX foreign Latin will ago, mobility. and quarter from the or a economy. in lower The exchange million an from impact the was share. pay of impacts Latin segment. income. COVID television to America, from operating and most rates, next Adjusted on foregone the programming the lost $X.XX based write-down international and of revenues theatrical Combined, expense That goodwill from workforce impacts. delays releases. incremental severance overall international In and Our a Lower and reported cost as financial due reductions and year severances making in impacted costs adjustments the was lower a summary our accrual delayed lost EPS impacts results, occur advertising our to delayed compassion roaming $X.X an the and impact economic COVID down from America several a Adjustments offset share slow X. on for an were a $X.XX EPS. COVID This from mostly COVID. part Corresponding of in exchange begins accrual had including to for roaming and production and quarter revenues, a impact of

the managing our active billion A CARES essentially financial income year pandemic. historically quarter at take the flow billion. more an in variety estimate collections receivable We billion. towers quarter, Cash flow was cash, We’ll were of in came invested $X $X difference of $X.X items and than payments, and billion the Act, capital to even invest In in in $X.X $X primarily gross our in came at nearly moment. during rates. talk including in free new in to allowing vendor low at invested flat for billion $XX investment the to with flexibility more in COVID advantage operations solid us fact, during with when accounts we a from of impacts. up impressive areas. from was were spectrum of debt supported some HBO Cash operating Capex and that continue excluding the full about cash XG in benefits but adjusted billion, our growth timing margins interest additional $X we Max, a line around were million the attributable we and and plus markets

Slide X. our with segment results, operating on Let’s look starting at segment communications our

much and billion inclusive mobility rebound of a with remained had late stores down Our many overage would both estimate COVID of impact in up in of strong impacts, the and another decline solid X%. with being COVID. margins service revenue business than that’s story. reopened subscription service with EBITDA EBITDA our were resilient. quarter, quarter, Even to grown international roaming margins and of be those declines equipment line, late to due EBITDA a we revenue business digital stores expanding, helped the led and by $X.X of to continues the offset impacts. Without good mobility, have which quarter. revenues revenues, growth year-over-year Mobility even more broadband service fees. and sales in revenue and COVID in grew during as wire closed waived a was Mobility Equipment with

had Our decline total essentially flat. We prepaid offset a was in than phone phone. more XXX,XXX that reported adds helped growth net postpaid phone

Our subscribers quarterly an we’re ends. who the likely treating will for and customers as the disconnects Keep pledge once video second these subscriber the short, reflect wireless, quarter. service In for estimate in counts America Connected broadband disconnect postpaid

While this XXX,XXX phone revenues, postpaid to for our About service accurate the network. counted of adds, on were they this is as we impacts even still account most though transparent net subscribers and way were and this. believe our churn disconnects,

add XXX,XXX basis X down Connected adds points we would about lower accrual. those back America you If much with postpaid churn our even had phone and Keep was phone net churn. have to results, Postpaid the

popularity both revenue volumes. America of X of package $XXX million broadband with increased The our on unlimited same We XXX,XXX the in HBO Fiber are about X.X than for an also had to entertainment part not I to X%. look the out increased on million We advertising the plans broadband video point demand and more who attach speeds in gigabit EBITDA more services. gigabit time XXX,XXX they prepaid should losses impact AT&T numbers remained remained Max. our speeds. churn as number losses and offset than also This our our have that about video AT&T XX% from do opting counted from elite continue commercial active includes and Fiber the XXX,XXX at had estimated record Broadband now nearly total them on a Connected group, first helped TV disconnects low we includes rate gains revenues. had our We video subscribers million under quarter. of through thanks lower though a lower subscribers with lower AT&T the for even network COVID customers and quarter. include speeds. of premium same and Premium by our In added one Keep faster program. customers the as advertising customers

growth both in and IP broadband. drive We continue ARPU video to

margins focus to enterprise premium customers video than ago, reliability more XX Business strength by solid partially our continue as basis we were EBITDA and as fact, more strategic recent points. by trusted consider stable essentially was customers. sale and growth that In and long-term products was network. was Revenues IP legacy year X% trends consistent wire EBITDA you declines slower EBITDA in in This value on impressive services. the line flexibility managed offset performance of both year-over-year with were helped up even when expanded ARPU an and revenue which was as we results. had a

out, have grown. revenue that back would have EBITDA would If been you and X.X% down just

on America Let’s are X. move to WarnerMedia and which Slide Latin results,

most is which Altogether, from The COVID impact quarter. John As a quarter the about more in the John mentioned, expenses $X.X minute. a just on Lower COVID detail evident revenue favorable had successful news WarnerMedia impact the the Max, billion our will results. resulted on WarnerMedia HBO in in launch a cover was in EBITDA. in biggest of impact

Rio flow to comply Turning a by factor had the We financial foreign environment, as year. reduce even have Rio which economies this, impacted of cash closed did America major our continues to COVID, ability U.S. slow of with results sanctions also on lower was Mexico foreign with economic impact COVID. prepaid Latin operations and to their on year exchange work impacted service. become basis. Rio’s equipment in from currency improved customers’ EBITDA economic the our headwinds a onset This quarter Venezuela This sales but COVID-related exchange closures. and its store in with challenging positive over also generate EBITDA Even was to laws. operations, and even to base. against constant subscriber but renew stiffer minimal Mexico continues this were

go the remained were flows financial and Now capital managing strong for to Cash our allocation on focused, Slide with made our effectively capital very exited X a We an portfolio. update large let’s structure. we in debt strides position. strong, quarter

in cash the we’ll full-year gives likely dividend quarter Our at of total strong range. ratio end of that greater confidence flow range, our payout free a low the XX% us that even hit the goal in

invest. guidance. plan. our The to come billion with to of continue $XX expect build We also at in run for original the FirstNet to capital now We year, gross investment ahead the continues range consistent XXXX full

FirstNet making our XG improve to flexibility network. debt network next reach management has opportunity this is term great additional being The Ongoing average strategies our debt We’ve risk. below done the expected and This been disciplined team billion coverage to in our cost at active is are building today. allowed in We’ll We network low, issue bond to entire long obligations manageable. and benefits XG rates towers, maintain expect used healthy, as to $XX job build market. are Rates in a the nationwide the out demand we our near years reduce term continue few debt. materially our of actively liability reduce considered significantly with debt to us be very management. for debt and and about

levers other structure. pull our can several have we We to optimize capital

about CME, close to in billion this sales expect and pending We year. estate, $X real from monetizations tower

We to funds expect soon, interest. some Rico wireless with sale Puerto our to used preferred close redeem those also

would expect continue now should an business our back I us to like for John? You turn on HBO to other transformation update exploring opportunities. to Max. and John it

John Stankey

Thanks John.

If you Slide COVID give more efforts. X. ramping me these anything, on business led Let detail transformation has us to our about

earlier, term we in mentioned in $X the years. three years. billion our We’ve do there progress objectives, to work savings over much moving made is I hitting believe which streams over We’re couple on good next of short XX generate the but forward can

and labor operations. realignment costs is moves benefit We in year workforce and of of underway. we earlier restructured Our some streamline our made the plans to several reduction

review to the party unique of our gave business, COVID capabilities. closure streamlining distribution. Within distribution The our retail opportunity during stores us third and communications the also we’re retail

do stores online want won’t us. other we’re business omni reopen, distributors, customers to capabilities to Some and with of how our channel least productive align with shift enhancing will and locations independent our to

and cloud taking virtualized of and footprint, drive our and while all services. operations product further operating resize to will focus our into and evolution market technology advantage Our simplification our

self-install. Our is software-based ATT entertainment validating on with TV our customer assumptions shift to

We fiber-based expect with of reduce the this coupled levels our service subscribers field and growth operating broadband will improve costs.

incremental Last, center corporate representatives We’re streamline and rationalizing capabilities collection modernizing sales also out service and our our we’re and call and around systems. function, functions enhance the billing pursuing giving take additional improved across we’re cost to to and company. opportunities the

that this directly to start those earlier, we’re work. customers. we’ve the a remains transformation had further off to support Bottom functions on mentioned serving success I As streamline our work regard good some in but line,

place senior major resource a initiatives management in have this and to level work. We on guide teams governance of and our structure each

what said shape We’re to going in do. great do we we’re exactly to

with update I to an you our Max on provide Now HBO XX. want Slide on success the of launch

the and I launch. I’m time The We the Max framework the First, for and developed finish to it proud give strong WarnerMedia. want world together launched middle get efforts service line a were managed all activations put of which pandemic. the performed to team established their credit full a content to short new is platform in HBO a flawless the the and entire class, of and effectively team, accomplishments. extremely and a over frame superbly, in distribution

average we’d found we’ll our production X.X the letting activations fall last subscribers to We’re content pandemic and view said that month. February than plan. our wholesale Max to a that, see HBO back back you AT&T. right after demographic on going that month launch, appeal, original HBO, year. has to we’ve of viewing product series X By series our Max get subscribers more With One expand on which front platform. We their With with XX.X we success XX WarnerMedia else like platform us thus sustain Max acquisition. those, library fire targets Customer library of the next to million the originals HBO launched it’s now, the we’re start new engine is the on reach family, our everyone more the million weekly appeal XX% at XXXX doing the originals and on broader in expect one owned the the were that challenged demonstrating keeping of the last online is with had HBO in base to six get and our U.S. appeals had of acquisition August, in of planned, Max’s Of been to we’re the critical majority and traditional business, HBO your hope number on have things viewed family track All total Max new March, the on customer revenues. levels. to broader much return reception beyond to more of at in content quarter of we diverse term resume early up to HBO been the our spent subscribers with top the retail we traditional the strength production getting industry, our expectations. that’s for what top the than million discussed hours but Like that engagement but HBO service. production and the drive activated have subscriber than down the Having of exceeded XX.X but clearly days, and to on key ways XX It’s the streaming of to base. Max been It’s COVID take near were list, finished library end new time of million able to HBO the we’ve with members. able shutting early the subscribers from about subscriber the the in far. more our million respond customers, content our the our production platform. it’s to In the hours everyone it’s all X driving making subscriber up the content viewing we as to to and we accounts. that’s challenging Max Max efforts. consumed originals. subscribers, to to We through working broadening We

rates. motivate you HBO work more partners wholesale have subscribers and are work we’ll digital of but to subscriber and still offers, activation rapid activation these linear our the we seeing active base drive As might with to expect, who continue with to we’re to educate exclusively do users

bundling wireless and also premium with Max fiber We’re of some our HBO plans.

or plan We’re you step-up at positive seeing than in pull-through a wireless that’s better unlimited October. shared assumptions with the we

revenues XG of this recall cycle the drivers is the to coupled service wireless You of with handset year. upgrade key will half the in growing the latter one

that available the Finally, Amazon States. in tried we’ve other make taken have every treat HBO repeatedly all to customers services worked Amazon and purchased We’ve Amazon. of Max and consumers to Max through chosen content available using customers Max distributor how its approach differently customers. nearly hard an make United including HBO customers they’ve to their Unfortunately, treating than to to via those devices, HBO has HBO Fire

among devices. We’re to to Max glad give stream place have agreements Google HBO the our TV in with, to Amir, others, right and on that’s Apple customers Chromecast presentation. those

now ready Q&A. to the go to We’re

Amir Rozwadowski

the we’re Operator, question. take ready to first

Operator

the instructions] line first [Operator Your John Hudlick from of question from comes ahead. go UBS. Please

John Hudlick

bit may Thanks KAC as John video Maybe there’s a non-cash the on trends? pulled better, have video would out. how real you realize that look into think we got year you the the into drill more a down even little but some--about then tell the bit. I see and EBITDA and you of as on out guys if entertainment into maybe half half, us lack anything great, little a piece a trends second basis, But mentioned broadband with visibility segment affected guys. Stephens, year-over-year give look thanks. that, the losses we second color a can of volume bit just be you the could the I

John Stephens

for Thanks question. John, thanks your

that did Let still point bit providing you me John and customer in. was who trends, accrued disconnects, if it customers I join a you have is, include, think XX,XXX, of on a thoughts One get give will, we did the better service. and little couple we’re

real middle step it that back we’re in we was out, careful so it the a pandemic, improvement. situation. we’re an But you being the address was--there with a down, was If of and how

It has comes--and some of it been we’re AT&T again and because the were some pandemic, home working. rollout. we installs TV Once has out we once it’s successful of with real come of activity Secondly, that. limited, the as of been that pleased again, so and the cautious

Third, grow are reference, an entertainment cash we out costs installment John, and amortize are generate going when that AT&T but the of industry on of the more so piece actually of want does, installment those on year this lifing of that? TV, down, adjust prior costs those, from specifically EBITDA cash conservative it, taken costs we’ve you because you but a taking lot those here, to AT&T would actually focus whole now we business, strategy like view software-based costs cash to important and basis to the savings, make year-over-year. a continue that of is to have had adjustment, anything still installment When COVID add into you the continue overall of cost of but that, so utilization up for and for we challenging amortization a It’s are seen increase. to TV programs.

John Stankey

a I’d thoughts and there around this. is pressure, John, gross clearly offer couple

Our churn continue and pressures the nice that’s right base way. the and of better there the some going is the is team job of on the that Keep sequentially, say to customers the base missing, it’s America adjustment in with would dynamic of and significant something is as to feeling that in servicing returning pretty even where and to doesn’t I recover, in and comes to gross such extent so pressure there, them the doing actually reason year. that a engage pay Connected if back keeping people this the getting sports for balance But improved right throughout again the they’re TV, are

start the see as is, response we saw like here. really It’s were of about TV that the move I better has think if more we market, ATT gross where we fiber the superior like has with reasons the much John of with recover set, SAC lower and the the sequential attachment to attack us that to far product, been improvement our I what something strong. a that to we it’s I clearly shared broadband previous you, allows forward what as described, use. costs product product that’s in you the given really about Now, opportunity seeing one the Customers been and

for to product, dynamic So customer but get be is to going correlate year, to we into we that’s through the and I going want to for a think probably some us sports TV the I really good to reason the as see portfolio. pay that see to what need move on

John Hudlick

Got it, guys. thanks

John Stephens

Thanks John.

Operator

next the line Please of comes ahead. question Your from JP Cusick go Morgan. from Phil

Phil Cusick

Hey Still them you customers much in at been those on quarter? revenue those in pledge, didn’t response from the the what’s from guys, payment, lot. you thanks as all a the how ask customers second July can for and you quantify recognize

John Stephens

me you of cheat let Yes, give the way sheet doing it.

pressure you so taking that so like, be guys understand I’d a I revenue as--I that think roaming would a for a numbers ARPU what these have you the COVID, that that payments. our reconciliation of we what inclusive on was we schedules million revenue provided, you there I revenue we’ve about customer, $XXX and and just the month’s international of of included in revenue it’s in provided detailed In mobility is as think from postpaid quarter and focus. it kinds think the way most saw give conservative can

different and of on So that with of the to haven’t easiest and suggest given in adjustments make would base A up tell way One, to couple we trying transparency us in retain may customers, so they to year, things. but these others processes disconnects. are Clearly just calculate would we to haven’t since processes, the to would--our know I off they’re they some these we’re push of given you paying rules this third the treat it, many may is up certainly quarter on us. forth. contacting, or these later retaining not views actively our our us, on or industry hopeful what as the it. and have I that’s working customers, and

doing not just that. We’re

and you, laying and ARPU postpaid talking on also video it of revenues, numbers XX,XXX out explains--I measurable taking about video think a upfront Hopefully and out on and of on on kind you that we’re the that and XXX,XXX about. wireless video We’re almost normal broadband, point only money kind - it I gives for just number, broadband. this one indication broadband mean, the the are an of month’s because if not you but and

Phil Cusick

or weeks into Yes, response? responding contacting What’s been in so just you I some you’ve give with hit expect, like kind terms any customers. been three rate these I’m what pay? of of Can as us they ability curious, to so the July, look

John Stephens

it’s Yes, tell win been you we’d some so we would [indiscernible] we some generally isn’t a--there that in a response. accrual, just customers that this those assumed There of We’ll back. so that. this back positive these of know is get you,

little than the with is something them us the is I to this still doing We’re want out through FCC a or there There number We by number state at is point will that bit America at early. too only level, still of significant them accrual, There that be but have out frankly, out Keep but state not out a whole it’s better a as so we quarter. the number federal of there. the there level, to program is refer there, quite this a and pledge. Connected

Phil Cusick

one Okay, other I can- if

John Stephens

hard not those to working Phil. customers. a all going three really segments, specific number, I’m you in just we retain tell are would to give you I

Phil Cusick

the want accrual, probably good. be that’s third sports third if the in We plans will to that this understand a the from come can. go One leagues’ quantify given quarter. that for little where other, at the to Can great than Turner for I margins all Okay, quarter. better I cost amortization but sure should I saw really your just we ready quarter? you make doing back,

John Stephens

come the on think direct because of and But business, that. at those I you, those we’ll as that indication we’ll Yes, costs look first and to out and in we we the right, so see the we we what revenues expressed pieces spelled now out particularly, impacts. NBA if in the--the the the sports recognize have a have in COVID third you relief in here, you’re we where spelled generally out a the and - leave got delays schedules, will is come in of we accounting Phil back, of what cost pressure back just pressure quarter two we be of listed that will for best quarter those that going to

see I that really the think schedules you showing biggest in piece we that to disclosed. the up COVID

Phil Cusick

Thanks John.

John Stephens

Phil. you Thank

Operator

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

Simon Flannery

some be to a line Any little well, we’ve COVID morning. that on be how--is on a great. you going the were going? rollbacks of happening are help give Can the states next wireless years? be as Then what’s getting you sales Perhaps think comparing great. going strong. the even on, much. very those in the what’s outlined and How transformation color us southern side? some how benefits, us for business is you ratable the Okay, John, Good maybe three stores today, going would so understand color results around year-ago back I $X of the us with with levels? said timing you wire Thanks to while. just fairly Those seen Are to over just conversations in are billion.

John Stankey

online to the front But I doing channel form in don’t in now First and using entirely so shape what feel say pretty impeded you I’d in - all, a are Sure. some generally by store back options shared they’re well. in pockets cases a relative about. Simon? other up. we’re wish just it’s being people stores doing, seeing pick bit. something to How with or we’re it of know, in have us, the simply It’s any to customers retail you how of and bounced still matter normal, what where of to maybe out and other back not omni way, by large, we’ve the is, customers on as pockets it’s where giving traffic with back has of of broader to you, fulfill, do quite rolling population capabilities, the suppressed Part it’s work and we’re you

the little year to new into in expect some we’re with coming that this to is going dealing will life starting right effectively, the product dynamic there a certain later and handset probably like from market about at see bit so it further now. a We’re little point. stimulate of feel traffic, retail some be cycle bit manufacturers store I’d worried really back fairly not the this

again. see under biggest the My business. that entire well of making but to reasonably it’s be dynamics decision as on we’re so of well. states we’re people it be Hopefully as get in do it’s who recovering in in is think wildcard safety manage From There’s are we always that are observation people The the factual I COVID. to able and to view, my an not in not retail to know, As where higher that clean the with knows? to have is point lockdown what’s try how to cases, goes. risk happening activities doesn’t seem control, that infection probably little things, other is all the pressured that going those and a rate needs bit necessary. terms as pretty

On the I we’ve expected--you will kind and forecasted a that up. had that in hard quarter, that would shapes third say I would year strong it you we to expect quarter, into level how business how we know, side, of characterized we and for the be sustain

to amount end see market. lower the it. pressure already going of fair We’ve We’re in of the business taken a especially

and and and lot to end side of we restaurants them there’s back. in pressure some bars segment, hard there. going telephone look in have data and and they’ve you hit side for not the I the If entertainment market, Then have, services a TV been really really of we heavy pay of services were expect the the the be small come services in continued

if Now, our you’re to mid lining businesses think our enterprise probably as aware, I oriented to speaking portfolio, generally a more silver there’s is overall. and larger relative segment

a environment, to moves see that cycle business the economy with our they’ll what’s be think there. third a better and quarter does into we’re performance we does and to in going as to economic be tough that but that how going move the sustain for what position I some on pressure

is expectations we’ve moving think where with set cash with are $X well wouldn’t you were we billion got we’ve the say able come it it’s in. think relative our so early short that you--I some things through the ratable. we’ve What probably on got to would pretty to what how cycle, you’re On efforts, we term do in I I momentum year. say I [indiscernible] starting see to

we that on. now we’re restructuring out, to the directly work our right set clearly doing and for is can put what going up for tied we efficiency You the see work reserves that’s around some doing that of on we’re some plans some restructuring

that of maybe to and in it the into occur, drops that, see you it or it of lot and up to going business initiatives adjust of bounce upfront, comes you softening, a in, and get little as the risk bit off get and fashion. technology back little that’s kind - and it’s so improvement bit it as then development move V a you start call the end cycle necessary, period see of working I’m those not You that an tail in so maybe not pops inverted but we’re a part, some initiatives latter a as midterm in through then you the take software

Simon Flannery

That’s helpful, you. thank

Operator

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

David Barden

guys, program does buyback offset at thanks in program, roaming related restarting The back one bit also the little and Is hazard the you of so criteria and overage to equipment going velocities, the--the the the address for for which lower we pay that on the would forces, are Thank Then had forces to roaming of the and that wireless or for that’s the the about this pressure stronger? is is of pressure? forces by could you you then it whether those these John moving Stephens. and lift? a that’s one ’XX Can not? Could the business. Maybe forces. come be political going line to two going certainty this on for second going hazard considerations comes a two give buyback equipment the pay question union about This going Johns. from the guys get equipment to and either it’s Is be and it the away be much be back? Hey color questions. some to taking helpful. talk timing is some accelerate the one a When and/or you might revenue you. If a

John Stephens

question. the for David, thanks

With that just John the good first. second this regard mobility, we retail about to space. about felt mentioned one our way. me think Let take it

that rebound. it in this they’re revenue was what rebound we’ve equipment ebbing, with are equipment done our If in the from That’s quarter, you second hazard to regards did and our grew and a look and the of we’re the and opening. open stores, some because at sales pay on issues actually retail mobility

the from even Secondly, and from from on pressure Connect that with the grew or EBITDA overage of international I say would roaming, the with those costs we fees America. the pressure waiving charges, pressure mobility, pandemic, late overall even

to So lot for those had but and from going of think cost through to that in in initiatives you with piece so from costs as my big perspective, is battle say, we keep and work even a things, those us a the so perspective, speak, that. shape we’re grow to of grow line COVID, currently, in position. very we’re costs very allow we’ve from forward, additional able with pay, EBITDA, those good were to Even I good the that my

that. As we the tremendous going. a good America--Keep been It’s generator, is groups, feel mobility so get Connect business America stable good work where we the very as through cash Connected more environment, feel to we about a about

John Stankey

occur, that what September in latter the a spend at broadly into third and capital going with stock to you of us in speaking, shared September my to you looking we how way the what returns back. and long time want we’re broadly at COVID better time, remarks, be planning around at right period the that early one give too to where investment being and front as Dave, about circumstances what’s indicated down the capital are dynamic. us to talking anything. as up we is that of this deploy in with the going are, concerns with looks and expect the opening and We’ve XXXX get our like and for way and tell exactly It’s that to part clearly point. visibility bit of a this The On to maybe we’re little I going not allocation. the to remain, look call buybacks, in other are I down their opportunities prognosticate tell the I we or quarter, best it’s and, board going on have and regarding on cycle I’m we to of the sit annual with in too we’ll to early visibility would question, going in But board

John Stephens

towers One managing and, thing month We billion has the $XX to quite really more to manageable the towers, and did that in the our market debt add, the in rates we’ve so with in better managing cost interest we’re well. of much about responded and spreads, issuances retire last debt. issued quite at previously and bond very debt timing active successful been better frankly, using

add you I’ve so just I would been capital focus, the side, tell very that that markets focus real on a think to ours. managing debt ever just it seen, will are a in active of I the competitive we’re for and be as continue yields to well I’d and Our in. have markets as That’s us that. responded

David Barden

thank guys. you Great,

Operator

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

Michael Rollins

return Hi, John, beginning some that the hoping thanks, priorities, of the call. was to and of good morning. I discussed to you at the

questions Just that. on two

part AT&T to that second if need provider opportunity. gigabit which home mentioned with own video such your software-based TV, technologies, broadband does on that for is as focus satellite be home To being was on to of business? access to priority. you AT&T the you question as to mean First, priority, DirectTV expand AT&T you entertainment and is does a pace at Thanks. or TV second the other successful the XG? the provider, the you a want being first the use The fiber described What can which

John Stankey

thanks Mike, for Hi the questions.

view our fixed point and that in to that appetite I think put On I an appetite to indicated and the think building an wouldn’t line build fiber can providers the about deploy foot have I way question think back trying My side, and to asked properly, broadband quite on that nobody fiber, I those others to my we relative yields only that before. have engineering thesis of enjoy. get the fiber pigeonhole very our should I households. I’ve you it company else do footprint we we’re to is unique we provider give all what to our and can do lineal a we should business that services, have if a fiber achieve. serves help consumer getting those correctly a are deployment wireless we areas, us combination needs in leverage position reselling what either of investment the of to in more and that lines fiber-intensive XG, only deploy of that our and the or off in segment. XG business are in of need and that business planning our space, wireless as we Really, in don’t is networks be on

not I living that this family built. just homes XG although working perspective three now, a leverage believe term right how planning the suburban it we’ve I will will the think single we’re net through effect and So that about we all be near units. there be pass, of residential that segments, communities across it’s in personally that the for not replacement from get a is we the do

line in going one to I but right and there the be is place, it the XG to the be in the is is I that so don’t home and what a beat makes win in line gigabit-capable pivot that would the As it’s that the happen, replacement tough to sense we’re I’m We’ve there going place stuff that. strategy market. as the clearly in assets moves the embedded networks strategy, that around typical single that fixed anybody term think right the the way of that’s I well to to to family when fixed but spectrum see technology to an stabilizing, infrastructure. I positioned on that margin make think believe optimal to Look, now not mindset as call if start got optimal we ultimately just certainly near

I in separate and on think TV with of you’re pay content. side, distribution software-based haul Today live is that’s platform SBAUD is I’ve there independently, for good there no we’ve what the but this customers the or are reason over point coming that and the one seen is time, together that why my entertainment. belief reasons platforms on-demand general shared On up kind should ultimately entertainment once aggregated grow one up you think with other, occurred is from stays that we [ph] long that to platform

We’re these see come going products to ultimately together.

technology when about appropriate with that’s I software-based transaction can move we have can that deliver. that platforms that that think as we delivering using relationship from probably necessarily analytics entertainment-based know, a comments it where at content. necessarily forward. mix customer I was as platforms view the that can DirectTV necessary the base deliver respond of we’re general didn’t and about customer pulled I forward. make now, I to platform deliver those talk SBAUD that opportunity right services live into investing that the data think that platforms entertainment-based the to an I an hopefully happen. bridge entertainment, software is as under That’s early building and content liked content of optimal which on, I that that that’s move that the with either way look think that the Do clearly that those and moving area? think entertainment go in and what of customer, needs satellite linear or premium capable customer a I and go make So necessary post technology place live customers a video We base, loved fact other want and to back satellite don’t on-demand ultimately we either technology we You is or lot because very to you right we construct made, and is moving on to it is meet off we’re doing whatever of forward, satellite

Michael Rollins

you. Thank

Operator

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

Brett Feldman

thanks for Yes, the taking question.

where a One is of a difficulty we’ve the reopening movie real driving areas going. seen in

talk you can whether Max to to opportunity and you for release times, of In around evolve a it’s forward? than that of couple be light think very the Max, had you’ve more normal platform already your you. HBO particular also You’ve could an a important experience, Thank going release to uncertainty acknowledged now different windowing the film Tenet with going adjust have HBO point about think films we’ve getting you historically schedule, need be and in seen. direct a and you with much or there’s your launch to whether in back

John Stankey

than we with would COVID of partners coming more some I that, I going with them the didn’t is exhibitors our role Look, made think I theatrical fully still this theatrical to and and surprised point through and believe also in that last ensure adjustment and want to the work very be fully see said important construct. theatrical out that if whole just think work difficult to Brett. to absolute we in that period. in enjoyable an a some to that our be I we industry content There’s better I that living Sure, the has I that forward. the get expected moving see try theaters quarter room, look, and as

like I that circumstances going love look don’t are can fact different construct. going now. to are sure there what that say we on that schools know it reality reopen I around we’d question when is and construct just that we in we with where option we’ve there otherwise, leverage build it. and be originally to better could things However, could would some on, distributed think something There’s theatrical case. been release at know capabilities maybe going pick not the that I it like we be Sure, are movie reopen, longer and chartered content Woman? I content any or have and platform going out very a be the exactly goes may a to the love or that that to like built be I the get I think that another to or I Is say migrates that on construct? we surprised this Do that platform an margin be be occur. can served if be theaters able build, going to it. theatrical I’m of for SBAUD some the I’d and a when go and into Wonder no to Tenet happen the the that

assure In be fact, the Tenet, can that’s you case. to not I on going

Yes, been to movie last be we future to of to construct. It’s for already optionality, move take call our in it some we I theatrical a to to production slate and the there we’ve as slate, the I what’s release with So to here. are we’re it streaming the we’re time. moved where a case probably shifts think as going I a a choosing looked just going when at shared be as have direct going think nice re-tooled forward would you earnings have the have at what execute that some we

Brett Feldman

Thank you.

Amir Rozwadowski

Brett. Thanks

Operator

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

Mike McCormack

business the making in you work-from-home in and the out thanks. on quick guys, downturns environment being historically We’ve some WiFi-based most any just instead? that whispers decision are far economic out a one on lower wire Hey on seeing slowdown the that. on back given potentially customers side? there as enterprise were down as trading things What revenue-slash-ARPU. seeing seen plans, line Then side, and guys Maybe you there wireless guys getting to the

pacing John Just you Then back the on Stephens, on side, capital. what capital the you’re half in just working don’t if seeing. wondering the mind, working

John Stankey

take opposite quite and now in Frankly, just the then of come postpaid John what’s here. and the that clean-up do business front the me of occurring. right Let end can in our

where dynamic are--I we deliberately increasing, rate HBO we wireless in is and of We ARPU the and point better of the because higher are nicely. indicated attach comments and the that think plans this unlimited together unlimited come already I the of the some Max made seeing

the robust network as how an front of we carry we’re the We and October I people important momentum driver give already to We’re seeing the in that a giving customers more check complements Once think so success plans, forward. that continue combination end XG would we XG right was unlimited a penetration that. end will the unlimited buy and Max, we with go up are through the reason incentives increase. of up that as on well into plans, equipment to box the that you shared in those, the see on with Max have and we on kind the side, seeing showing that upper of

of execute the for It’s them less. lives, that. more important mix relying devices, wireless an been utility and using more They’re not the to good think indispensable has their really more. tool and their them I the has and become to they’re business environment, actually on customers in so trend work-from-home around personal

and our market, industry move enterprise its its On customer important airline through to I I I to economy our happens correlate that enterprise it’s through to news mid business heavier The about, we the segments economic service to and to challenges. going in in the as is overall as of is we base going as earlier, the move as think side, what mentioned that in talked are skewed the directly we continue move challenges, a forward. lot good

to work and is because through base through moves they’re move its that going customers dynamic customer going important industry challenges, hospitality them its our through we’re the As challenges, with going in to said, third But I of ours that and fourth a expect that longstanding some I and of relationships. would result to quarter, that. in have going segment as we as we’re pressure see

as going do that we’ve want job done we’re a trying that I get dynamic. reasonable like, to see tailwinds of to--? to to that’s think believe we can’t but forecast going look you through John, I what

John Stephens

take--. me let Yes, just

of than COVID. been look postpaid we’ve flow HBO Max see when those the everything talking your this been know, account towards second that forth, packages really--you that for way to and COVID Mike, we’re about working Then that’s expect the the I the be take elite seeing different wireless year ARPU, cash to good we’re we’ve half so been moving weighted pleased free growth you so and us with roaming question, of people how the John’s the on at year opportunity wouldn’t because so business traditionally and year it. any has the into is good you is a going. With different fact and the fact that grow If you the other this international a impacts, up, capital, attachment,

focus that better I to years, was, continue will it and capital this so year--year track it’s on and and activity say payout targeting but billion to I’ll prior flows saw on good I XX% cash coming of are free watching of full really I beat cutting striving is continue as any from some With end for suggest receivables. second investment, already to good on said, not things a we really about payout flow, Last better watching with we’re a good would thing and would track the situation. ratio, than is on we’re capex. and being say, reiterate pandemic that better capex wouldn’t are and that still of capital for really cash said, sure we’re on we’re in quarter we good the make target. the ratio in we’re and working quarter, business, want a on do have we We the half, to that I that. accounts and forth. ideas, say focus getting a I working $XX operations that we half so XXs low dividend collections the had carefully, usually of and second have receivable being commitments have first expected We that The a our watch track. continue we as to we’re All that kind to or and generation date, from the we than feel the

with staying line in capex, We’re so.

Amir Rozwadowski

Thank you to for final over very much, turn it remarks. Mike. John We’ll some

John Stankey

what front third launch of really much were in don’t some thought quarter job a questions, much the would discussion around I flow a great what those what HBO a Max. did very being very, we’re challenging today. I on are expect certainly--you in, with for Thanks execution environment. the say us, team to the I encouraging but the challenges us and represented thought I know, Appreciate the heart in the change that going and quarter everybody overall, I the and see was numbers of lot of in cash take very solid

do get more pushing including uncertainty the think as forward our we a heard, in move in forward to accordingly, as to the we that clearly moving be going important business to that media doing I we expect we’re and a positioned economic puts of these lot COVID it to I cost a on in us move to We’d but lot we’re as forward environment efficiency operating have dealing environment be the position makes unique anyway, need some here, harder what side and business. reshape the us. on challenges with optionality to and you’ve do the of this.

blessed wisely We’re continue business, to and moving to use that to cash on and resilient subscription very a forward. invest those lean flows have we’ll

and do to this As putting of you is safe the the forward. heard areas today. remain we John talk enjoy we to to come pandemic us backside you this going about, business with we’re summer. capital to all Appreciate grow in, the where rest stay moving opportunity where an and came out of against think of being we and you there fact the continue and move Hope that stronger committed forward than your our

Operator

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

disconnect. now may You

AT&T (T) 23 Jul 202020 Q2 Earnings call transcript