T - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the AT&T Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions].

Following the presentation, the call will be open for questions. Instructions]. [Operator

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

Amir Rozwadowski

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

Joining and Chief our John the Financial today John are call on Stephens, me Stankey, CEO; our Officer.

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

As remind may AT&T such, available also Relations our information on they uncertainties. are always, subject to the are Investor differ is on we John? risks John cannot and that, the any the Web today. Results as materials I we additional site. for Investor I’ll And materially. call Relations want that And turn period earnings quiet of that to available site. are address page so NCC Stankey. the also spectrum XXX, the With the to you questions about auction in Web over

John Stankey

we keep time and Slide comments good let’s X. and and healthy you’re I all morning. you well going with us and I taking thank are your to hope questions, Amir, morning, for so John more everyone. brief joining Thanks, can start doing spend this our so

our broadband enterprise trends. and First, our industry customer leading network is the healthy wireless, accounts driver of our and strong

with in fastest quarter. last customers. than markets. quarter wireless nationwide last under overall promoter Our named residential for third led named ranked business XG every high-quality increasing to seventh and we some for we really our our The #X Ookla Internet for I'm and are penetration our rates wireless pleased with the us helping network were service. row, and Jeff great team Power in fiber products that won AT&T week network net for underpins connectivity in execution challenging we’re iPhones fastest satisfaction McElfresh the the circumstances. network our the from achieving across AT&T our service materially network really communications cables region commitment month J.D. scores a tops are having the fastest better customer offer drive in by and

continues we of this business up on and track ago. with working the costs, year Second, and streamline organization processes you distribution, a and transformation redundancies, is has our set remove to how support for The reduce simplify functions. been

Our structure we're focus an balance into being focus efficiencies is capital committed experience. third, are management, maintaining improved back resilient, allocation. capital supporting Accordingly, this our year further generating is material focused debt our areas. you're with support plowed And cash strengthening to progress John market deliberate seeing value our dividend. in added but and these and our a We've flow while sharply will efficient. provide free customer with customer to detail, more growth made solid strong, sheet our that

review theatrical business, pleased We faced tough important a also COVID WarnerMedia. COVID broader direct streaming. total grow organizational we picture continue very to moves and we turn we consumer the of to pragmatic first made invest we've With segments, John driven believe this quarter taken challenges shows In quickly the economic ahead. steps environment growth recognize with I and is a Max to and particularly of In the Through investors. of earning the I'll that HBO in it to work more right have view for HBO pandemic, and some have and a to HBO further in subscribers. continue position Max in closing, us in to to I'm we the few with we do direction, responding our challenging there's customers the opportunity team that the how a our details the in but vision on executing over more the loyalty quarter. WarnerMedia environment. that,

John Stephens

and John, good morning, everyone. Thanks,

our than you million We progress more during quite quarter, made we seen priorities postpaid business some growth third XXX,XXX as stronger phones. we've was X John can added the in subscriber subscribers, than see As postpaid time. said, on including gains. in Wireless our

subscribers We also growth full the launched than solid subscribers than more AT&T ads, million globally. HBO premium fiber have net subscribers the and saw with U.S. since Max million XX more doubled now and activation and we We in XXX,XXX our HBO Max business. in first fiber base XX HBO quarter

Our cost track. transformation continues on

savings benefit and efficiencies alignments. seeing from already achieved We’re organizational

dealers, very shifted customer Our deliberate to focus experience, cash processes. and party we've debt our been in simplify to focusing sales on We've some also refining our third also been digital our paying our We managing on flow. especially others stores and off. able our closed distribution is and streamline

the near-term flexibility this financial XX with about has year, of than debt years us full our far giving more refinance at have rates, flow cash of this a So billion X percentage the of coming quarter areas. focused billion market XXs. debt in billion dividend our historically ratio or high we XX due with expect ample higher illustrates ahead. through maturities now This XX low in XXXX. Slide success the in We lowered payout had debt free year we've

lower on HBO by on than our our this fiber our X% phone million AT&T churn factor even ever. and of postpaid were bundling adding year, grow left. including base X.XX%, than straightforward plans, the phone Max. which big subscribers. new strength can growing to for was includes are Improved unlimited XX% Penetration rates was by churn fiber churn X best network postpaid was Prepaid less also premium and track of mentioned, chart you adds as was pricing We're the on that. driven plan, lower the [indiscernible] postpaid As see our A strong.

launch HBO international XX subscribers deployment we we HBO our our year. before in continues on Max domestic of All to target begin Max planned product year. U.S. this On and Max our AVOD next the for year right of HBO also We've and scale. before upper for is the chart, initial million over-performed HBO this next

to we losses business continue is good This the share. with As premium you in to big expect XXXX. exited moving told the consistent we chart our TV as share in right, make can step in pay video our a toward we you ratable see progress lower to what in

We of the footprint. in are focused broadband churn. helped, has on high-value particularly introduction the TV subscribers as which transitions helped The has our top, to industry over improve AT&T

pandemic. Let's free impact EPS flow summary a X.X year to cash of results, with debt deferred billion. redemption share. premiums activity ago, EPS, and now $X.XX in management debt X. a the in third from of continue from pressures. billion COVID or Cash with for. exchange down lost had look associated our be at COVID the foreign financial more X.X was our we from quarter including not which adjust revenues. quarter quarter. operations did X.X billion segment Adjustments for and impacts to on were consolidated Combined, Adjusted Revenues $X.XX take an came costs COVID our billion estimated the revenue X.X included and a and lost the was during included $XX billion starting strong, Cash than even per Slide flows at incremental That from

was included in quarter. margins Latin in about TV revenue, shift invest Max Adjusted continue exclude if but up revenues timing full underpayment. Foreign the impacts. you third been billion segment. by quarter to was on about of are billion, X.X productions attributed million basis X.X was of the CapEx we exchange HBO down offset capital primarily difference and were Adjusted invested had COVID and $X of year-over-year, America and negative the have operating investment a to in XXX investment billion. impact And our gross track impact And billion, to partly expense sports income about in of in year with income operating of we a reductions. million XXX estimated growth COVID Lower which were areas. would $X.X our points $XXX the and

X. at segment on our look starting with communication now Let's operating segment our Slide results,

Prepaid for upgrades in continue people we strong to growth roaming well late season device international Without unlimited EBITDA higher saw devices. data Our with service wireless postpaid net XXX,XXX and In moving resiliency. phones. down for alone, revenues XXX,XXX a adds core COVID and and as have heading busiest XXX,XXX from to roaming sales. smartphone positioning wireless had payments. the which as demand had the phone encouraged also the our Total year-over-year, data traditionally up impacted by to net growth. a impacts net healthy market both into much adds, impacts even solid revenues. those we're fourth slightly, came Roaming We plans. with show to postpaid strong were and businesses line, their in postpaid prepaid. quarter, overages thanks a were adds total revenues margins, waived equipment total would mobility, had of addition connected Bottom quarter with

over add with churn on to AT&T pleased year trends. losses our we're broadband the improved improvement were sequentially this track to prior We’re helped net million fiber a Premium year-over-year, and shift add is and X to fiber has revenues. mix high-value year video significant subscribers and decline on stabilize thanks lower momentum, customers. focus The

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

revenue points, was in XXX solid expanded and In turned year-over-year was X%. more up quarter. fact, video up than basis wireline ARPU EBITDA premium margins EBITDA Business another by legacy trends. despite

COVID The Theatrical Sports favorable results, is sports programming in driven same in HBO continued up, scale WarnerMedia Latin sports impact the on theaters advertising into third associated evident country. results. and WarnerMedia Max on quarter closed remained activations. TV in to to strong parts had X.X resumed quarter. estimated time, WarnerMedia Slide production impact expenses. an but the X. most and the with to nicely, is on At COVID impacted revenues. in billion shift of the by and costs Altogether, the a which the Let's impact wholesale had revenue move quarter production our and ramping back America are many

with reputation Primetime with pleased from consumer XX XX Emmys. News We we was up what as WarnerMedia’s is Now. reinforced highest it the HBO quality engagement, storyteller Documentary with are industry's leading and and also the nearly saw with again which XX% industry

with even challenged cash We We and slowdown quarter. and flow after turnaround But Vrio and also a this, continue in exchange, continues economies in more than the COVID generate added both currency saw Mexico’s by to second a be COVID. operations. XXX,XXX EBITDA in Latin subscribers constant to subscriber showed year-over-year, Vrio, revenues on improved America EBITDA America our slow subscribers Latin in basis. Mexico foreign and XXX,XXX

let's Now structure. an go XX capital to update on for our Slide

to down billion our continue cash flow Free dividend X.X year-to-date. almost even and with while business the the debt. was us resilient, and pay paying in cash comfortably Our $XX and quarter billion the invest be allows flows to for pandemic also in

more by closed our than little billion XX two debt net more than In since ago. reduced acquisition fact, a we've years Time Warner we

We rates aggressive active continue rate. have coupon to be interest in in lowering and our at historical maturities debt refinancing been With our market. debt we the lows,

As the quarter. you chart, can see near-term changed on obligations debt significantly have since the first our bottom

years. by five debt good We be our which next XX% have as to This rates the reduced maturities has place extended low. almost a debt over is average with maturity,

lowered for average we as with That today have us coupon flexibility, X.X% well. under not fact, ever In forward gives seen. we've going rate the just just financial interest rates to our lowest on but debt

continue cash the our our assets. total to cash billion gives also quarter assets balance in sheet on sheet. ended on $XX ample our The monetizing with of to non-core us we by fact, billion opportunity position nearly XXX strengthen In balance

close of Rico week wireless end properties, We ready CME the the the which previously by expect presentation. and year, for actually of which Q&A. of close the We're to October. asset before billion we including last our sales Amir, announced our that's closed $X to Puerto expect end now

Amir Rozwadowski

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

Operator

[Operator you. Thank Instructions].

Please comes Your of UBS. first Hudlick the from question from John line go ahead.

John Hudlick

of do Maybe on Is results gross guys basis really saw a you the obviously the and we the fiber requirements can about over DirecTV, really churn? the talked results fiber company the expansion you've improvement grew those better year-to-year especially lot we solid guys. side, software few on years? that John, add anything guys’ at board with And Thanks, fiber there wireless how we you think but your should should side, the a the footprint the think wireless. point in subscriber great. that and sustainable? next Obviously, And look on around about and entertainment. for are that you Thanks. drove network? also How Okay, across to then repositioning the

John Stankey

in good and Good point work. where thing. hard been John. period the on you? morning, a that's making first, really focused of of one I are answer variety side, going the I'm team This not on How think different something So, for strategies, subscriber been time and is is to any work the the has it's a to

things our think reengineering we've well, of including very I a done number distribution.

approach We effective of it's have today a approach much in terms and to of what more broader a bringing efficiency distribution in.

You comments. heard his that of in address some John

have very, right give We we value on been sure to very us data customers. has making focused And do that. helped our

experience. seeing band until because removed to anytime the going that when have years, leave, a that the COVID reason the need band of issues helped satisfied on the think at right spectrum with working, service customers wave, market getting right as much on has oftentimes deliberate suburban-oriented networks literally infrastructure, you network, the more of environment the suburban very those That's because buildings, network they're And and building the that penetrating higher undisputed not we're strength construct. than in strength because network a value much that basis, has low spectrum kind think not our distribution. and to starting portions last FirstNet pick soon, are you're over do of the customers the And gain the several suburban segment we of for some And a about up. through a more became they're wireless is to quality millimeter experience least in of we to band to to low as the higher band low to have kind with starts Mid we inside volume address that. a get dynamics been do out able and urban-oriented, hit distributed is density you nor is spectrum quality

it on more intend our focused And iPhone we've so we're of very forward. And be promotions the is now on somebody's very that that going you, out are same. that. sure tell And answer what the because moving market, and I'll would been ask I'm the right focused to with on I in we just doing launch to

treated plans attack that they new customers, very customer that that us our time themselves for coming to These move that of business somewhere base. can are to them an And we're it's don't to been talk that recommit on. We or very long data economic for up we get they to some a us best into that long it's see at to to the opportunity we're look have like have elects not going the we because can higher more with often want. offer because we fine going unlimited just And to with is that that's than the and in usually been us, in point. us. to include that we to it's not, their our getting time. of they around our not when them network, we offer service an important avail our belief very and a can't construct And not about and up go enticement chat that value this moment, a that. why valuable most device to stay to loyal and It's get ensure position focus very, customer are go of like opportunity incredibly a at And iPhone And base very subscribers continuum plan opportunity asset buying while It's to they now or where else that them many to tune original because and customer their understand address period meet they entertainment. unlimited a we plans. have a an to

that's construct win-win so in for And a that economically. it us and pays off

continue up. brand can statistically. is churn that's us contract our base economic it's to a smart than sure is we've sitting a this decision that make Our that our that smart the our competitors. we and in customers. to position just less for record that competitors, base with part a decision breaking this simply to our committed positioning know We is And set ensuring in of And similar

know we And still do the happen. a is that be and engineered comes in one out leaving we getting reason so are exit where of we subscribers, can our On are for it to we your up accretion regarding to And buying intent that's unlimited place right footprint fiber, we that address to share us plans, to number to gaining the get lot we can this construct way, them gaining when people business. on question have sell we that fiber why into. the year and of the entertainment, allow second sticky the will think be. that my broadband growing And a next us

push this You little homes the having and we're business been to growing it fiber adding we're bit existing pick the we're that We're and a we that and effectively. of that make that's our a footprint. as customers how selling liked reasons continue my going exit can quarter. so to into footprint, million in saw heard product We've we're much comment that we're share as slowly. we've fiber very success broadband talked up footprint and we of actually about in one position gain We're to going you sure about, year. And next doing a over great the XX

John Hudlick

Great. John. Thanks,

Amir Rozwadowski

Next question?

Operator

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

Phil Cusick

can What out drivers were normalized coming about or of losses DirecTV about Is CapEx you. Thanks. wireless Thank and be fiber? just down? said mean priorities how to more want were you customers. these that And video really can does fit that of that the you sounds like say CapEx Hi, It after you for to you of a into and Does that build talk see plans? the John, needs anything higher guys. out source lower, even can year? to the company's improvement great pledge there you we it's sale? reports next

John Stankey

will point. for the do what flow and giving guidance effectively on I manage capital But not comfortable. this we comfortable later we're I'm those I of tell our We’ll part cash said. I feel year you equation just So we'll give bit a can feel we at the lay it. that next for that really that little not about and out guidance out come this you. year and concerned you numbers

kind certainly going what's these at If of look in on you customer accounts help.

I we're aware think in really the us and around on that's helping you're in some hard working cost the markets. equation invest the we're here work of doing

opportunity kind fill-in to of bit have in been We expensive, of have which the I some doing tends and central that new geographic new factor historically side, build on in be we've front to do us light little an cycle shorten had to fiber from investment you had up to – what traditionally really about can if a we've the a we've areas, very more and cash offices, different think think on this. economic we

year, give through in I the see So think don't appreciable fill you some but this. direction as coming we'll we'll go we you next change you're forward blanks And here. for an going trajectory in our to

we've side, been on On high-value the video focused customers.

business decided of this, through in and of the to make on a forth, to a taking or that and first the we a that you're to and impacts a because through clear seeing frankly lot quarters, out gross. dynamic is, now think a lot right the we've of got that to bit. run a cost promotional been way I lot work things. are their the go effective we've a and customers promotional can on and our what we're at better are of Because the credit that kind had We bit normalized what want right we see little some on structure, give They're the we to little just ones gross that's industry you're focused cycle that's others look, is. better reflective definitely retention. team the ones a get to made of in and a couple the been more But us that for when dynamic mix VMPDs of that direction not it price of we this where money as starting shift work out back ensuring so to churning of And much

product for in compare want better in we right now people of product a TV see market is. that pay satellite those than have customers we fit AT&T how with with as business. improved which a TV helps We much it a that broadband. on is volumes natural we've the broadband, The product more compare got today broadband, use And to service you the our video when terms

continue looking of by decline. on them. but job year that can a not manage that. think to we're we can the do base, the should our final mature we I'm march continue that rate with as suggest of We're share to should it. around that basics I'm going So degree kind we the speculation business nice give anything But of to to year our as question, done that's like to you how and well, And video approaches comment our what back team's really kind things on this we to some getting decline of the momentum going the point. should that not about going at we'd doing that you, this And and more exit on business a to we radical some manage it's we help we customers, to any right told and next the to how what tried-and-trued doing do it in service

Phil Cusick

Thanks, John.

Amir Rozwadowski

move next we the Can question? Thanks. to

Operator

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

Simon Flannery

think allocation have And might and post how about changes morning. movies the think things capital for about how then very you're us are thinking Warner, the and theatrical a big question. just terms if COVID? I that Great. about the Good there of you wonder you could – on much. progressing should how future you in we TV On Thank help any evolving production and

record think, and talked you're versus, for deleveraging. I growth. it you've importance of market. in you balance paid track the you options that getting up the buybacks? say, not the spectrum John, But Obviously, current How really got about dividend dividend the of that’s dividend the coming like do looks

near-term a addressed maturities. the of lot You've

the to you love there. how of about the and think think about Thanks. priorities I’d So order preference

John Stankey

Hi, Simon.

So on the Warner side, easier. I'm breathing

February think kind I XXX bad a the production. or about much week. you, underway some That's And would last probably or so, the at in the I environment. restart numbers of think I easier. to productions better some running last of you but – before a had We form week breathing everybody's the analogy give form exited, pandemic probably and shape COVID in in I hit. tell looked of Feel roughly, about rough up or in XXX or about shape the productions we idea, way, probably haven't

have to some most and to from XXX actually geographies have no So get how way. rationalized, the of what out gotten we've back we're to there's to to don't the work, and through this. that clearly by are working produce the operate us I we're where constructs a back we having are, we perspective civic hurdles barriers with on We starting There's perform. well in up. the ramp think back into to figure stuff but that do

employees still enough going of can far safety the level I where far work enough and and away processes confidence work we testing. think individuals get the that's We're with into is on along growing fields fact right built done. right and unions and of in the protect in we've squared day-by-day we that around the got

feel So good where about that's at.

one point the don't our middle at can in being Theatrical cold this we underway these to production. out great it's work the doing like? to a forward, importantly, the it. visibility one that's you ours for theatrical the we walked like that going it We've exhibition we're we the we feel well. We've HBO done tried and brought pandemic of can't a things Most experiencing, is going We're of happy does get experimentation. still things. produced have to work of is, think I as I'm away products. Max. few did help on. what was and of And dead some kind question woods from homerun. I where that's tenant help look from we The tell

think was the I team incredibly creative.

I nationwide, work open, learned actually a theaters open do couple believe if were that of I about New what that. do. we California we were these latitude geographic be and some some things if and of able releases have can York through think to we specific to

that and So we get on more. that the committed happening do what different counts footprint, consistent checkpoint going put if think of into where sense. in a makes some to to with time based more to in to and country. not little a we're theatrical exhibition a we bit the channel geographies there's say, happening content the place and next we try a want to what's whether can maybe important some as see on most or some we theatrical big to game can holiday what's to effectively going back decision make I'd actually maybe be the occurs still infection season is the move to that content is into have the We're

Now, choppy and takes direction business at and the that same time, incredibly expecting this year the next moving we're with into account. into giving you be we're to guidance

to to plan. C year. seeing having next And keeping We’re open. through not it a two and choppy. the into B We're the plan the looking as kind the the early plan and result we moving the we're of to and on back part kind we'll it, C we and occurring, of expecting that, B cards in plan and team's plan options to of at not A what's the continue we're optimistic. and working or come look that next expecting them our the be A the get of And theatrical plan, a of month call And the recovery huge as all We're evaluate you.

on you where So on that. we that's can kind of the are best give restarts and I

give things we paid advertising right just of through. and execute visibility there in into and way The it's next put them. and is need to coming probably like bit Clearly, sports happens fourth what visibility the you around of that more first, second, be about plans can get other I would clarity we the accordingly. demonstrated a year. calendar 'XX. if the are a lack views media And allocation of On uncertain. in We games out. schedule bit where the the how in the shapes many the think quarter consistently. a And a around on is bit producing I to you exactly carry looks can better have seen in fact, until and 'XX we've tell them in can, that hard able adjust timing probably I in with it fact thing little we you you what do see have that, think your still businesses, they what kind we'll the transpires to safely where on And you think those get those little calendar we've The that of they and that of weeks, that demonstrate exact leagues and little is little broader third, capital selling falls question, on the

where and cycle, ultimately, takes I think and things in visibility decisions those on one, care to you still that best the is do think that way And to to I is we're else don't yield we're the on we how we're is have been think versus discontinuity And owns like think that. kind I'm point a But a the it. we And sure well definitely the consistently. and I've address of out we sit likes through I'm getting is, we paying. each now it doing allocation. right nobody make should capital your what us problem make quarter aware that probably valid there sure in delivering for when that stock I itself. there the meantime, about tell ask going can where I what And so I of about COVID

confident And need every it we that comfortable, continue and we on then down and in When game anything do timeframe, like getting think around have do make in to I'd little very will around some I the this that the sense do of in whether It's that's down out piece of through from priority that. we way not choppiness for is a pay discretionary that and want sit us really outlook we'll it an to it I into allocation our business so cycle into. to first feel we we disciplined to managing restructured makes this no 'XX think kind cycle and John bit what to I closer is isn't a we're that that move that call. makes and can perspective be invest side. start have that? the we bit capital the we before where given to manage question check. you comfortable to we're that we sure little kind all a in the looking and get way be economic equation the that it we being confident important to can know on a keep us John, can, make get do at. this COVID I'm as more that that what business the manage of space sense that we able we’ve it's or something of at regard. that plan your can to indicated, down I'm think ensure we to when manage in that add confidence do fashion, through the as debt equity can that load We we growth. time we that get different of back for discussion to the of things this

John Stephens

shape, of but got term a No. only the over over lot long debt flexibility not really quite maturities good towers, Simon, as and the in out the we've the balance spelled slides frankly the we the term. near sheet in debt

So to debt lot flexibility very market forward. a but very to that. going of levels, We’ll has we've responded feel about reduce continue it. got good bond The our well

us really, on for core basis what of of It’s services gives he's and it talking with it. the cash about customers when this. of about is The good that. a and the feel this us all starts our as for I so products a resiliency to they That's timely the flow one churn basis our thing important. all is, services, I'd really John And pay say our of continue talked number about a low resiliency and

feel about we're very going. we good So where

Simon Flannery

you. the Thank for Thanks color.

Amir Rozwadowski

to We're the move going question. to next

Operator

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

David Barden

Thanks the Hi, guys. questions. for Good taking morning.

John Stankey

Good morning, David.

David Barden

Hi, guys.

this the guess, John I related I guess Stephens, guidance. So, is question to

So around a couple of it. questions

ratio XX% of cash the kind math of in kind low of the at payout the year, beginning to billion was $XX So, dividend $XX billion of the range. flows a

north it's XX of Now billion.

the to guess outlook there's answer is which a reform particularly what of flow next and related the the How What And cash related – tax does working which And of that? change AT&T function so that CapEx to that into under drivers of a and administration? the is for Biden iPhone cash of was that could vendor are talk of sweep who kind of that? AT&T? exit lot, other for number, What that biggest goes a And through, into I proposal can earlier that tax lower then one John talking the the if some as beneficiaries dem that mean the are Stankey about you're Thanks. is affecting promotions the we're we what kind qualified tax financing? expectations year? about of part trajectory of to the getting current go was which question, capital expectations

John Stephens

Yes.

back customers. COVID. let first And was side. of the So really there lack cash and It David, does guidance me our with year, our flow uncertainty [indiscernible] regard visibility came thing, go the to for with out on we when

prudent sheet, have third balance very rates the we collection at products, The see quarter good can So paid it that. the very basis we're a in results, – been third with getting levels. in turns the our and you It of and out service, careful quarter appreciation timely on resiliency were the and you good. for can our it see

that's so point. first the And

managing The that efforts, payables, capital been second been there's has whether it's done. tax all receivables, working payments, across point it's is the board, whether managing

CARES were been deferring Some into came Act out that payments the of of the by account. benefits that with payroll of allowed tax that's of, the all income CARES for taken or deferring Act, example, tax payments

capital to a XX going on feel cash is HBO When and very mobility, that performance on the think of being the of services, growth history focused resiliency leading growth about really come that we back revenue all the I in and fiber, us have or stream focused a I situation and normally though, number. flow. working it better we to the such Max, to the better strong in billion comfortable products

Now, there's uncertainty. still

All where a came so are sales frankly, And we that's go a capital up not working But the to about the we'll basis that. how see that. can it. there's specific for quite pay. you of part good feel number launch, the we really in mentioned And impacts of iPhone pieces the

as or dividend kind in into rate. probably account. are [indiscernible]. XX-Q frankly, the You can that in six pandemic remarkable. And of to about I pretty XXs good taken some here of feel It's you really But been high years. disclosures about quite a quarter asked that's specifics in the third those get payout in ratio five look it's that as good the all the in at

tax incentive of It's reform, tax strong go increase also business. for rates So frankly, the sheet, to rate the it's payments a on a is a depreciation, bonus balance quite issue the in a [indiscernible] cause On really obviously little could impact strong up. sign the CapEx.

largest, of our if that for in the suppliers’ of employees the jobs not one as United We the a ton employees. generates for well States are investors as capital larger, certainly our

So that significant company's parties, Democratic well been That's any overall [indiscernible]. if we're you over or probably whether last carefully. issue years, both XX for supported for watching individual the at be economy Republican by as a it the that's Likewise, look tax as treatment.

in and it reforms quite our to infrastructure the whether to of So our we decide continue there our whether footprint. efforts expand base and frankly, fiber broadband follow, they to activity continue and we'll that expand we'll can within follow to include fit would – any the

David Barden

you. Thank

Amir Rozwadowski

We're next going the to question. to move

John Stephens

you, Thank David.

Operator

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

Brett Feldman

be to the just you that with fiber John earlier penetration this I'm higher of slightly already. that you outdated thanks. to sort up drive statistic. a million to follow actually of Yes, homes passed because going you was alluding opportunity But might on the XX talked something have know, about

XX customer your million something in landline think there's region. like I locations

maybe to in with of meaningfully imply the expand you're you which today availability product addressable them So would your there. of only on of market, passing your fiber, could XX% step you the sort were fiber gas if

increase what expand policy conditions have that the to to are or items it over have operating Does something on you’d So there be encourage greater such willing meaningfully control be would meaningfully side the you are that the that you fiber fiber to footprint? CapEx? related

John Stankey

tell believe put because discussion back be I thing whipsaw digital your areas we for is in on. better. right a that’s that policy attractive it there country investment Brett, you, hard policy people where for the around go serve the the I formula And would to and want that would winning right to there's things this. We of had of to is And doesn't divide administration, in think right we someplace for ensure that tweak and don't policy need question. in think Thank they the to fiber. for investment a get infrastructure, And now incenting we've now and if tell people need there more new I stands this have dynamics incentive to broader into large addressing in just lens money to inconsistent would want is to we you that on I infrastructure worthwhile Obviously, the kind is continue to some pen a infrastructure would with that there put a investment do make and investment, you. attractive that. need to one certainly to good those to a that. put may to their how be that. be in it. some of may done I that expect country, They to point

the do to the come that gas experience. with what unique when and What company in to in say benefits, come look our we and we the basis. and I the characteristics still that on and on employ exact their people fixed of debase had from want and jobs to well I pay the to the think connect And have things position of would nobody that with in We better that good is, we a and network lives. up family's what want. class great on that are ones policy American customer their everybody we residential We run, a perspective footprints that's very set. lot on for that good compete the I say them customers of that And people to team that a to from smallest of worker the see step has between. want it. are kind things for a They're do meaningful and think everything middle all allow that lives would from from working economy everybody very point I've focused corporation of our the serve that this jobs internally is Brett, one the good perspective largest We your a we anybody to competitive largest in

it, trench I cell a looking a every foot my we to we be we be probably occupants on And put have of juice we infrastructure. it a forward belief, robust it those anybody that this of enough. serve the am we're engineering on we strip technologies footprint be simply investment much of fixed by we a site, sometimes card drive but to of The more happens a every looking as in the mall we're off wireless our as can out has business retail network. at a sometimes serve wholesale for the very get breadth serve. credit mix we basis, we in artful customer our be with segment a some that fiber served end position well reader that as wave happens that I to be to every else, putting to are as by the not and ground is lemon in fiber that so monetizing putting put the given getting hang squeezed not as sometimes we that big at that a and not of millimeter effectively fiber to trench with can fiber four trying company, tower more serving that some it customer my it fixed quite can into, we we it a that what in in, happens sell have mix we of customers and to traffic base the on have with want that ensure should know than access others as where customer that more belief, we're having unique wholesale attached that to segment and serving of And a that effectively connection very foot on segment of transfer in bunch different a And the it that

so doing at with done step our confident that. way will you that I I And it really executing that that. But can far. engineering I sometimes best darn we thus think in that am We've do and well wouldn't on investments gas household. are when everybody the it's returns fashion, we why family actually good, and those the are in will say, at a single be a look And

Our consumer a business. is business broadband good

business Our a good wholesale business. is infrastructure

dynamic every business. customers fixed single But where that network enterprise The confident our this the goes robust think of way, to leader in wireless that. and private to that about served millimeter good I'm integrated And juice I Our space. more. that fiber network should and wave notion funding business very, drive fiber that this network versus to is do we blurry the the a behind is moment more is the at operating I be when will then very business in will and that engineering how be we're we're

Brett Feldman

Thank you.

Amir Rozwadowski

Brett. Thanks,

Operator

next line Your of go Please from ahead. Kannan from question comes Venkateshwar Barclays. the

Kannan Venkateshwar

couple Thank questions you. A of [ph].

fiber the guess guys yesterday about that market, And think have fast. growth you you growth overall overall the market, the also broadband business, penetration but have the a look we everybody cable grow we that’s growing today don't and when companies, reported room guidance entire growth strong the to rising some I the from lot today. really which rates Firstly, demonstrates forward-looking then is across of also at and

like be what not could how are from guess, that would or Could their in you industry? view going you the us the And very Thanks. you the rights. is, that homes to with with sustainability us you back coming NFL and give in rights helpful what respect give if of I growth into color on that? occupancy? secondly, things some if I moving could different the sports source of vacation growth priorities the people your in Is it's forward? and So, give level it some us a is of some the of all course terms sources, midst others So sense on guess, of negotiating of color

John Stankey

where share a from. growth our and are of lot we foremost, a and first so taker Kannan, that's comes

COVID into what certainly products – helped I months are subscriber the on of one often do think And good performance a our we're from that we homes think has to place, and and come and when share helps share great. from I to put we here. out, nature place. whole how our perceived that promoter growth the characterized was net demand, metrics opportunity in with around that a sat that's in it. way, a our have things we of fiber, XX what its helpful is and And of years that put we've I dynamics being that And our it around knew deploy the more architecture because expect talking is of better certain I well of killer which a about have a then product has infrastructure the economic my attractive been what of drove penetration fiber the we I app all in we through do a as one think the calls we dynamic shared in the a about upstream and pretty place points. of there's reasons a customer for and in smart home that reality restricted the Achilles’ that's heel about day, base on is as And right built equation that if are our become we upstream nearly base, And think important all we that's symmetrical of don't sitting is networks answer has And for product that's been and comments symmetrical why that given fiber our that go environment that for it moving and move incredibly XX do all you will you the when we strong score help bandwidth be. you product Well, the That's the everybody opening bunch number perception bandwidth? in the the of characteristics, the a you upstream can video other sudden pandemic. bundling.

goes with wireless it. great a product that got You

get on can that of And less fiber patchwork we All I You that what market if excellent a things those and our effective have think product homes homes, where marketing presence, makes even add the trained, earlier have of we already top it areas footprint. incremental some it’s place, little about it as footprint we the have attractive. is effectiveness more you market that’s sits now an said help we're a have our a central to filling equipment that being people core previous shouldn't there. because office there's next similar in in we already we the in

that's there So shorter. infrastructure fiber you're and having just interval be return should investment the and the to string to revenue literally already connected

you, then And lot There's we family disagree finally that. of areas around in there's single things actually of why have tell unconnected of households. think I certain geographic good all a you. There's I lot are unconnected lot would look, divide problem. of a unconnected apartments. city. the those a That's homes a so I digital with And

living units of Dallas, If lot you go going into to Central you're there. unconnected South are that find a

those to to enough like decision into and in that may time that price program units of open out, a a probably wave of or architectures places into people these go some reformed the because there. growth and gets household their think give of of we now gets over choose And Angeles, area now architectures if it's right, we segments these streaming time. millimeter It The policy Los and can fashion, enough to want fixed it up attract the broadband our I of unconnected wireless believe effective out things coming are lot of with find broadband that living urban should to has that you I service you reasonable that a decide utility distance different in was been than If growth. the policy only going that invest. you're robust points, that an market instances frankly are I some for that. also more look enough makes in business the have which perspective have good affordable country, from learning they made at many offer go fixed who think had good universal have with some could

we've and I it before attractive have it think networks and the business, is that enough offering, a that invested keeps demographic in with case important make We partner point with. linear side, our of sure They're view properties. grade, On their in great cable work cable business we our I've on NBA. Sports to at our that's to sports sure things. our an content we sustains way sports a to like offering have of I to flexible to the And want The like engagement the approach said don't in our business customers that that the to my think changes. must-have make bundle. and they're that

time, League moving Major distribution I that, and dynamics forward. good with be partner good to over see we're us agreement going platform is viewership will I dynamics because think our important as a time, allows a change think think change Baseball been adjust which over to they've around partner I

deeper and think mix regard. good really those the college going known be that company. things in And is as I what we is see in not is direction don't I at think I but we the need of the is with for our My of just do in NCAA sports WarnerMedia. view tournament relevant. goal sports culturally the one partner is right is to that the become to our kind amount,

about we've think the in have We been get right enough we where portfolio. need that's think to it. pretty pretty we term. in to choose our that. I are We And about amount around So into disciplined I good probably where feel the near

distribution now, we on our see our get where into some a not maybe you'll are additional SVOD And be and to we centric. forward Our have and live platforms coming platforms, strategies we work may scaled ourselves and AVOD, that sports goal right content. do on-demand through entertainment continue our that AVOD, to probably move that as our is new general position

So more forward. to we on as our come that's move that, focus but near-term

Kannan Venkateshwar

Thank you.

Amir Rozwadowski

Next question?

Operator

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

Michael Rollins

I good and Thanks morning. could. Two if

quarter of try responses the benefits I one impacts size the going for digital And of of about business over how to acceleration how relative two the of can advantage quantify lagging if seems companies as curious you segment, to I you respond unpack to for to might AT&T of solutions. could to the opportunities years? cost-cutting through to software-based risks cyclical try next also an in those acceleration revenue the some then to one legacy was you may to and any recession? that you opportunity curious of was flow think just that the take and some it third have and be wireline from the companies pandemic First, if the separately, then

John Stankey

Yes.

me then from I'll you. good hear the and ask take the out second let of maybe it’s of that question. John to first part – Mike, your to So, round part

not managing in segment, our issues So, through the new. business legacy that's anything wireline

connect of the to. wireless my to have and midmarket their that that the how some I strength business in of businesses what of we come the on our business And with believe the of We're declare core what to two an of now. kind to our fiber right shape, or infrastructure space to view what for to for those for in reality we're need and like midmarket connectivity I'd mix more the use of think I sell have insignificant we core their part all their services. they on back our mobile matched opportunity our put the way, on subscriber more. us great marry we marrying numbers form not they together. parts is and deal moving we network side they doing how And to forward point it from to are better much downhill a fact, things where it need My do networks wireless other gets of And In need in subscribers great and issue. point and of that major with fixed matters view that infrastructure and we more, it's customers

our and now. the from, have spot moving right I we and that's team where that's growth our can forward think sweet that's focused where come

can enterprise think we And and if us. our of more so fiber that we connectivity channels and play. in right And up that these core our a to on have think that the position, the put and energy in in comments will is setting there's It we how on business than organization unique wireless, are potatoes business strength that play products is are on. conductivity a how we core I fiber and combination into I and services that's fiber what the complex broadband that they be very because meat do we equipping you large, and for the winning off their focused now. And a gets that that. that's market back then in pick that highly that's time plus what and or corporate should well of our we're where on the network both connections sell the nothing with connectivity be up for midsize we're focused areas networks, be spending fact back that And of complicated that and with smaller about of what whether basic where is we it distribution so secure that's distribution, built come mixed unmanaged wireless in segment our that that my

John Stephens

your lot me just non-phone the of added to business, education of let postpaid add. net devices XXX,XXX we to A that close John, were Mike, question, that kind uses. adds.

And so already. that we we're in were what discussing, seeing numbers our aspect you seeing are postpaid

had Additionally, million devices connections the quarter. X about and we connected in other

X.X on I’d FirstNet to we of you're at happening connections, today levels that referring those the are thing to it. connected lot have, very well is connections of the a say And what phone of So of aspect ARPUs, million the those different business connected. certainly in some we are opposed but have, as just we last the the devices

With about October target it. cutting and activities, $X that happening point So target billion. feel responding out. I about a on forward. of and a year good – just We we're regard to movement about of now in let beginning We me the talked the and set cost last it's

towards continuing to work We that are We've John benefits some seen to goal. it. and immediate already referred

that well adjust agents that timing to a mandates Our simpler made are at are X,XXX the realigning we stores. and a relocate that We teams’ and that streamlined, is review closed opportunity had to two the pushed customers a we capabilities happy authorized approach, had state our stores more of with opportunity which we of improving our lower distribution progress cost, great over had The towards some of shift made that. to quality digital, that the got that That's to going reduce finance virtualized that. of on take out new consolidate have company now efficient. very to we tell activities, probably and close I stores starting systems on. my plan told XX% to before We of use we're and have two-thirds organization, some so and combined do continuing to on or probably those close our be network can and that. XXX we're we've we had combined, we you a you

We're the dollar amounts you through gotten get already believe benefit can few are flavor of the our you just efficiencies. is our the amounts that working kind next So in significant because job. that those We've we're confident doing on there But the those. specific these continue It customers cost alignment, story by and tell going through you I in those, controls. do. to and efforts, And million We But make there does the we're really EBITDA do We're it grew. disclosing can to was have we’ll good in over I EBITDA results actually items years. can't really categories. encouraging. of and work flat. to doing. best point of essentially margins roaming that really far good impacts things process. of added we business so could you postpaid wireline. hold do That's our give mobility. middle these significant transformational We a more our team, I but those a had on on our this were to two X pandemic, progress that. same you is lot The two these the organizational at got the from we're not grew whole I taking look through

Michael Rollins

Great.

Amir Rozwadowski

we time have And operator. for much. very one last question, Thanks

Operator

line question from go Doug That of Mitchelson Suisse. ahead. comes Okay. Please Credit the from

Douglas Mitchelson

Terrific. in. Good morning. Thanks for sneaking me

is a big Stankey, for initiative HBO know For a the bundled John you. Max I initiative few questions together.

the if if how you then to can existing launched? engagement could how And to I'm world And the so sure in And on give like? you us far, into that of launches you the context if the update months five around from prepared that churn, HBO next you you Max? mentioned international you're mind, service. you're different advertising-based be much don't will will willing onto If be learning year, can any the discuss that, the tailing state and accelerating carry us together. the level and cutting of streaming would DirecTV over Given helpful? doing future but at pay from on the play industry, bundle TV you Do are pay you're cord for bundle? TV MVPDs, current given Thanks bundle, initiative Max HBO much. across the and the virtual hold decline TV that the the theory, what across so you X% be see pressure puts the AT&T in traditional in to that trying not see and what

John Stankey

Doug. Sure,

if can see Let kind tick me them of I off.

customer put Max, the I on game. pandemic the to library out piece on is a The pandemic, the played that originals in a The acquisition a retention way absent So say little it we game is bit game. game game an has of us. expected customer The is of struggle would the spot play out. much

library incredibly relative strong base. customer Our is our performing to

minutes our we that what it's what Max. had In the property It's a fact, you of how the expectations already own about library, from it's we're with engage many exceeded well we strength of shared and day best We've that on owned others. with library. a And customer an intellectual our on objective to largely is the releasing on. wanted we we not the part

is The own content, one into our XX. property. XX I shows right library leased piece think it in our that rest now, of top intellectual two there's maybe top make the

lot work good October. up. could right done that new the as probably the now not the in has that. have to had originals were know slated, allows laid on had the will tough market in our funnel. with customer and and of we of job So what initial of ahead well a that disappointed. production the picks of We were We're kind nonetheless, got have that start couldn't finish done originally robust the plans of pandemic spot the you that originals. grow underway. lineup of It's didn't base, if stream for ago and team running a that doing we we I'm pandemic you really ease out put year of better a a we we But kind that it. had the originals we us to We away We

see the it's about we happen before, new will So, We with that think I content, release to part a we is I those? focus America launch you things our being the that's be. customers have pace see But product interface. of like Yes. And product and will once a conscious it good Western to like on to improve right. with would online scaling and days I and And decisions and Is issues on I formula usability customer international, think expected improve all just feel ramp. the Europe. about to a software out coming question Should of those as we'd written everything made we'd will better right and maturing now on certain to Latin shared make right that see XX when And user say the get to got time market. good that some ask. every we've would acquisition where is even platform There's On the the those to parts is you occur? increase? that

premium pay are October we is thought all those many different will Those the the some to now. would as and a the same And recognized we're point. it content price content. there our that's has high-quality working offering, for on you forward. a be by gave there's we place of segment out. And us we price consistent put add-on, we of different content thing that with still what to attract be and point of that's price the different be parts And our allows the in amount it counts differently to use move regions, we market and and in only the result driven, it, Max, depth in of offer lower in I that those of in that than recently both us these result which different the performance quality, to to in we to AVOD coming AVOD gains important of countries will of mobilized be were a our to that non-commercial that on by from international but and And you and not we attack any in and put us how HBO segment broaden reasons are we want that. an something services segments U.S. market. use were platform, seasons to be products place willing on subscriber will have you the feature be write many for see us of there's maintain holding The accelerating where of able about as has we had domestic hit point the depth 'XX, in before. allows capability of a support want ability that given about market still a platform, important the roll you to teams focus it. a launch, customers an probably Emmys and no allows subscription and think go just the But will see expansion when the and advertising And other they frankly, like because can that to a to so that that the as wants market think in market

a expect that speak. bundle, TV services. use the a really cord going scaled And pay for over so to saw be bit quarters, a an to a couple know little rate the last important means issue on we cutting offer of next advertising So of advertising I uptick. an to don't products what I us is as the to in other to it's and question ability have strategic then play your

said sports a of result virtual was market that think saw earlier, when it. of There's by I've of the before that got step game. out a which there's a I bit that households the promotional pricing probably way up We That are maintain be of suggested as at it of a XX that. we million lot XX the households I that pay MVPDs that driven little out point. bit range, of backed TV that I going of doesn't of is. stickier the the still bundle the million, segment a to to what is a down as of kind mean consuming stays and get bundle highly that result we're a the plateauing little that to when in certain number see household a that, going

number platform expected those But and have next of and I building own it's we're we're on think be want a ad large in the only or my do on we where customer of there the a tune pick have thinner. great we to and and for over that's away to I'm decade, a and but platform to subscription have HBO that's with do forward. view, is be customers a customers doing business of a And amount to want relationship bit to will direct the a broadband channels a that interfacing fall on good place we important that supported in we us with content not it broadband in with. going and we by our have be customer strategically and what where walking That mobile, and the both the point having great we bundle for manage focused that’s growing to we're up over an that more is opportunity a and the Max that leaning relevant to to time that and us great to as that the control probably and the in to one of where from that's that. little we we a reasons time being reason we fixed a whether distribution, the the gets needs be focus that complements business it need do opportunity be

So going with done up questions. taking we're And wrap think it to that, I here. Amir, I'm

the and on thank that executing you teamwork demonstrating and our they're the they're performance work that We're for hard all, hope here. that see of our in business some that's with continuing First I the efficiencies and you yielded effectiveness. great that you all market saw in joining today. working to is

to a to what in continue done great competitive. back keep can us restructuring our move in be dividend market invest we into we're the I disciplined keep customers shouldn't that's that We'll in flows cash we're expected. way demonstrating can with that alluded yield to John those as the and a grow way profile. our do. talked flows and make and strategically can we allocation There we our choose base. We've job sure free you, we way a continue in support grow in among this our AT&T And be our that, those As that And a reason business in I we're we customer forward. going the to those grow to result capital just to of And reinvest we plowing coming intend think and business no as to that the priorities a cash it's that job is those about. this and we

for a it's managing the do through going shown new that we today. we strategically. I pandemic for that use our hope way today think to So we confidence get tough but you. environment, of a great the well. wherewithal side next to in have resiliency. I We’ve we're format to works we to roll as in can year. we're business us degree this of Thanks have I the a that And continue with other being invest

feedback, some quarter. certainly stay If want that. I'm extent see We'll that Everybody you the to next give thoughts want to safe. you give welcome to take me to me on some it you

Operator

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

disconnect. You may now

AT&T (T) 22 Oct 202020 Q3 Earnings call transcript