Q1 2021 AT&T Inc Earnings Call

April 22, 2021

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[music] Your conference will begin momentarily please continue to hold.

Yeah.

Ladies and.

And then thanks for standing by welcome to At&t's first quarter 2021 earnings call. At this time all participants are in a listen only mode. If you should require assistance during the call. Please press Star then zero and an operator will assist you offline for.

Following the presentation and the call will be opened for questions. If you would like to ask a question. Please press one and then zero and you will be placed and the question queue. If you are and the question in queue and would like to withdraw. Your question you can do so by pressing one and then zero and as a reminder, this conference is being recorded I would now like to turn the conference over to your host of.

Amir Raws with dusky senior Vice President Finance and Investor Relations. Please go ahead.

Thank you and good morning, everyone welcome to our first quarter call on EMEA, Robert <unk> head of Investor Relations for AT&T.

Joining me on the call today are John Stankey, our CEO and Pascal the Roche, our Chief Financial Officer before we begin I need to call your attention to our safe Harbor statement and.

It says that some of our comments today may be forward looking as.

As such they're subject to risks and uncertainties described and At&t's <unk> SEC filings.

<unk> may differ materially.

Additional information is available on the Investor Relations website and.

And as always our earnings materials are on our website with that I'll turn the call over to John Stankey John.

Thanks, Amir and good morning, everyone. It's been about six weeks since our analyst and Investor day. So the framework for what we'll cover today and will be familiar to you.

We have and consistent deliberate and clear approach to the way we run our business from a market focus areas to our 2021 priority to grow customer relationships with most U S households across these market focus areas to.

So our capital allocation plans.

And as you see and our quarterly results our execution has been sharp and we have momentum.

We continued to grow our customer relationships with strong subscriber growth and mobility.

AT&T fiber and HBO Max we also.

<unk> continued to invest both in capital spending and and content.

Our ability to drive costs out of our business and deliver strong cash flows as.

Has allowed us to invest and strategic growth.

However, as you can see from the results we're investing wisely.

We've been deliberate and intentional and allocating dollars without generate returns.

This supports the future of our business, while also optimizing the returns on strategic opportunities across our portfolio.

For example, <unk>.

Cost transformation efforts and mobility yield improved year over year profits Lee.

While we simultaneously investing to drive customer growth.

Same at Warner Media, where EBITDA was down slightly even with significant increased investment and HBO Max.

The restructuring and consolidation of our Warner media business is driving cost savings and our studio operations networks sales force and technology.

Our transformation initiatives across the company are driving efficiencies and freeing up capital to invest and our growth areas and there's more opportunity ahead of us our deliberate capital allocation plan.

Loudest to invest and sustain our dividend at current levels.

Which we believe is attractive for.

Prioritizing cash after dividends to reduce debt and.

And we continue to monetize noncore assets as we refine our overall business focus as you saw during the quarter with our announced sale of a controlling interest and Directv and our other video assets.

Let's look at the progress, we made and delivering on our market focus areas on slide four.

Our customer growth was impressive across mobility fiber and HBO, Max and we're doing it the right way with a focus on growing profitability.

And mobility, we added nearly 600000 postpaid phones and the quarter, our best net add first quarter and more than 10 years.

Our subscriber momentum is strong and we're taking share.

Gross adds are up and our average promotional spend per net add is significantly lower than a year ago.

Our transformation program is enabling us to be competitive.

At the same time, we're benefiting from a simplified go to market strategy and optimize sales and distribution channels.

Mobility, EBITDA was up more than 2% and service margins increased 100 basis points.

Despite of 'twenty 'twenty first quarter compare where roaming revenues were largely unimpeded.

You put it all together.

And I believe this demonstrates the formula works.

AT&T fiber net adds were strong and penetration levels continue to expand and we've added more than 1 million fiber subscribers and the last four quarters.

Broadband revenues grew nearly 5% and the quarter.

And we're on pace to build out fiber to another 3 million consumer and business customer locations. This year.

H B O Max continues to deliver strong subscriber gains fueled by the success of our day and date theatrical strategy and are steadily strengthening post COVID-19 content slate.

And the U S. We've added more than 11 million domestic HBO, Max and H B O subscribers and the last 12 months.

It's a premium offer with a premium of <unk> compared to other streaming platforms and subscription revenues and the first quarter grew about 35% globally for Warner media is direct to consumer business and.

And we're on track to launch HBO, Max internationally, and introduce and Avon product in June of <unk>.

Cross the board.

We're encouraged by our momentum and how our management team is executing against our singular priority to grow customer relationships and our market focus areas with that I'll turn it over to Pascal to discuss the specifics of our first quarter results Pascal welcome and the floor is yours.

You John and good morning, everyone.

Let's begin with our consolidated results on slide six.

We started the year with growing revenues earnings and cash flows.

Revenues were up from a year ago with gains and mobility and Warner media.

More than offsetting declines from video legacy services and FX.

As a reminder, our communication segment has been recast to exclude our video business for.

For the quarter.

Communications EBITDA was essentially flat with the prior year.

That demonstrates a marked improvement from the fourth quarter of.

Adjusted EPS for the quarter was <unk> 86 cents.

That's up more than 2% year over year.

We also had a good start the year with our cash flows.

Cash from operations came in at 9.9 billion for the quarter.

Free cash flow was $5 9 billion with higher sales of receivables lower capex and interest are.

Our dividend payout ratio was about 63% cash.

Capex was $4 billion growth capital investment was $5 7 billion.

In addition, one of Media's total cash content investment across all of their business. This quarter was for 5 billion slightly higher than last year.

And we indicated at our analyst day, we are investing and our market focus areas and we're seeing further validation of our strategy and the first quarter results. Therefore, we edged up our gross capital investment expectations to the $22 billion range for the year. Additionally, we increased our expected vendor financing payment.

Given our ability to negotiate favorable terms.

Let's now look at our segment operating results starting with our communications segment on slide seven.

<unk> continues to lead the way and our communications business we.

We saw strong customer growth and our postpaid phone base growing service revenues growing EBITDA with expanding EBITDA service margin and that's with continued headwinds facing our high margin international roaming business that we estimate cost us about 100 million in EBITDA this quarter.

Our simple direct postpaid phone offers continue to resonate with customers and as John mentioned, our mobility gross adds share is increasing.

And postpaid phone churn has stayed near record low levels.

Cost transformation continues to be a big part of the story for mobility or more efficient sales processes and streamlined operations are driving down costs. In fact, our average promotional span per net adds of significantly lower than a year ago. Our cost efforts are also evident in business wireline.

Cost management has helped expand EBITDA margins as customers transition away from higher margin legacy services and products, but the product simplification and the resulting cost savings have been key to delivering solid EBITDA.

Consumer wireline is another business and transition we are moving quickly to expand our fiber footprint and our results show you why that is crucial and.

We added 235000, AT&T fiber customers and their quarter.

IP broadband ARPA grew three 2% year over year, our fiber penetration rate has more than 35% and growing and total broadband net adds and also increased we expect this to be the trough in terms of year over year EBITDA growth.

We expect trends to improve from here driven by IP broadband revenue growth and a mid single digits for the year, let's move onto one and media, which is on slide eight.

One and media results of the first chapter of what we expect will be a transformational year for the business revenues were up nearly 10% higher direct to consumer subscription and advertising revenues drove the growth and even with higher customer acquisition and content cost associated with HBO, Max and higher sports.

Cause EBITDA was down only slightly.

Advertising revenues were up more than 18% driven by return of sports, especially the NCAA Championship men's basketball tournament.

Direct to consumer subscription revenues grew about 35%, reflecting the success of HBO Max.

We now have $44 2 million domestic HBO, Max and HBO subscribers, and nearly 64 million worldwide subscribers.

Average monthly revenue per domestic customer is just a little less than $12.

And now we have 11 million customers, who combined one of more connectivity products with HBO, Max or H B O.

The same day release of movies and theaters and on HBO Max has been of success.

He has provided theaters with a steady flow of content and of pandemic challenged environment and and it's also been of great catalyst for subscriber growth of at HBO Max.

The success of Godzilla vs. Kang at both the box office and on HBO Max Bears this out.

It had the largest domestic box office of any other movie and the last year, while also having the largest viewing audience of any other film or show on HBO Max since launch and films such as Godzilla vs Kong attract new retail customers, who are staying because they enjoy all of the cotton.

On the platform, we're really looking forward to the introduction of our international and Avon products.

And for HBO Max later in June.

We plan to have attractive price points for our Avon offering and we expect to lean into our international launch, reaching 60 additional markets by the end of the year. Our aim is to use our differentiated premium content offering to track global customers now.

Now, let's go to slide nine for an update on our capital allocation and liquidity.

We made our $23 billion C band spectrum payments since we last talked to you in March that drove net debt to adjusted EBITDA ratio to three one times. We expect this will be our peak leverage level.

We're still on track to have a sizable reduction in debt by year and through a combination of strong free cash flows and proceeds from asset monetization will continue to focus on debt reduction we expect our net debt to adjusted EBITDA to be around three times by year end.

We also continue to actively evaluate other asset monetization opportunities. Our treasury team has also been working tirelessly to lower our cost of debt. Our weighted average cost of debt is down 50 basis points year over year, driving about $150 million and lower interest costs and the first quarter.

Our weighted average maturity for debt is 16 years at a weighted average cost of three 8% of.

About 90% of our debt is out of fixed rate. So we feel we're well protected and an increasing interest rate environment.

Amir that's our presentation, we're now ready for the Q&A.

Thank you Pascal operator, we're ready to take the first question.

Thank you as a reminder, ladies and gentlemen, if you'd like to ask a question. Please and then.

Zero.

Your first question comes from the line of John <unk> from UBS. Please go ahead.

Great. Thanks, Good morning, guys.

And maybe two questions on the on the Warner media side, and you've got $64 million.

Total HBO Max subs.

And the Avon and and international launches coming later this year and obviously, some momentum sort of and certainly more than we thought and the first quarter. I mean is the $67 million to $70 million.

Good for year, and does that does that need to come up and if not why why why do you expect of slowdown and then and then maybe for Pascal and you've mentioned some of the drivers, but we expect it of a double digit decline and Warner media EBITDA. This this quarter.

Despite get driven by all the other content investment and and HBO Max can you give us some more color on some of the drivers of that that kept that EBITDA.

And essentially flat and is that a trend that we can expect through the year.

You know even as the investment ramps. Thanks.

Okay.

Thank you for your question John a couple of things to keep in mind for.

First as it relates to our guide where we provided our guide on Investor Day, and obviously, we're really pleased with how the business is performing at this time.

We're not going to update our guidance beyond what we've said already but we are really pleased with the performance and I think what you're seeing is we.

Putting out of really good product and consumers are responding.

In terms of Warner media overall.

Here's the thing.

It's focused on and we've mentioned this several times, but over the course of the last several years, there's been a <unk>.

Consistent transformation effort, taking out duplicate costs across the organization. So we combine technology organization sales function.

Productions.

Studios. So all of that is what you're seeing coming through is offsetting the investment that we are.

We are making and HBO Max that was the plan that was deliberate and that's what we that was our objective and it's coming through.

In terms of going forward I'm not going to comment on what the exact trends are going to be but again you should see we have significant transformation savings that should help.

Subsidize some of the investment we're making.

But thanks for Scott.

Operator for you go to the next question.

Your next question comes from the line.

Hold on one second.

Yes.

Yeah.

Okay.

Yeah.

Operator can we get to that move to the next question and then your next question comes from the line of David Barden from Bank of America. Please go ahead.

Hey, guys. Thanks, so much.

Maybe two if I could.

Hi, John.

And again I'll stay about the prospect of accelerating fiber investment base.

And based on the success rate that the team had in deploying against the opportunity that they were presented with the 3 million passengers. This year potentially as many of its 4 million next year.

Can you talk a little bit about kind of what youre seeing on the ground relative to your expectations and how the recent price changes in the armor business.

Factor into that and.

And plan and then I guess the second question for you.

Pascal.

Hugh Hugh.

Effectively lowered your capex guidance by boosting your plan to take advantage of vendor financing.

You kept the free cash flow guidance for same implying lower operating cash flow for.

From a quarter ago could you elaborate a little bit on on how do we kind of square that.

Change and the guidance with <unk>.

Looks like relatively strong performance this quarter. Thanks.

Okay.

Dave Let me start with the Capex question, and then I'll turn it over to John.

Here's the context to keep in mind.

Our first quarter performance was really strong.

And typically as you know this is the low watermark for.

Free cash flow delivery and.

And.

So we're really pleased with out of the business is performing and the customer momentum.

And rest assured you should not read into this any more than it is we when we looked at our projections for capital spend and we thought it was appropriate to increase it.

But.

We didn't think at this time of year given how early it is it was appropriate to start to change guidance. We wanted to maintain some flexibility, but we are really comfortable with our.

With our free cash flow guidance and it has not changed in any way as a result of the change that we've made to capex. So there's really nothing more to it and that.

Yes, I would tell you Dave just to kind of maybe put a finer point of what Pascal said, one of the things and I'm trying to impress upon with the management team as well.

We want to do things of the right way and we want to do things and the sustainable way and.

And probably a little bit of a cultural shift we are of very.

Process driven organization.

Very focused on delivering what we asked them to do and.

And that's a great strength, but sometimes that means of people are very literal about looking at a number and saying I will get you that number and maybe Don.

Raise of point that says if you gave me a little bit of flexibility I can do something a lot more efficiently or effectively for the next two years and I'm really trying hard with the management team to help them understand they had the latitude to do the right thing for the long haul and that and while.

And while we want some consistency and how we run the business there is a limit to doing that.

De Minimis returns are diminishing returns.

And so with that and I've got a back up what I say it of folks and when they come in and they have compelling and ways to think about how we should build or go about deploying and I need to be responsive and ensuring that I give them of latitude to do that and given the number of things, we have underway that where scale and including fiber build as you asked the question of what we're doing around starting to roll into <unk>.

Deployment et cetera.

And making sure that we get that latitude and there is really important to me.

And I think it's important to supporting them on and what I'm seeing on the early days of I won't even call. It. The early days, what I know about our base on our fiber deployment and and what we know about the incremental work as well.

From an operational perspective, and a market perspective, all green lights.

One of the reasons, why I'm really comfortable and letting the team run and the way that we're letting them run and.

And I like what I see in terms of our market position. If you. If you look at things like customer lives.

Sure.

Customer satisfaction and net promoter scores.

And the actual performance of the product, they're all great and when you start looking at that you know there is going to be goodness and.

I told you this before I've not seen share movement untypical products like this as rapidly as we're able to get share movement, once we deploy and area and.

And I frankly have never seen customer satisfaction levels move up and get to a you know promoting position and the market as.

As we've transitioned of product as fast as we're seeing I think both of those things.

Bode really well and as you heard Pascal and talk about and the opening remarks.

We think we're at kind of the bottom of our of our EBITDA compare of lot of that is actually being driven by our strategy to start attaching content to broadband.

That's been really good in terms of driving those customer lives up it's driving churn down and it's driving engagement and satisfaction levels higher we're going to get the benefit of that over the customer lifecycle and as we start to lap that youre going to start to see.

From our EBITDA dynamics start to creep back up to where we want them. So I feel really good across the board.

Thanks very much.

Operator, if we can move to the next question.

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

Thank you good morning.

John can you talk a little bit about the plans for the C band spectrum and what are you doing and the marketplace. Today. When do you expect to get the initial markets rolled out and is that what's the extra $1 billion is going on is that part of the six to 8 billion and you called out and so any updates around the timing there would be great and.

I think you just mentioned on CNBC around your interest and to trade up for five perhaps you can expand on that thanks.

Yeah.

So Simon we gave you the Pops coverage guide at the Analyst day, and we haven't changed any of that now.

Now, even with and without changing the pace and rate of.

And where we are and the C band deployment, which will begin touring and markets up late this year.

That doesn't mean that and things that we're doing today that can help for 2020 to build that we wouldn't make some decisions on and deployment and that is an aspect of some of this.

Capital dynamically described but it's not the aspect of a variety of things that are playing into it that's one of several and so.

So as.

As we time certain things.

Aggregate amount may be the same but theres things that we can do today is we're touching towers and doing things and parts of the infrastructure that for example, maybe are going to be and service until later in 'twenty two that we could do a little more efficiently and a pre provision provision of some things and not go back and touch on the second time so.

Some of that ordering is a dynamic that we're trying to drive through.

As you know I've told you I don't expect that there's going to be any change right now and our deployment plans and the growth from the guidance that we gave you for five weeks ago.

We will see as we get into this a little bit deeper as usual.

And that cycle, where technology is relatively new vendor.

Vendors have commitments, we're waiting on specific units.

Global supply chains are stressed right now across the board and.

You asked the question and you do the work and people will give you a comfortable answers, but I'm a little skittish I mean, we're seeing dynamics that are occurring and the global supply chain were unexpected things are popping up and is it possible that we could see certain element shortages.

Part of crop up as everybody is racing to put stuff up on towers and May and Thats why I wanted to be a little bit cautious around guiding up or doing anything different until we get a little bit of momentum around that.

In terms of where we are on the three four of five and of your D. O D auction.

Look I.

I believe that there could be and opportunity there.

We're going to watch it carefully we've we've always participated and any spectrum auction that comes forward or looked at it and said as it makes sense for the portfolio and.

We can see some things that if the valuations are sound and valuations that makes sense for our business I will tell you and the guidance. We've provided you over the next several years, we have plugged in and <unk>.

Expectation that we will be in spectrum markets as we guide down to our two dot five debt to EBITDA level that we projected for you in 'twenty four and.

So I expect within that plan and we're gonna be looking at it and saying do we like the valuations and does it make sense and we do believe.

Some of that spectrum could fit into our network portfolio and and be helpful to us down the road. If if the auction is done and the way we think it's going to be done.

Great. Thank you.

Thank you Simon operator for can move to the next question.

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

Thanks, and good morning, two questions. If I kind of first just curious if you could share more details on the customer engagement levels that youre seeing on the HBO Max platform.

And to gain a better understanding of how customers are using the platform.

After the initial reason to purchase of service or activate onto the application and then secondly, just curious if you could also provide some context.

And on the customer verticals that are contributing to the improvement in the wireless postpaid subscriber growth.

And if you're seeing any impact or change.

To your growth or growth expectations from some of the recent promotional changes of your competitors. Thanks.

So Mike let me give you kind of were not going to give you any more guide publicly on the hours of engagement and what we gave you at analyst day.

Don't want to get into a kind of a you know.

Every five week update on those numbers I think we gave you a good sense of.

Of what's happening and our satisfaction that we're well up over two hours per day per account and I think that's.

And so really good place to be and it certainly is probably higher than our our engineered expectations. When we launched the product and we will take that goodness.

The behaviors of what customers are doing really I don't think are dramatically different than what you would see on any other asthma and service.

As Pascal mentioned, we clearly have a good reason for them to come in and we're seeing and the customer data that many of our opt in to come in because of the theatrical slate opportunity.

And credit to the team they've done a remarkable job not only of engineering and that strategy and executing and carrying it through and it's playing out.

Exactly as we kind of laid out for you and we said we wanted to do it in terms of the mix.

We've got more of the year to get through to see what that balances between theatrical revenues versus as five but when you look at the customer growth on <unk> and you see some of the early data coming back on and on movies like Kong versus Godzilla and the theater I think you can all see there is probably a pretty compelling rising tide lifting all of.

Boats, and this case and and we feel was the right call for the moment, we were in with the pandemic and really comfortable about that and that drives customer.

Exploration of the product and once they come in and they do what they do with any other restaurant services. They go to our high value series.

So any of the new scripted series content that we have out there HBO original as HBO Max original and they go for the high profile ones and they start to engage on those and then guess what else. They do they dig deeper into the library and there's work horses and the library of depending on the demographic of the.

That tends to sustain them around and.

Because of the good job of of marketing and the slate for the movies.

I think what we're seeing is evidenced that they say well gosh I am now into it two or three weeks and I know theres. Another one coming next month and I wanted to see.

Sticking around and sort of churn expectations.

And consistent with what we expected moving in and.

So I think it's just the classic approach to managing any escalade service, although we are playing to our strengths and <unk>.

Now, we're tearing the content and we're using theatrical and maybe a little bit more heavily than other services might use because that's one of our strong suits and it always has been with the strength of HBO and the theatrical slate at HBO offered and the core product.

On the wireless side I've said this before I don't want to sound like a broken record, but part of our strength is.

As it were really able to cover the waterfront on some of the verticals and our distribution strategy and in particular, we've been particularly strong and using our enterprise business and our business sales force and not only selling into business segments, but ensuring that affinity plans and those areas.

Can reach customers and their families at home for being part of that business that we sell to the strength of first net which has opened up of vertical that we were under indexed and and share and we're seeing really attractive share growth and again, there is and affinity characteristic that occurs.

Within that vertical it's not only and affinity characteristics among coworkers, but we've managed to ensure that as somebody chooses to come on for the purpose of their work as of first responder that they have a lot of incentives to maybe drag their families through that experience with attractive pricing and approach.

We continue to be strong and our traditional verticals with our iOS centric customer base, which tends to scale and no what I would call the better part of the postpaid market and we haven't lost any edge. There in fact, we've been a little bit stronger and I would tell you.

We still have room to run I think we're probably under indexed and a couple of verticals, especially if we start looking at the Hispanic community that we can do a little bit better and and how we position our brand and our product and the team is focusing on those areas. So my off my point of view right now is.

Our momentum is continuing.

We're doing better as you can see from the results. We still have a couple of cards to play to try and sustain that.

We've been very consistent and the market with a repetitive offer of quarter. After quarter. You are correct, we have seen and our competitors continue to try to compete aggressively they're mixing and change and their offers pretty frequently and we seem to be very consistent and very stable and that's a really good place for.

For us to be and we're going to continue to play our game.

Thanks.

Operator, if we can move to the next question.

Next question comes from the line of Phil Cusick from Jpmorgan. Please go ahead.

Thanks, John following up on wireless you talked last year about investing and the base how do you see the upgrade and retention and outlook for the next few quarters you upgraded a lot of the base do you think there's just less need for new phones going forward.

And second for Pascal and I believe with lower churn you extended the life of wireless customers can you give us an idea of how much of that may have helped wireless EBITDA year over year.

Yes, Phil.

Hard to predict exactly where the ebbs and flows of the subscriber base goes it's been fairly consistent and I expect it's going to remain pretty much on this pattern.

And the pattern that we would expect given it was a new device launches it tapers off a little bit and the middle part of the year. After you get through the bubble immediately following a new device launch and then you know as you get into the second part of the year and you get into the holiday season.

I'll kick back up but.

As I said we.

We have given you guidance that we think is consistent with the volumes that we're experiencing right now we're really comfortable with where we're at as.

As we told you youre going to see.

Service profitability bounce back and Youre seeing EBITDA grow and the segment.

We're very comfortable we'll continue that trajectory so I'll take the customer growth and we can get that dynamic moving in the direction of its AD I feel really good about it.

I don't think I'm going to guide you to suggest that there's going to be any dramatic shift one way or the other over what youre seeing right now and on our direction.

And.

So a couple of point.

First just a follow on and John thing to keep in mind as for Chris for not only customer momentum, we saw revenue gains as well as profitability gains.

And mobility. So the strategy is working and we feel really good about it as it relates to your question on customer lives.

And here's the context overall.

This is something we do on a regular basis, we change lives of assets based on the most recent information we have.

The net effect of changing lives this quarter was with slightly negative to earnings.

For for wireless and was positive.

For consumer wireline and was positive but for.

Directv asset it was negative so our balance.

And it was negative and it was not significant and by any stretch said, we've disclosed that nor 8-K.

Alright, Thank you do now.

You would expect to see a little bit of extension of wireless wise with churn and taking the direction of its taking seven of handles on postpaid churn is rarefied air.

Yeah, I agree Pascal if I can follow up on a question earlier.

And just getting a lot of incoming.

And where people are of two minds can you spoon feed us on the free cash flow versus increased vendor payments versus Capex I think theres a lot of misunderstanding about about what are you spending and.

Net this year what are you paying back for in previous years, and you mentioned also something about higher confidence so higher spending as well can you just go deeper than that.

And Phil as you know we have a metric out there of non-GAAP metric that's call gross capital investment that is the sum of cash that we pay for Capex plus of amounts we pay to vendors.

And for financing related to Capex that don't flow through free cash flow.

I will tell you that.

Net much of the time, those vendor financing payments don't necessarily relate to in year purchases of capex, but relate to prior year.

But it's a measure that we've historically provided as just another data point for people to consider overall your takeaway should be from our free cash flow from the guidance. We have out there one we we intend to continue to fully invest and our businesses.

Two.

We expect to generate.

Free cash flow at the levels that we've guided to and we feel really good about the trajectory and being able to accomplish that based on where we are day.

Okay.

Thanks, guys.

Operator, if we moved and the next question.

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

Yeah. Thanks for taking the question and I was hoping we could spend some time on the Ava product that we'll be launching this summer.

Can you elaborate a bit on who you see as the addressable market for that offer in other words, who do you think you can reach with the aim of <unk> service that you aren't currently reaching.

And back and then how do you intend to reach those consumers do you think you'll be as efficient leveraging your existing channels. As you have with HBO Max or do you think youre going to need to broaden out and work with new partners and you bring that service to market. Thank you.

Brett Lee.

I'll give you a little bit of color and.

As you know were for market reasons haven't entirely disclosed everything like pricing et cetera, and we will.

Of course do that right before the line so that we get the maximum benefit of coming into the market.

Look I mean, I think that there is a segment of the base and this is particularly true.

When.

There are multiple streaming services out there and people are making decisions to reorder their investment and in home entertainment and they're going to be more price sensitive and while we believe HBO Max without commercial interruption as a premium product and words, what we charge and the.

The market today.

We know that that premium and some cases is high enough that there are people when they start to say well I've got three services and I aggregate everything of that maybe I won't make a choice to be in it and.

And Thats, particularly true if you look at maybe some younger demographics.

And as a result of that we believe getting a price point down where for them to get some well executed advertising.

They would look at the product and service and say within the portfolio of streaming services that they may wish to have and their household or and their apartment. They think that this is a good place to be.

Another example of it will be and certain socioeconomic dynamics. So you can expect for example.

We believe the Avon product actually pairs well with some of our prepaid offers and how we might position it because it tends to line up on a more price sensitive.

No economic dynamic and we think that opens up a marketing channel and awareness channel and ultimately and opportunity to drive penetration and other places where again customers are a bit more price sensitive so really at the end of the day, a customer gets to make a choice and.

And there is no question, if you get a lower price point youre going to push it down lower and the demos that will ultimately subscribe to it and I think that's more important as people are making portfolio decisions of multiple services and household and when you see the reality of of ebb and flow on a direct to consumer.

And offering where maybe you hit that period of time.

Where youre not as enamored with the offering that we have on the new content that's in place having.

Having that option to be at a lower price point allow somebody to stick with the service and.

And we just think it's a really smart place to be for that segment of the market in terms of the channels.

What we've been I think it's really important point, you bring up and I want to stress. This we have been really really careful about our channel partners at the end of the day of direct to consumer business should be of direct to consumer business. It should be of business that that we have the opportunity to have a direct relationship with the customer market.

Sell to them and work with them and the way that we feel is appropriate.

And so where.

And in some cases.

We were criticized for taking a long time to get certain agreements worked out you should understand that we were doing that under the principle of we refused to back off on the notion that we wanted to make sure that our distribution and.

And the way we offered the product was something that we ultimately have the ability to talk to our customers and to bill our customers and make sure that we can manage the lifecycle of our customers over time and do these migrations easily and not allow somebody else between us and the user interface of the customer.

And not all launches of streaming of products have done that and done it and that same fashion and so we've been a little bit more dependent on our owned and operated channels. We've been I believe respectful and balanced with our existing distribution partners, where we've certainly consented to their rights to be.

<unk> bundle and sell the product, where we can make sure that we manage for customer experience and the user interface as the customer is inside the product and that we can appropriately and for them and guide them to the right kind of content and have the kind of relationship with them that we should add as a direct to owner of that product.

For service and so.

Youre going to see US use for example, our own prepaid channels, but youre not going to see us dramatically change our distribution strategy, where just to get volume, we're turning over control and exercise rates of how the product or services being used.

And in discussions with our existing distributors and we intend to make it available to them under very similar construct to what we did and economic incentives with the subscription product if they choose to do that and if.

And they choose to carry it forward and its done and the way that we think is the right balance for our ability to manage that customer will extend it to them if not we will be moving it largely through our owned and operated channels if thats whats required.

Thank you.

Operator, if we can move to the next question.

Your next question comes from the line of Frank Lee with them from Raymond James. Please go ahead.

Great. Thank you very much what is your sense of the fiber investment that could come out of the infrastructure Bill in Congress and how much that might be available to you and can you can you comment on the FCC's Edp plan that I think going into effect later, this month and how and how you might be able to take advantage of that from your customers both on the wireless.

And on the wireless side. Thanks.

Sure Frank.

The infrastructure build.

Euphemistically speaking the infrastructure Bill is a little bit of a large amorphous thing right now and I think we're and very much the early innings of shaping and what it's going to be.

I don't pretend that I've got any great insight that I can predict out of the political process will play it out but I'll give you my opinion on it my opinion is that it will go through some changes I think and aggregate the size of it will probably be different than what it was proposed to be.

My sense is that there is enough support on both sides of the aisle that both would like to see broadband spending.

If it's a bipartisan approach.

Think it would still survive a byproduct of partisan approach if it ends up not being a bipartisan bill I think it will still survive not be and a bipartisan bill.

And if you think about how it's executed I think the White house made a couple of broad statements and the announcement of the policy that we are starters.

You've heard the president and say himself that he is open for discussion on things and I know Theres a lot of dialogue going on my sense with that dialogue is that there are members of Congress on both sides of the aisle that maybe have somewhat different views as to how the policy should be executed.

And then what was and a very at a very high level laid out and the bill of some.

Suggestion and I don't think it was all of that specific.

And I think we're actively involved in that discussion right now talking about our learnings and our understandings of what we think good policy would be if in fact, the government chooses to put some subsidy and place around that and some incentives in place.

And we think it should probably get to a different place and the rough framework that the white house put in place and we think that there is support on both sides of the aisle and other policy aisles of this administration to try to drive it that way.

I I believe.

Some of the things, we're frankly not characterized properly.

I think when you get underneath the facts of how broadband infrastructure is deployed and the United States today what occurs when there is two players and the market that are offering both cape of capable and robust networks, what's the price performance characteristics of the product or I think vast parts of.

Of U S broadband market are actually performing incredibly well.

I think we have an issue that needs to be dealt with on certain degrees of low income subsidy interestingly voluntarily several of us and the market, including AT&T as a voluntary low income offer that's out there that it's hard to imagine that of $10 of offer and <unk>.

My view would be a monopolistic pricing and offer it seems to me that thats, a pretty gracious and attractive offer and if there were the right subsidies put on it.

That could be of pretty effective tool of putting more fixed broadband into people's homes. I do believe we have some rural areas of the bill needs to deal with that if the policy is done right on a technology agnostic way that we can participate in and grow and and that clearly is going to take some additional discussion and.

And policy of formation to get it and to that place.

We're in the early innings of it we're active in it.

Think it is going to be something at the end of the day alike, and a political process that there'll be a middle ground that will come up with some opportunity, but probably not everything we'd like.

But we will be active and aggressive and the places that we can go the good news is and the guidance that we've given you.

And the core of our business, we have a lot of opportunity for growth in broadband and this would be icing on the cake. If we were able to make some headway there and that we can we.

We can move forward without this policy to to deliver to you. What we said we were going to deliver.

We've been working with the SEC.

How the subsidy gets placed out we've been talking with them about the approach to and my sense is that they've got their arms around it.

They understand how to administer these programs.

They are they are going to do it in a way that I think it will help some of our customers again, we've got great offers out in the market for low income customers.

And some cases there is income stress that maybe don't qualify as low income the SEC plan will help the income stressed but it will particularly help low income.

And that coupled with the offers we have and the market I think should be generally helpful and moving forward.

I think we're probably at a peak rate now at need.

And as people return to schools and person.

I think theres going to be a little bit of pressure taken office dynamic moving forward, but.

Again, we werent banking out of lot of government subsidy and the guide we've given you on our our directions. So if it breaks the right way it will be a good thing for us.

Thanks, very much John that's helpful.

Thanks, Frank if we can move to the next question.

Your next question comes from the line of canine and cash flow.

From Barclays. Please go ahead.

Thank you.

So John on the broadband side.

Just wanted to see if.

Given the success, you've had and the wireless side with device promotions and now that seems like it's flowing through the margins and as well.

Is there any thought about maybe a different go to market strategy.

With broadband as well, which accelerates the pace of growth there.

And in the coming years.

With respect of penetration because that's been a big focus for you guys for a long time I'm just wondering if the approach.

It has some room for change and secondly on the wireless side when you think about.

The margin this quarter I mean, David obviously.

Pretty.

Pretty good and the context of some of the promotions you guys have done and I think you pointed to the promotional costs and the normalized basis for subscriber actually being pretty attractive could you just talk about that and a little bit more and how that might.

Play out over the course of the year. Thank you.

Sure.

And we're first of all if you have any ideas you want us and May feel free to drop me, an email and I'm always looking for good thoughts and what might be effective and the market, but I will I will tell you. We go we've had really good success.

And pairing our wireless services with our broadband customers and I will tell you. It's one of the areas of frankly over the last couple of months really pleased with the team's execution.

And how we've been working that dataset and that customer base to put the right attractive offers in place and.

One of those things, where because we have a relationship with the customer.

We can maybe do some things a little bit differently, and and the market and how we position what those incentives are for them to put two products together and what you might do and a mass market channel nationally and we feel that Thats a.

Pretty attractive place for us to go and.

And I mentioned, we're having really good success bundling our entertainment direct to consumer product with broadband and we're seeing really high marks from customers and doing that that feels really good that feels to me like a a new version of pay TV with broadband and it feels like eight for.

Leaning entertainment product and services, coupled with broadband where we know that when we bundle we drive churn down and our success has been really strong on that we've leaned in on that we're seeing customers receive it really well, but it is really really good on customer profitability and asset lives when they make.

Wireless couple of and decision.

I'm not going to I'm, not going to kind of see.

They too much but we believe there are some further customer durations on service integration, we can do between wireless and broadband that makes some things even more attractive moving forward for that customer base, our product roadmap as we move into 'twenty 'twenty two starts to introduce some of those.

And it goes right at the heart of what Youre, suggesting and.

I, absolutely believe that'll be of winning play, but I don't want to oversell. It because right now our broadband footprint as you know doesn't cover the entire United States, and we do need to be successful and marketing and selling and the entire United States and our wireless business to be successful.

Why are we doing better on promotional unit costs and dynamics.

Consistency of execution.

One is we've not had to change our approach to the market and change our messaging to customers and go to what I would call of the expensive approach. The on again off again on again off again those things caused you to do things like try to retrain.

Salespeople, you have to put incentives and space in place to get their attention to move through.

I will tell you we are operating through our distribution channels and and incredibly consistent fashion.

And a way that I look at the numbers and I take great Pride and what the team has executed and what they're doing and it looks like sound management and looks like we're doing the right things and doing them better.

And when we get the customer and with the right consistent offer.

Our.

Trusted sales advisors are doing what you would expect trusted sales advisors to do theyre guiding the customer to the right product and service that meets their needs and sometimes that products and service and that solution is and exactly the thing that the customer was motivated to comment and explore and oftentimes.

Is that a good outcome for our business when that occurs and that might be of buyout on an unlimited plan to higher rates that allow us to drive our pool up.

It might be bundling and other product and service with them and we're we're getting the goodness of comes along with that consistent message.

<unk> customers to explore with us instead of maybe their first inclination, which might've been to go and explore with competitor and move their service and Thats why the churn levels of so much lower.

So we're getting really good lift from our promotional spend.

We're getting really good performance when you look at how we're managing the device recovery of lifecycle.

All good and it's all healthy and when you're when you're not driving the volume that we.

Drive driven and the past when we're down at those low gross add levels guess, what your unit costs are of higher per gross add when you're operating at the levels that we're operating that right now you get some scale benefits to it. So it just it all comes together in a way that's really goodness and Thats, what you see and work through the numbers.

Thanks very much.

Operator, we have time for one last question.

Okay that question comes from the line of Colby <unk> from Cowen and company. Please go ahead.

Great. Thanks for fitting me and I guess two questions.

One I was hoping you could just talk about what youre seeing from a competitive perspective and broadband you've obviously had success.

Now for a few quarters stepping up your fiber net adds just curious if youre seeing and your response to that and how that might expect that momentum you're anticipating and that remainder of the year and then secondly Pascal.

As it relates to the guidance after such a strong quarter and the revenue growth guidance of plus 1% seems.

For any conservative as does the EPS expectation that it's flat.

I think and a previous question your responses that you now.

It's less about.

Anticipating.

Any type of downturn, if you will in terms of the financial results, but more a function of.

You guys not wanting to be and the habit of having to change your guidance of frequently just want to make sure that I'm understanding that correctly. Thank you.

So Colby I don't think I've seen what I would call it a dramatic shift or adjustment and to the broadband market and the competitive dynamics around it.

We.

We're not pleased with our performance and places, where we don't have fiber which is.

Why and need additional.

Footprint and why we're headed that direction, but we're incredibly pleased at our ability to compete.

And we do have it and.

And it's been pretty consistent in terms of the competitive dynamics around that.

And in fact.

I think we're doing some things right now that are improving our performance overall, because our focus and the market and how we're thinking about the integrated customer experience and really.

What we're now starting to do.

Took us maybe a little too long to get there, but we're thinking beyond the side of the house is the way I would think about it.

We've always built really good networks, and we do a really good job of ensuring that they are consistent and reliable and work well but.

The inside of the house is a bit of a.

Of Derby place right now from a data perspective.

And it's getting dirty or by the day as customers do more and more and more devices.

And we're now starting to work really hard on how our products and services can help the customer inside the house.

And that as the result of making our product look more consistent and more reliable and perform better and.

I think we are in the early and ends of that frankly, and so one of the competitive dynamics that we really want to push on is ensuring that where we used to kind of you know.

I would say wildfire hands of the problem that occurred on the other side of the network interface and many instances.

Trying to lean on embracing that way thats helpful of the customer and makes our product and service work better and when.

We think that Thats, a great way to compete moving forward and it has a real interesting opportunity to start differentiating the product and service off for moving forward and I'm pretty optimistic about that coupled with our fiber infrastructure as we move into 'twenty two.

For Skol and Colby on your guidance point Youre commentary response. It is early in the year, we're really happy with our performance.

We don't want to get into the habit of changing our guidance each and every quarter and John said this earlier, but just to underscore the point that he said.

What we want and try to do is to focus on running the business and investing appropriately and we.

We believe that has to be our priority and.

And we're comfortable we can do that and at the same time deliver on our financing commitments and.

But.

We won't be and the habit of changing guidance every quarter.

Thank you very much.

For the questions John turn it over to you for any comments. So first thank you all for being with US today and past Cogs. Good to have you here and the the saddle you no longer can see you as of first coming up so look forward of anymore of these with you but.

What I would tell you is.

Second quarter of last year, we told you about where we wanted to focus of this business and.

And then we wanted to make sure that we were gaining momentum and success and satisfy and broadband customers and our wireless business and what we could do and growing fiber and fixed connections and now.

Now we grew a forward leaning of entertainment based product and I think this quarter youre seeing that the team has done a remarkable job of.

Of getting their focus together over the course of the last year and carrying success forward and I would submit to you can plough through the numbers and see that it's being done on the right way across the board, where these are growing products, but they are growing and the right way with the opportunity for high value subscribers that are highly <unk>.

Satisfied sticky with long and service wise and I feel really good about that in terms of building the franchise and then finally.

If you look underneath those numbers, we have a lot of confidence and what we've seen coming out of the first part of this year. We told you our guide was.

A conservative guide, we don't know exactly where things are going with the.

The crawl back from Covid.

And I'm hopeful and optimistic.

And we see citizens continue to get vaccinated and we continue this march out and if those tail winds continue I think we're going to have a really strong year in front of us, but there's still a degree of uncertainty that we're all trying to adjust to I'm sure you understand that but irrespective of that the fundamentals underneath the business of really strong.

Now you see that and the quarter, we're going to continue to ride that and I look forward to talking to you 90 days from now thanks for your attention we will see you soon.

Okay.

Ladies and gentlemen that does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.

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Ladies and gentlemen, thank you for standing by and welcome to At&t's first quarter 2021 earnings call. At this time all participants are in a listen only mode. If you should require assistance during the call. Please press Star then zero and an operator will assist you off line following the presentation and the call will be opened for questions. If you would like to ask.

A question. Please press one and then zero and you will be placed and the question queue. If you are and the question in queue and would like to withdraw. Your question you can do so by pressing one and then zero and as a reminder of this conference is being recorded I would now like to turn the conference over to your host a mirror of raws with dusky senior Vice President Finance and Investor relation.

Please go ahead.

Thank you and good morning, everyone welcome to our first quarter call I'm of mirrors with LTE head of Investor Relations for AT&T.

Joining me on the call today are John Stankey, our CEO and Pascal day, Roche, our Chief Financial Officer, before we begin and I need to call your attention to our safe Harbor statement.

It says that some of our comments today may be forward looking.

As such they are subject to risks and uncertainties described and At&t's <unk> SEC filings.

<unk> may differ materially.

Additional information is available on the Investor Relations website.

And as always our earnings materials are all of our website.

With that I'll turn the call over to John Stankey John.

Thanks, Samir and good morning, everyone. It's been about six weeks since our analyst and Investor day. So the framework for what we'll cover today and will be familiar to you.

We have of consistent deliberate and clear approach to the way we run our business from a market focus areas to our 2021 priority to grow customer relationships with most U S households across these market focus areas too.

So our capital allocation plans.

And as you see and our quarterly results our execution has been sharp and we have momentum.

We continued to grow our customer relationships with strong subscriber growth and mobility.

TNT fiber and HBO Max we.

We also continued to invest both in capital spending and and content our ability to drive costs out of our business and deliver strong cash flows has allowed us to invest and strategic growth.

However, as you can see from the results we're investing wisely.

We've been deliberate and intentional and allocating dollars without generate returns.

This supports the future of our business, while also optimizing the returns on strategic opportunities across our portfolio.

For example, <unk>.

Cost transformation efforts and mobility yield improved year over year of profits, while we simultaneously investing to drive customer growth.

Same at Warner Media, where EBITDA was down slightly even with significant increased investment and HBO Max and.

The restructuring and consolidation of our Warner media business is driving cost savings and our studio operations networks sales force and technology.

Loud us to invest and sustain our dividend at current levels, which we believe is attractive.

We're prioritizing cash after dividends to reduce debt.

And we continue to monetize noncore assets as we refine our overall business focus as you saw us do in the quarter with our announced sale of a controlling interest and direct TV and our other video assets.

Let's look at the progress, we made and delivering on our market focus areas on slide for.

Our customer growth was impressive across mobility fiber and HBO, Max and we're doing it the right way with a focus on growing profitability.

And mobility, we added nearly 600000 postpaid phones and the quarter, our best net add first quarter and more than 10 years.

Our subscriber momentum is strong and we're taking share.

Gross adds are up and our average promotional spend per net add is significantly lower than a year ago.

Our transformation program is enabling us to be competitive.

At the same time, we're benefiting from a simplified go to market strategy and optimize sales and distribution channels.

Mobility, EBITDA was up more than 2% and service margins increased 100 basis points.

Despite of 'twenty 'twenty first quarter compare where roaming revenues were largely unimpeded.

You put it all together.

And I believe this demonstrates the formula works.

AT&T fiber net adds were strong and penetration levels continue to expand we've added more than 1 million fiber subscribers and the last four quarters.

Broadband revenues grew nearly 5% and the quarter.

And we're on pace to build out fiber to another 3 million consumer and business customer locations. This year.

H B O Max continues to deliver strong subscriber gains fueled by the success of our day and date theatrical strategy and are steadily strengthening post COVID-19 content slate.

And the U S. We've added more than 11 million domestic HBO, Max and H B O subscribers and the last 12 months.

It's a premium offer with a premium of our pool compared to others screaming and platforms and subscription revenues and the first quarter grew about 35% globally for Warner media is direct to consumer business and.

And we're on track to launch HBO, Max internationally, and introduce and Avon product in June of <unk>.

Cross the board.

You John and good morning, everyone.

Let's begin with our consolidated results on slide six.

We started the year with growing revenues earnings and cash flows.

Revenues were up from a year ago with gains and mobility and one of media.

More than offsetting declines from video legacy services and FX.

As a reminder, our communication segment has been recast to exclude our video business for.

For the quarter.

Communications EBITDA was essentially flat with the prior year.

That demonstrates a marked improvement from the fourth quarter.

Adjusted EPS for the quarter was <unk> 86 cents.

That's up more than 2% year over year.

We also had a good start the year with our cash flows cash.

Cash from operations came in at $9 9 billion for the quarter.

Free cash flow was $5 9 billion with higher sales of receivables and lower Capex and interest.

Our dividend payout ratio was about 63% cash.

Opex was $4 billion growth capital investment was $5 7 billion.

In addition, one of Media's total cash content investment across all of their business. This quarter was for 5 billion slightly higher than last year as we indicated at our analyst day, we are investing and our market focus areas and we're seeing further validation of our strategy and the first quarter results.

Therefore, we edged up our gross capital investment expectations to the $22 billion range for the year of.

Additionally, we increased our expected center of financing payments, given our ability to negotiate favorable terms let's.

Let's now look at our segment operating results starting with our communications segment on slide seven.

Mobility continues to lead the way and our communications business we.

Our simple to rack postpaid phone offers continue to resonate with customers and as John mentioned, our mobility gross adds share is increasing.

And postpaid phone churn has stayed near record low levels.

Cost transformation continues to be a big part of the story for mobility or more efficient sales processes and streamlined operations are driving down costs. In fact, our average promotional spend per net adds of significantly lower than a year ago. Our cost efforts are also evident in business wireline.

Consumer wireline is another business and transition we are moving quickly to expand our fiber footprint and our results show you why that is crucial and we.

235000, AT&T fiber customers and the quarter.

IP broadband ARPA grew three 2% year over year, our fiber penetration rate has more than 35% and growing and total broadband net adds and also increase we expect this to be the trough in terms of year over year EBITDA growth.

We expect trends to improve from here driven by IP broadband revenue growth and a mid single digits for the year, let's move on to one and media, which is on slide eight.

One of the media results on the first chapter of what we expect will be a transformational year for the business revenues were up nearly 10% higher direct to consumer subscription and advertising revenues drove the growth and even with higher customer acquisition and content costs associated with HBO, Max and higher sports.

Cause EBITDA was down only slightly.

Advertising revenues were up more than 18% driven by return of sports, especially the NCAA Championship men's basketball tournament.

Direct to consumer subscription revenues grew about 35%, reflecting the success of HBO Max.

We now have $44 2 million domestic HBO, Max and HBO subscribers, and nearly 64 million worldwide subscribers.

Average monthly revenue per domestic customer is just a little less than $12 and now we have 11 million customers, who combined one of more connectivity products with HBO Max our H B L.

The same day release of movies and theaters and on HBO Max has been of success.

Yeah, that's provided theaters with a steady flow of content and the pandemic challenge environment and and it's also been of great catalyst for subscriber growth of at HBO Max.

The success of Godzilla vs Com at both the box office and on HBO Max Bears this out.

And had the largest domestic box office of any other movie and the last year, while also having the largest viewing audience of any other film are show on HBO Max since launch and films such as Scott Zeller for US is Kong attract new retail customers, who are staying because they enjoy all of the content.

On the platform, we're really looking forward to the introduction of our international and Avon products.

And for HBO Max later in June.

We plan to have attractive price points for our a broader offering and we expect to lean into Orange NASA launched reaching 60 additional markets by the end of the year. Our aim is to use our differentiated premium content offering to attract global customers.

Now, let's go to slide nine for an update on our capital allocation and liquidity.

We made our $23 billion C band spectrum payments since we last talked to you in March that drove net debt to adjusted EBITDA ratio to three one times. We expect this will be our peak leverage level.

Our weighted average maturity for debt is 16 years at a weighted average cost of three 8% of.

About 90% of our debt is out of fixed rate. So we feel we're well protected and and increasing interest rate environment.

Amir that's our presentation, we're now ready for the Q&A.

Thank you Pascal operator, we're ready to take the first question.

Thank you as a reminder, ladies and gentlemen, if you'd like to ask a question. Please and then zero.

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

Great. Thanks. Good morning, guys are maybe two questions on the on the Warner media side, and you've got $64 million.

Total HBO Max subs.

And the Avon and international launches coming later this year and obviously, some momentum sort of and certainly more than we thought and the first quarter. I mean is the $67 million to $70 million.

Good for year, and does that does that need to come up and if not why why why do you expect of slowdown and then and then maybe for Pascal and and you mentioned some of the drivers, but we expect it of a double digit decline and Warner media EBITDA. This this quarter.

Despite get driven by all of the all the content investment and <unk>.

<unk> can you give us some more color on some of the drivers of that that kept that EBITDA.

Essentially flat and is that a trend that we can expect through the year.

Even as the investment ramps. Thanks.

Thank you for your question John a couple of things to keep in mind.

First as it relates to our guide where we provided our guide on Investor Day, and obviously, we're really pleased with how the business is performing at this time.

We're not going to update our guidance beyond what we've said already but we are really pleased with the performance and I think what.

And Youre seeing is we put we're putting out of really good product and consumers are responding.

And in terms of Warner media overall.

Here's the thing.

It's focused on and we've mentioned this several times, but over the course of the last several years, there's been a consistent transformation effort.

Taking out duplicate costs across the organization. So we are.

Combined technology organization sales function.

Content productions.

Studio. So all of that is what youre seeing coming through is offsetting the investment that we are.

That we are making and HBO Max that was the plan that was deliberate and that's what we that was all of our objective and it's coming through.

In terms of going forward I'm not going to comment on what the exact trends are going to be but again.

And you should keep we have significant transformation savings that should help.

Subsidize some of the investment we're making.

But thanks for Scott.

Operator from go to the next question.

Your next question comes from the line.

Hold on one second.

Yes.

Yeah.

Operator can we get to that move to the next question and then your next question comes from the line of David Barden from Bank of America. Please go ahead.

Hey, guys. Thanks, so much.

Maybe two if I could.

Hi, John.

And you talked of gain on staying about the prospects of accelerating fiber investing.

And based on the success rate for the T hat in deploying against the opportunity that they were presented with the 3 million passengers. This year essentially as many of its 4 million next year.

Can you talk a little bit about kind of what youre seeing on the ground relative to your expectations and how the recent price changes and the hardware business.

Factor into that game.

Game plan and then I guess the second question for you.

Pascal.

Hugh Hugh.

Effectively lowered your capex guidance by boosting your plan to take advantage of vendor financing, but you kept the free cash flow guidance, the same implying lower operating cash flow for.

A quarter ago could you elaborate a little bit on on how we kind of square that.

Change and the guidance with what looks like relatively strong performance this quarter. Thanks.

Yeah.

Hey day.

Now, let me start with the cash.

Opex question, and then I'll turn it over to John.

Here's the context to keep in mind.

Our first quarter performance was really strong.

And typically as you know this is the low watermark for.

Free cash flow to lift and.

And.

So we're really pleased with how the business is performing and the customer momentum.

And rest assured you should not read into this any more than it is when we looked at our projections for capital spend we thought it was appropriate to increase it but.

We didn't think at this time of the given how early it is it was appropriate to start to change guidance. We wanted to maintain some flexibility, but we are really comfortable with our.

With our free cash flow guidance and it has not changed in any way as a result of of the change that we've made to capex. So it's really nothing more towards a net.

Yeah, and I would tell you Dave just to kind of maybe put a finer point of what Pascal said, one of the things and I'm trying to impress upon with the management team as well.

And we wanted to do things for the right way and we want to do things and the sustainable way and.

I have probably a little bit of of cultural shifts we are of very.

Process driven organization.

Very focused on delivering what we asked them to do and.

That's a great strength, but sometimes that means of people are very literal about looking at a number and say and I will get you that number and maybe Don.

Raise of point that says if you gave me a little bit of flexibility I can do something a lot more efficiently or effectively for the next two years and I'm really trying hard with the management team to help them understand they have the latitude to do the right thing for the long haul and that.

While we want and consistency in how we run the business there is a limit to doing that.

Minimis returns are diminishing returns.

And so with that I've got a back up what I say to folks and when they come in and they have compelling and ways to think about how we should build or go about deploying and I need to be responsive and ensuring that I give them of latitude to do that and given the number of things we have underway that we're scaling and including the fiber build as you asked the question of what we're doing around starting to roll into <unk>.

Deployment et cetera.

Making sure that we get that latitude and there is really important to me.

And I think it's important to supporting them and what I've seen in the early days of <unk>.

I won't even call. It the early is what I know about our base on our fiber deployment and and what we know about the incremental work is.

From an operational perspective, and a market perspective, all green lights and Thats.

One of the reasons, why I'm really comfortable and letting the team Brian on the way that we're letting the Brian.

And I.

And I like what I see in terms of our market position. If you. If you look at things like customer lives.

Sure.

Customer satisfaction and net promoter scores.

And the actual performance of the product, they're all great and when you start looking at that you know there's going to be goodness.

And.

Told you this before I've not seen share movement and typical products like this as rapidly as we're able to get share movement. Once we deploy and area and I frankly have never seen customer satisfaction levels move up and get to a promoting position and.

The market.

And as we've transitioned of product as fast as we are seeing I think both of those things.

Bode really well as you heard Patrick I'll talk about the opening remarks.

We think we're at kind of the bottom of our of our EBITDA compare of lot of that is actually being driven by our strategy to start attaching content to broadband.

It's been really good in terms of driving those customer lives up and it's driving churn down it's driving engagement and satisfaction levels higher we're going to get the benefit of that over the customer lifecycle and as we start to lap that youre going to start to see.

And our EBIT of dynamics start to creep back up to where we want them. So I feel really good across the board.

Thank you very much.

Operator, if we can move to the next question.

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

Thank you good morning.

John can you talk a little bit of bad the plans for the C band spectrum and what are you doing and the marketplace. Today. When do you expect to get the initial markets rolled out and is that what's the extra $1 billion is going on and is that part of the $6 8 billion and you called out and so any updates around the timing there would be great.

And I think you just mentioned on CNBC around your interest and to trade up for five perhaps you can expand on that thanks.

So Simon we gave you the Pops covered you guys at the analyst day, and we haven't changed any of that.

Now even within without changing the pace and rate of.

And where we are on the C band deployment, which will begin turning market's up late this year.

That doesn't mean that and things that we're doing today that can help for 2020 to build that we wouldn't make some decisions on on deployment and that is.

And as an aspect of some of this.

Capital dynamically described but it's not the aspect of a variety of things that are playing into it that's one of several and.

So.

As we time certain things the aggregate amount may be the same but theres things that we can do today is we're touching towers and doing things and parts of the infrastructure that for example, maybe are going to be and service until later in 'twenty two that we could do a little more efficiently and our pre provision provision of some.

And I would go back and touch of a second time. So some of that ordering is a dynamic that we're trying to drive through.

And as.

And I've told you I don't expect that there's going to be any change right now and our deployment plans and the growth from the guidance that we gave you of five weeks ago.

We will see as we get into this a little bit deeper as usual.

And that cycle, where technology is relatively new vet.

Vendors have commitments, we're waiting on specific units.

Global supply chains are stressed right now across the board and.

You asked the question and you do the work and people will give you a comfortable answers, but I'm a little skittish.

Seeing dynamics that are occurring and the global supply chain were unexpected things are popping up and is it possible that we could see certain element shortages.

Start to crop up as everybody is racing to put stuff up on towers and May and Thats why I wanted to be a little bit cautious around guiding up or doing anything different until we get a little bit momentum around that.

In terms of where we are on the three dot for five and of your <unk> auction.

Look I I believe that there could be and opportunity there we're going to watch it carefully we've always participated and any spectrum auction that comes forward or looked at it and said does it makes sense for the portfolio and.

We can see some things that if the valuations are sound valuations that make sense for our business I will tell you and the guidance. We've provided you over the next several years, we have plugged in and <unk>.

Expectation that we will be and spectrum markets as we guide down to our two dot five debt to EBITDA level that we projected for you and 'twenty four and.

So I expect within that plan, we're going to be looking at it and saying do we like the valuations and does it make sense and we do believe some of.

Of that spectrum and could fit into our network portfolio and NB.

Be helpful to us down the road if if the auction is done and the way we think it's going to be done.

Great. Thank you.

Thank you Simon operator for can move to the next question.

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

Thanks, and good morning, two questions. If I kind of first just curious if you could share more details on the customer engagement levels that you're seeing on the HBO Max platform.

To gain a better understanding of how customers are using the platform. After the initial reason to purchase of service or activate onto the application and then secondly, Jeff.

Chasing sales to provide some context.

And on the customer verticals that are contributing to the improvement in the wireless postpaid subscriber growth.

And if youre seeing any impact or change.

To your growth or growth expectations from some of the recent promotional changes of your competitors. Thanks.

So Mike let me give you kind of were not going to give you any more guidance publicly on the hours of engagement and what we gave you at analyst day.

Don't want to get into kind of.

Every five week update on those numbers I think we gave you a good sense of.

Of what's happening and our satisfaction that we're well up over two hours per day per account and I think that's.

It's a really good place to be and it certainly is probably higher than our our engineered expectations. When we launched the product and we will take that goodness.

The behaviors of what customers are doing really I don't think are dramatically different than what you would see on any other S fraud services.

As Pascal mentioned, we clearly have a good reason for them to come in and.

And we're seeing and the customer data that many of our team to come in because of the theatrical slate opportunity and.

Credit to the team they've done a remarkable job not only of engineering and that strategy and executing and carrying it through and it's playing out exactly as we kind of laid out for you and we said we wanted to do it in terms of the mix.

We've got more of the year to get through to see what that balances between theatrical revenues versus.

Spot, but when you look at the customer growth on <unk> and you see some of the early data coming back on and movies like Com versus Godzilla and the theater I think you can all see that there is probably a pretty compelling rising tide lifting all boats and this case and and.

And we feel was the right call for the moment, we were in with the pandemic and really comfortable about that and that drives customer.

Exploration of the product and then once they come in they do what they do with any other asthma and service. They go to our high value series.

And so any of the new scripted.

Series of content that we have out there HBO of original HBO Max original and they go for the high profile ones and they start to engage on those and then I guess what else. They do they dig deeper into the library and theirs Workforces and the library of depending on the demographic of the individual that tends to sustain them.

Around and because of the good job of of marketing of the slate for the movies.

I think what we're seeing is evidenced that they say well gosh I am now into it and two three weeks and I know theres. Another one coming next month and I wanted to see.

Im sticking around and so our churn expectations had been consistent with what we expected moving in and.

And so I think it is just the classic approach to managing any escalade services, although we are playing to our strengths and how we are cheering the content and we're using theatrical and maybe a little bit more heavily than other services might use because that's one of our strong suits and it always has been with the strength of HBO and the.

Of course slate at HBO offered and the core product.

On the wireless side.

And said this before I don't want to sound like a broken record, but part of our strength is.

As it were really able to cover the waterfront and some of the verticals and our distribution strategy and in particular, we have been particularly strong and using our enterprise business and our business sales force and not only selling into business segments, but ensuring that affinity plans and those areas.

Can reach customers and their families at home for being part of that business that we sell to the strength of the first net which has opened up of vertical that we were under indexed and and share and we're <unk>.

Seen really attractive share growth and <unk>.

Again, there is and affinity characteristic that occurs within that vertical it's not only and affinity characteristic of mountain co workers, but we've managed to ensure that as somebody chooses to come on for the purpose of their work as of first responder that they have a lot of incentives to maybe drag their family through that experience.

And with attractive pricing and approach.

We continue to be strong and our traditional verticals with our iOS centric customer base, which tends to scale.

I would call the <unk>.

Better part of the postpaid market and we haven't lost any edge. There in fact, we've been a little bit stronger and I would tell you I think we still have room to run.

Think we're probably under indexed and a couple of verticals, especially if we start looking at the Hispanic community that we can do a little bit better and and how we position our brand and our product and the team is focusing on those areas. So.

My point of view right now is.

Our momentum is continuing.

We're doing better as you can see from the results. We still have a couple of cards to play to try and sustain that.

Seem to be very consistent and very stable and that's a really good place for us to be and we're going to continue to play our game.

Thanks.

Operator, if we can move to the next question.

Next question comes from the line of Phil Cusick from Jpmorgan. Please go ahead.

Thanks, John following up on wireless you talked last year about investing and the base. How do you see the upgrade and retention outlook for the next few quarters is upgraded a lot of the base do you think there's just less need for new phones going forward.

And second for Pascal and I believe with lower churn you extended the life of wireless customers can you give us an idea of how much of that may have helped wireless EBITDA year over year.

Yes, Phil.

Hard.

<unk> exactly where the ebbs and flows of the subscriber base goes it's been fairly consistent and.

I expect it's going to remain pretty much on this pattern.

The pattern that we would expect given it was a new device launches it tapers off a little bit and the middle part of the year. After you get through the bubble immediately following a new device launch and then.

And you get into the second part of the year and you get into the holiday season.

It will kick back up but as I said.

We have given you guidance that we think is consistent with the volumes that we're experiencing right now we're really comfortable with where we're at as.

As we told you youre going to see.

Service profitability bounced back and Youre seeing EBITDA grow and the segment.

We're very comfortable we will continue that trajectory. So I'll take the customer growth and we can get that dynamic moving the direction Thats add I feel really good about it.

I don't think I'm going to guide you to suggest that there's going to be any dramatic shift one way or the other over what youre seeing right now and on our direction.

And.

And Phil a couple of points.

First just a follow on and John I think to keep in mind is for Chris for not only customer momentum, we saw revenue gains as well as profitability gains.

And mobility. So the strategy is working and we feel really good about it as it relates to your question on customer lives.

And here's the context overall.

This is something we do on a regular basis, we change lives of <expletive>ets based on the most recent information we have.

The net effect of changing lives. This quarter was was slightly negative to earnings for.

For the wireless and was positive.

For consumer wireline of was positive but for.

Directv <expletive>et it was negative so on balance.

It was negative and it was not significant and by any stretch and we've disclosed that and our 8-K.

Alright, Thank you do now.

And you would expect to see a little bit of it.

Extension of wireless wise with churn and taking the direction. It's taking seven of handles on postpaid churn is rarefied air.

Yes, I agree Pascal if I can follow up on a question earlier.

I'm, just getting a lot of incoming where people are of two minds can you spoon feed us.

On the free cash flow versus increased and entertainments versus Capex I think theres a lot of misunderstanding about.

What are you spending and net this.

And this year what are you paying back for in previous years, and you mentioned also something about higher confidence so higher spending as well can you just go deeper than that.

And Phil as you know.

And we Havent metric out there of non-GAAP metric Thats call.

Gross capital investment.

That is the sum of cash that we pay for Capex plus amounts we pay to vendors.

For financing related to Capex that don't flow through free cash flow.

I will tell you that.

Much of the time, those vendor financing payments don't necessarily relate to in year purchases of capex, but relates to prior year.

But it's a measure that we've historically provided as just another data point for people to consider overall your takeaway should be from our free cash flow from the guidance we have out there one.

We intend to continue to fully invest and our businesses.

Two.

We expect to generate.

Free cash flow at the levels that we've guided to and we feel really good about the trajectory and being able to accomplish that based on where we are today.

Yes.

Thanks, guys.

Operator, we moved and the next question.

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

Yes, thanks for taking the question and I was hoping we could spend some time on the Ava product that we'll be launching this summer.

Elaborate a bit on who you see as the addressable market for that offer in other words do you think you can reach with the <unk> service that you aren't currently reaching with Max and then how do you intend to reach those consumers do you think you'll be as efficient leveraging your existing channels as you have with HBO Max.

Or do you think youre going to need to broaden out and work with new partners as you bring that service to market. Thank you.

Brett let.

Let me I'll give you a little bit of color and.

As you know were for market reasons haven't entirely disclosed everything like pricing et cetera, and we'll of course do that right before the line. So that we get the maximum benefit of coming into the market.

Look I think that there is a segment of the base and this is particularly true.

When.

There are multiple streaming services out there and people are making decisions to reorder their investment and in home entertainment that are going to be more price sensitive and while we believe HBO Max without commercial interruption as a premium product and worse, what we charge and.

The market today.

We know that that premium and in some cases is high enough that there are people when they start to say well I've got three services and <unk>.

Aggregate everything of that maybe I won't make a choice to be and it and thats, particularly true if you look at maybe some younger demographics.

And as a result of that we believe getting the price point down.

And for them to get some well executed advertising they would look at the product and service and say within the portfolio of streaming services that they may wish to have and their household or and their apartment that day.

And that this is a good place to be.

Another example will be and certain socioeconomic dynamics. So you can expect for example.

We believe the Avon product actually pairs well with some of our prepaid offers and how we might position it because it tends to line up on a more price sensitive.

Economic dynamic and we think that opens up marketing channel and awareness channel and ultimately and opportunity to drive penetration and other places where again customers are a bit more price sensitive so really at the end of the day, a customer gets to make a choice.

And there is no question, if you get a lower price point youre going to push it down lower and the demos that will ultimately subscribe to it and I think thats more important as people are making portfolio decisions of multiple services and household and when you see the reality of of ebb and flow on a direct to consumer.

Offering where maybe you hit that period of time.

Where youre not as enamored with the offering that we have on the new content that's in place.

Having that option to be at a lower price point allows somebody to stick with the service and.

And we just think it's a really smart place to be for that segment of the market in terms of the channels.

And what we've been I think it's really important point that you bring up and I want to stress. This we have been really really careful about our channel partners at the end of the day of direct to consumer business should be of direct to consumer business. It should be of business that that we have the opportunity to have a direct relationship with the customer market.

Sell to them and work with them and the way that we feel is appropriate.

And so.

And in some cases.

We're criticized for taking a long time to get certain agreements worked out.

You should understand that we were doing that under the principle of we refused to back off on the notion that we wanted to make sure that our distribution.

We're able to bundle and sell the product, where we can make sure that we manage for customer experience and the user interface.

And does the customer is inside the product and that we can appropriately and for them and guide them to the right kind of content and have the kind of relationship with them that we should have as a direct to owner of that product or service.

So youre going to see US use for example, our own prepaid channels, but youre not going to see us dramatically change our distribution strategy, where just to get volume, we're turning over control and exercise rates of how the product or services being used and we're in discussions with our existing distributors.

And we intend to make it available to them and are very similar construct to what we did and economic incentives with the subscription product if they choose to do that and if they choose to carry it forward and its done and the way that we think is the right balance for our ability to manage that customer will extended two of them if not we will be.

Moving it largely through our owned and operated channels and Thats whats required.

Thank you.

Operator, if we can move to the next question.

Your next question comes from the line of Frank Lee from Raymond James. Please go ahead.

Great. Thank you very much.

Is your sense of the fiber investment that could come out of the infrastructure Bill in Congress and how much that might be available to you and can you can you comment on the FCC's Edp plan that I think going into effect later, this month and how and how you might be able to take advantage of that from your customers. Both on the wireline and on the wireless side. Thanks.

Sure Frank.

The infrastructure Bill.

Euphemistically speaking of the infrastructure builds a little bit of a.

Large amorphous thing right now and I think we're and very much the early innings of shaping and what it's going to be.

I don't pretend that I've got any great insight that I can predict out of the political process will play it out but I'll give you my opinion on it and my opinion is that it will go through some changes I think and aggregate the size of it will probably be different than what it was proposed to be.

My sense is that there is enough support.

Both sides of the aisle that both would like to see broadband spending.

If it's a bipartisan approach.

I think it would still survive of byproduct partisan approach if it ends up not being a bipartisan bill I think it will still survive not being a bipartisan bill.

If you think about how it's executed.

I think the White house made a couple of broad statements and the announcement of the policy that we're starters I think you've heard the president and say himself.

He is open for discussion on things and I know Theres a lot of dialogue going on and my sense with that dialogue is that there are members of Congress on both sides of the aisle that maybe have somewhat different views as to how the policy should be executed than what was and a very at a very high level.

Laid out and the bill of some.

Suggestion I don't think it was all of that specific.

Administration to try to drive it that way.

I believe.

Some of the things, we're frankly not characterized properly.

I think when you get underneath the facts of.

And how broadband infrastructure is deployed and the United States today.

It occurs when there is two players and the market that are offering both cape of capable and robust networks, what's the price performance characteristics of the product or I think vast parts of the U S broadband market are actually performing incredibly well.

I think we have an issue that needs to be dealt with on certain degrees of low income subsidy interestingly voluntarily several of us and the market, including AT&T as of.

Voluntary low income offer that's out there that it's hard to imagine that at $10 of offer and.

And my view would be a monopolistic pricing and offer it seems to me that thats, a pretty gracious and attractive offer and if there were the right subsidies put on it that could be of pretty effective tool of putting more fixed broadband into people's homes. I do believe we have some rural areas of the bill needs to deal with that if the policy of <unk>.

John Wright on a technology agnostic way that we can participate in and grow and and that clearly is going to take some additional discussion and policy of formation to get it into that place.

We're in the early innings of it we're active in it.

I think it's going to be something at the end of the day alike, and a political process of there'll be a middle ground that will come up with some opportunity, but probably not everything we'd like.

But we will be active and aggressive and the places that we can go the good news is and the guidance that we've given you and.

And the core of our business, we have a lot of opportunity for growth in broadband and this would be icing on the cake. If we were able to make some headway there and then we can we.

We can move forward without this policy to to deliver to you. What we said we were going to deliver.

We've been working with the SEC.

How the subsidy gets placed out we've been talking with them about the approach to it and my sense is that they've got their arms around it.

They understand how to administer these programs.

They are they are going to do it in a way that I think it will help some of our customers again, we've got great offers out in the market for low income customers.

And in some cases, there was income of stress that maybe don't qualify as low income.

<unk> plan will help the income of stressed but it will particularly help low income and.

And that coupled with the offers we have and the market I think should be generally helpful. Moving forward.

I think we're probably at a peak right now at need.

And as people return to schools and person.

I think theres going to be a little bit of pressure taken office dynamic moving forward, but.

Again, we werent banking out of lot of government subsidy and the guide we've given you on our our direction. So if it breaks the right way it will be a good thing for us.

Thanks, very much John Thats helpful.

Thanks, Frank if we can move to the next question.

Your next question comes from the line of Canon and cash flow.

From Barclays. Please go ahead.

Thank you.

So John on the broadband side.

Just wanted to see if.

Given the success you've had on the wireless side with device promotions and now that seems like it's flowing through the margins as well.

Is there any thought about maybe a different go to market strategy.

And with broadband as well, which accelerates the pace of growth there.

And in the coming years.

With respect of penetration because that's been a big focus for you guys for a long time I'm just wondering if the approach.

Has some room for change and secondly on the wireless side when you think about.

The margin this quarter I mean, David obviously.

Pretty.

Pretty good in the context of some of the promotions you guys have done and I think you pointed to the promotional costs on a normalized basis for subscriber actually being pretty attractive could you just talk about that and little bit more and how that might.

Play out over the course of the year. Thank you.

Sure.

John on <unk>.

First of all if you have any ideas you want us and May feel free to drop me an email im always looking for good thoughts and what might be effective and the market, but I will I will tell you we get we've had really good success at.

And pairing our wireless services with our broadband customers and I will tell you. It's one of the areas of frankly over the last couple of months really pleased with the team's execution.

And how we've been working that dataset and that customer base.

To put the right attractive offers in place and.

One of those things, where because we have a relationship with the customer.

We can maybe do some things a little bit differently and in the market and how we position what those incentives are for them to put two products together than what you might do and a m<expletive> market channel nationally and we feel that Thats a.

Pretty attractive place for us to go and.

Leaning entertainment products and services, coupled with broadband where we know that when we bundle we drive churn down and our success has been really strong on that we've leaned in on that we're seeing customers receive it really well, but it is really really good and customer profitability and <expletive>et lives when they make them.

Wireless couple of and decision.

I'm not going to I'm, not going to kind of see.

And it goes right at the heart of what Youre, suggesting and.

Why are we doing better on promotional unit costs and dynamics.

Consistency of execution.

Salespeople you have to put incentives in spurts and place to get their attention to move through.

I will tell you we are operating through our distribution channels and and incredibly consistent fashion and.

And a way that I look at the numbers and I take great Pride and what the team has executed and what they're doing and it looks like sound management looks like we're doing the right things and doing them better.

And when we get the customer and with the right consistent offer.

Trusted.

Trusted sales advisors are doing what you would expect trusted sales advisors to do theyre guiding the customer to the right product and service that meets their needs and sometimes that product and service and that solution is and exactly the thing that the customer was motivated to comment and explore.

And oftentimes that's a good outcome for our business when that occurs and that might be of buy up on an unlimited plan to higher rates that allow us to drive <unk>.

It might be bundling and other product and service with them and we're we're getting the goodness of comes along with that consistent message.

Causes customers to explore with us and instead of maybe their first inclination, which might've been to go and explore what the competitor and move their service and Thats why the churn levels are so much lower.

So we're getting really good lift from our promotional spend.

We're getting really good performance when you look at how we're managing the device recovery of lifecycle.

All good and it's all healthy and when you're when you're not driving the volume that we.

Drive driven and the past when we're down at those low gross add levels guess, what your unit costs are of higher per gross adds when you're operating at the levels that we're operating that right now you get some scale benefits to it. So it just it all comes together in a way that's really goodness and Thats, what you see and work through the numbers.

Thanks very much.

Operator, we have time for one last question.

Okay that question comes from the line of Colby <unk> from Cowen and company. Please go ahead.

Great. Thanks for fitting me and I guess two questions.

And I was hoping you could just talk about what youre seeing from a competitive perspective and broadband you've obviously had success.

Now for a few quarters stepping up your fiber net adds just curious if youre seeing and your response to that and how that might expect that momentum you're anticipating and the remainder of the year and then secondly Pascal.

As it relates to the guidance after such a strong quarter and.

The revenue growth guidance of plus 1% it seems.

For your conservative as does the EPS expectation that it's flat.

I think and previous question your responses that.

It's less about.

Anticipating and.

Any type of downturn, if you will in terms of the financial results, but more a function of.

You guys not wanting to be and the.

Habit of having to change your guidance. So frequently just want to make sure that I'm understanding that correctly. Thank you.

So of Colby.

And I don't think Ive seen what I would call it a dramatic shift or adjustment and to the broadband market and the competitive dynamics around it.

We.

We're not pleased with our performance and places, where we don't have fiber which is.

Why and need.

Additional footprint and why we're headed that direction, but we're incredibly pleased and our ability to compete.

We do have it and.

And it's been pretty consistent in terms of the competitive dynamics around that.

And in fact.

I think we're doing some things right now that are improving our performance overall, because our focus and the market and how we're thinking about the integrated customer experience and really.

What we're now starting to do.

Took us maybe a little too long to get there, but we're thinking beyond the side of the house is the way I would think about it.

We've always built really good networks, and we do a really good job of ensuring that they are consistent and reliable and work well but.

The inside of the house is a bit of.

A dirty place right now from a data perspective.

And it's getting dirty or by the day as customers do more and more and more devices.

And we're now starting to work really hard on how our products and services can help the customer inside the house.

As the result of making our product look more consistent for reliable and perform better.

And I think we are and the early and ends of that frankly, and so one of the competitive dynamics that we really want to push on is ensuring that where we used to kind of I.

I would say wildfire hands of the problem that occurred on the other side of the network interface and many instances.

Trying to lean on embracing that in a way that's helpful of the customer and makes our product and service work better and.

And we think that Thats, a great way to compete moving forward and it has a real interesting opportunity to start differentiating the product and service off for moving forward and I'm pretty optimistic about that coupled with our fiber infrastructure as we move into 'twenty two.

Pascal and Colby on your guidance point Youre commentary response it is early in the year.

We're really happy with our performance.

And we don't want to get into the habit of changing our guidance, each and every quarter and John Stephens.

Earlier, but just to underscore the point that he said.

What we want to try to do is to focus on running the business and investing appropriately and.

We believe that has to be our priority and.

We're comfortable we can do that and at the same time to deliver on our financial commitments and.

And we won't be and the habit of changing guidance every quarter.

Thank you very much.

For the questions John turn it over to you for any comments. So first of thank you all for being with US today and past gods. Good to have you here and the the saddle you no longer consider first coming up so look forward of anymore of these with you but.

What I would tell you is.

Second quarter of last year, we told you about where we wanted to focus of this business and that we wanted to make sure that we were gaining momentum and success and satisfy and broadband customers and our wireless business and what we could do and growing fiber and fixed connections and how we grew a forward leaning and entertainment based product and.

And I think this quarter youre seeing that the team has done a remarkable job of of getting their focus together over the course of the last year and carrying success forward and I would submit to you can plough through the numbers and see that it's being done and the right way across the board for these are growing products, but they are growing and the right.

Way with the opportunity for high value subscribers that are highly satisfied sticky with long and service slides and I feel really good about that in terms of building the franchise and then finally.

If you look underneath those numbers, we have a lot of confidence and what we've seen coming out of the first part of this year.

We told you our guide was.

A conservative guide, we don't know exactly where things are going with the.

The crawl back from Covid.

And I'm hopeful and optimistic.

Now you see that and the quarter, we're going to continue to ride that and I look forward to talking to you 90 days from now thanks for your attention we will see you soon.

Yes.

Ladies and gentlemen that does conclude your conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.

Q1 2021 AT&T Inc Earnings Call

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