Q1 2026 AT&T Inc Earnings Call

April 22, 2026

Operator: Good morning, and welcome to AT&T's Q1 2026 Earnings Call. At this time, all participants are in a listen-only mode. Should you need assistance during the call, please press star then zero, and an operator will assist you offline. Following the presentation, the call will be open for questions. If you would like to ask a question, please press star then one, and you will be placed in the question queue. If you are in the question queue and would like to withdraw your question, you can do so by pressing star then two. As a reminder, this conference is being recorded. I would now like to turn the conference call over to our host, Brett Feldman, Treasurer and Head of Investor Relations. Please go ahead.

Brett Feldman: Thank you and good morning. Welcome to our Q1 call. I'm Brett Feldman, Treasurer and Head of Investor Relations for AT&T. Joining me on the call today are John Stankey, our Chairman and CEO, and Pascal Desroches, our CFO. Before we begin, 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're subject to risks and uncertainties described in AT&T's SEC filings. Results may differ materially. Additional information as well as our earnings materials are available on the investor relations website. I also want to note that the quiet period for FCC Spectrum Auction 113 is in effect. During this period, applicants are required to avoid discussions of bids, bidding strategy, and post-auction market structure with other auction applicants.

Speaker #2: you and good morning . Welcome to our first quarter call . I'm Bret Feldman , treasurer and head of investor relations for AT&T .

Speaker #2: Joining

Brett Feldman: Finally, I want to note that the discussion of our operating results and outlook during this call will be on a continuing operations basis. With that, I'll turn things over to John.

John Stankey: Thanks, Brett, and good morning, everyone. I appreciate you joining us today. We executed well in Q1, delivering results that were consistent with the outlook we provided while implementing several key strategic initiatives. Last quarter, we told you that we had positioned AT&T for improved growth with our investment-led strategy in fiber and 5G, and there's clear evidence of this in our Q1 results. We reported 584,000 total fiber and fixed wireless advanced internet customer net additions. This is our best ever Q1 result and the sixth consecutive quarter with over 500,000 consumer and business net adds. We also continue to see accelerated pace of our customers purchasing their wireless and internet connectivity together. 42% of our advanced home internet customers also choose AT&T Wireless.

John Stankey: When excluding the transaction with Lumen, this convergence rate approached 45% on an organic basis during Q1. This is more than a 3 percentage point increase compared to last year, which is our fastest-ever year-over-year convergence growth rate. These results are encouraging but not surprising. It is exactly what customers have told us they want. They're increasingly choosing what we believe to be the best combined fixed to mobile internet service in the market. When our customers choose AT&T for their wireless and internet connectivity, they consistently express stronger brand love, higher net promoter scores, and ultimately stay with us longer. During our Analyst and Investor Day in 2024, we shared a few data points highlighting the relative improvements that we see among our converged customers in key operating metrics such as customer lifetime values and churn.

Speaker #3: During the first quarter . This is more than a three percentage point increase compared to last year , which is our fastest ever year over year convergence growth rate These results are encouraging , but not surprising .

Speaker #3: It is exactly what customers have told

Speaker #3: want their increasingly choosing what we believe to be the best combined , fixed and mobile internet service in the market When our customers choose AT&T for their wireless and internet connectivity , they consistently express stronger brand love , higher net promoter scores , and ultimately stay with us longer During our Analyst and Investor Day in 2024 , we shared a few data points highlighting the relative improvements that we see among our converged customers in key operating metrics such as customer lifetime values and churn These benefits remain robust , and we expect that as a greater portion of our customers purchase their wireless and internet connectivity from AT&T will demonstrate improved trends in churn and additional improvement in account growth During the first quarter .

John Stankey: These benefits remain robust, and we expect that as a greater portion of our customers purchase their wireless and internet connectivity from AT&T, we'll demonstrate improved trends in churn and additional improvement in account growth. During Q1, we made further progress at positioning AT&T as the preferred provider for connecting consumers and businesses to the internet. We closed our transaction with Lumen ahead of schedule, adding 1.1 million fiber customers and over 4 million fiber locations. We're pleased with the progress we're making as we integrate these assets in several major metro areas and position the business for faster growth. Early indicators are positive. We now offer fiber services throughout our distribution channels in these areas, which has driven sales activity well above pre-transaction trends.

Speaker #3: We made further progress at positioning AT&T as the preferred provider for connecting consumers and businesses to the internet. We closed our transaction with Lumen ahead of schedule, adding 1.1 million fiber customers and over 4 million fiber locations.

Speaker #3: We're pleased with the progress we're making as we integrate these assets in several major metro areas, and have positioned the business for faster growth.

Speaker #3: Early indicators are positive . We now offer fiber services throughout our distribution channels in these areas , which has driven sales activity well above pre-transaction trends .

Speaker #3: We're executing the steps to scale engineering, construction, and service delivery in the acquired geographies, and as expected, as we move into the back half of the year, we'll achieve steady improvement in fiber and wireless customer growth in these areas.

John Stankey: We're executing the steps to scale engineering, construction, and service delivery in the acquired geographies and expect that as we move into H2, we will achieve steady improvement in fiber and wireless customer growth in these areas. When we focus on customers' needs and invest in the experience and products they want, we find success. In Q1, we gave customers more reasons to choose AT&T. We expanded the AT&T Guarantee to cover Internet Air and launched a new flagship app to deliver a simple digital-first experience to customers. We also launched AT&T OneConnect, which enables customers to easily connect all their eligible devices at home and on the go and eliminates the need to buy internet access twice. We refreshed our Unlimited Your Way plans to deliver more value.

Speaker #3: When we focus on customers needs and invest in the experience and products they want , we find success . And in the first quarter , we gave customers more reasons to choose AT&T .

Speaker #3: We expanded the AT&T guarantee to cover internet air and launched a new flagship app to deliver a simple digital first experience to customers We also launched AT&T One Connect , which enables customers to easily connect all their eligible devices at home and on the go .

Speaker #3: And it eliminates the need to buy internet access twice. We refreshed our unlimited Your Way plans to deliver more value. All these moves are based on a consistent set of principles that drive our approach to serving customers.

John Stankey: All these moves are based on a consistent set of principles that drive our approach to serving customers the way they want to be served, with offers that deliver on simplicity, value, and choice, and converged connectivity. After years of industry-leading investments in our fiber and wireless network, we believe that we have now established a structural advantage that others will not catch. We reach more than 90 million customer locations across the country with our advanced internet services over either fiber or 5G. We believe this provides us with more scalable reach and converged connectivity than any of our peers, including a meaningful scale and performance advantage in fiber. This is an advantage we're growing as we ramp our deployment at a faster pace than anyone else.

Speaker #3: The way they want to be served with offers that deliver on simplicity , value , and choice . And converge connectivity . After years of industry leading investments in our fiber and wireless network .

Speaker #3: We believe that we have now established a structural advantage that others will not catch. We reach more than 90 million customer locations across the country with our advanced internet services over either fiber or 5G.

Speaker #3: We believe this provides us with more scalable reach and converged connectivity than any of our peers , including a meaningful scale and performance advantage in fiber This is an advantage we're growing as we ramp our deployment of faster pace than anyone else Today , we reach over 37 million customer locations with fiber , and we're on track to reach 60 million plus locations by the end of the decade .

John Stankey: Today, we reach over 37 million customer locations with fiber, and we're on track to reach 60 million-plus locations by the end of the decade. As I discussed last quarter, when we complete our work at a fiber location, we believe we're able to offer that customer access to the internet on a lower marginal cost structure than any competitor with superior performance and an industry-leading experience on America's best and fastest home internet. This positions AT&T to compete on performance and value by putting our service at the center of our converged offers and shifting the focus away from expensive device subsidies. You saw us lean into this advantage with the launch of AT&T OneConnect, the industry's first ever single subscription service for fiber and wireless with a flat monthly price.

Speaker #3: As I discussed last quarter , when we complete our work at a fiber location , we believe we're able to offer that customer access to the internet on a lower marginal cost structure than any competitor with superior performance in an industry leading experience on America's best and fastest home internet .

John Stankey: This is how you should expect us to go to market as we accelerate the expansion of our fiber availability, with offers and marketing strategies that yield attractive returns by driving deeper fiber penetration and growth in converged customer relationships. Running these plays has not only strengthened our performance in the consumer market, but they've begun to demonstrate that the same strategy can strengthen our business enterprise operations. During Q1, advanced connectivity business service revenues stabilized on a year-over-year basis for the first time ever. This reflects improved growth in fiber and 5G that is now offsetting declines in transitional services such as VPN, as we drive better sales execution across an expanding footprint of business locations that we can reach with fiber and fixed wireless. We're operating from a position of strength as we lean into the strategic foundation we've built.

As we drive, better sales execution across an expanding footprint of business locations that we can reach with fiber and fixed Wireless.

John Stankey: Our investments have positioned us to accelerate and scale the execution of our strategy in 2026. Through the course of the year, you can expect to see the momentum in our operating trends build. As we continue our journey forward, our strategies and capital allocation will remain focused on meeting the advanced connectivity needs of consumers, businesses, the public sector, and first responders as they adopt and rely on AI-enabled tools and applications. We expect AI to fundamentally transform network requirements beyond download speeds to the ability to support symmetrical capacity, ultra-low latency, and session control across multiple access technologies under sustained load. That's how we're architecting our converged network.

We're operating from a position of strength as we lean into the Strategic Foundation. We've built

Our investments have positioned us to accelerate and scale the execution of our strategy in 2026, and through the course of the year, you can expect to see the momentum in our operating trends build.

As we continue our journey forward, our strategies and capital, allocation will remain focused on meeting the advanced connectivity needs of consumers businesses. The public sector, and First Responders as they adopt and rely on AI enabled, tools and applications.

We expect AI to fundamentally transform Network. Requirements Beyond download speeds to the ability to support symmetrical capacity ultra low latency in session control across multiple access Technologies under sustained load.

John Stankey: We've committed to greater investment than any of our peers in the US connectivity infrastructure, and by the end of this decade, we expect to operate the most advanced and open communications network in the US, built on a foundation of dense metro fiber and deep nationwide spectrum. With the opportunity to reach more end users than our competition, coupled with our historically scaled metro and long-haul core, AT&T is well-positioned to lead our industry in AI-ready connectivity. Investment in high-performing networking is a critical component of a competitive American AI ecosystem. We continue to appreciate the leadership of FCC Chairman Carr and the commission's continued efforts to modernize America's networks. What we see transpiring on the federal policy front are the absolute right moves for the US to sustain leadership in communications infrastructure at this seminal moment in the birth of the AI economy.

And that's how our architecting our converge Network.

Becomes to Greater investment than any of our peers in the US, connectivity infrastructure. And by the end of this decade, we expect to operate the most advanced and open Communications Network in the US. Built on a foundation of dense Metro fiber and deep Nationwide Spectrum.

With the opportunity to reach more end users in our competition. Coupled with our historically, scaled Metro and Long Haul core.

AT&T is well positioned to lead our industry in AI, ready connectivity.

We continue to appreciate the leadership of FCC, chairman Carr, and the commission's continued efforts to modernize America's Networks.

John Stankey: I reflect on this moment within the context of AT&T's milestone celebration of the 150th anniversary of the first phone call. For a century and a half, we've adjusted to shifts in markets, technology, and the evolution of public policy. It's a story of many chapters over 150 years shared by proud and dedicated AT&T employees and retirees, consistently rising to our longstanding call of the spirit of service. While all the chapters are important, some turn out to be more consequential than others, and I believe we're entering one of those chapters that will be exactly that. I couldn't be more optimistic, given how this company has positioned itself as we enter this defining moment, that our best days are ahead of us. With that, I'll turn it over to Pascal.

What we see transpiring on the federal policy front are the absolute right moves for the U.S. to sustain leadership in communications infrastructure, at this seminal moment in the birth of the AI economy.

I reflect on this moment within the context of AT&T's milestone celebration.

The 150th anniversary of the first phone call.

For a century and a half, we've adjusted to shifts in markets technology and the evolution of public policy.

It's a story of many chapters over 150 years, shared by proud and dedicated AT&T employees and retirees.

Consistently rising to our long-standing call of the spirit of service.

All the chapters are important.

Some turn out to be more consequential than others.

And I believe we're entering 1 of those chapters. That will be exactly that.

I couldn't be more optimistic, given how this company has positioned itself as we enter this defining moment.

That our best days are ahead of us.

Pascal Desroches: Thank you, John, and good morning, everyone. At a consolidated level, total revenues were up 2.9% year over year in Q1, and service revenues were up 1.4%. Our growth is increasingly driven by gains in fiber and fixed wireless internet customers, as well as our success at growing customer accounts that choose AT&T for both internet and wireless connectivity. We continue to expect we will grow consolidated service revenues in the low single-digit range for the full year, driven by growth in wireless service, fiber, and fixed wireless revenues, partially offset by declines in transitional and legacy revenues. Adjusted EBITDA was up 2.3% year over year in Q1, and adjusted EBITDA margin decreased 30 basis points to 37.4%. As a reminder, our Q1 2025 results included a benefit to adjusted EBITDA of approximately $100 million related to the resolution of vendor settlements.

With that, I'll turn it over to Pascal.

Thank you, John. And good morning everyone.

How to consolidate level total revenues were up 2.9% year-over-year in the first quarter and service revenues were up 1.4%.

Our growth is increasingly driven by gains in fiber and fixed wireless internet customers, as well as our success at growing customer accounts that choose AT&T for both internet and wireless connectivity.

We continue to expect, we will grow Consolidated service revenues in the low, single digit range for the full year.

Driven by growth in wireless service.

Fiber and fixed Wireless revenues partially offset by declines in transitional and Legacy revenues.

Adjusted, but I was up 2.3% year-over-year in the first quarter, and adjusted margin decreased 30 basis points to 37.4%.

Pascal Desroches: During Q1, we made good progress executing against our ongoing transformation initiatives as we work towards achieving our target of $4 billion in annual cost savings by the end of 2028. These include workforce optimization and vendor rationalization, efficiency gains from further AI enablement, accelerated digitalization efforts, and reductions to our legacy operations and support costs. We expect improved growth in adjusted EBITDA in Q2 as comparisons normalize, service revenue growth improves, and as we implement further cost actions. We continue to expect consolidated adjusted EBITDA growth in the 3% to 4% range for the full year. Free cash flow was $2.5 billion, which is at the high end of the $2 billion to $2.5 billion outlook we provided in January.

As a reminder, our first quarter of 2025 results, included a benefit to adjust eot of approximately a hundred million related to the resolution of vendor settlements.

During the first quarter, we made good progress, executing against our ongoing transformation initiatives. As we work towards achieving our target of $4 billion in annual cost savings by the end of 2028, these include force optimization and vendor rationalization efficiency, gains from further AI enablement.

Accelerated digitalization efforts and reductions to our Legacy operations and support costs.

We expect improved growth in adjusted, our in the second quarter as comparisons, normalized service revenue growth, improves, and as we implement further course actions.

And we continue to expect consolidated adjusted EBITDA growth in the 3% to 4% range for the full year.

Pascal Desroches: Free cash flow declined by roughly $600 million compared to last year, which was driven primarily by higher capital investment of $5.1 billion as we accelerate the pace of our fiber deployment. For Q2, we expect free cash flow in the range of $4 billion to $4.5 billion, and we continue to expect $18 billion-plus of free cash flows for the full year. Adjusted EPS of $0.57 in Q1 was up nearly 12%, and we continue to expect full-year adjusted EPS to be in the $2.25 to $2.35 range. Under our new segment reporting, over 90% of our consolidated revenue and nearly all of our adjusted EBITDA is generated by our advanced connectivity segment.

Free cash flow was $2.5 billion, which is at the high end of the $2 to $2.5 billion outlook we provided in January. Free cash flow declined by roughly $600 million compared to last year, which was driven primarily by higher capital investment of $5.1 billion as we accelerate the pace of our fiber deployment.

For the second quarter, we expect free cash flow in the range of $4 billion to $4.5 billion, and we continue to expect $18 billion plus in free cash flows for the full year.

Pascal Desroches: We believe this new reporting format improves transparency into the growth we are achieving from our investments in fiber and 5G, as well as our progress at powering down our legacy copper network. Focusing first on advanced connectivity, service revenues were up 3.6% compared to a year ago. Wireless service revenues grew 1.7% year over year, which is consistent with our guidance that growth in Q1 would be below the run rate we expect for the full year. Our wireless service revenue growth was primarily driven by growth in our customer base, including 294,000 postpaid phone net adds in Q1. Postpaid phone ARPU was flat versus a year ago.

Adjusted EPS of 57 cents in the first quarter was up nearly 12% and we continue to expect full year, adjusted EPS to be in the $2.25 to $2.35 range, under our new segment, reporting over 90% of our Consolidated revenue, and nearly all of our adjusted ibida is generated by our Advanced connectivity segment.

We believe this new reporting format improves transparency into the growth we are achieving from our investments in fiber and 5G, as well as our progress at powering down our legacy copper network.

Focusing first on advanced connectivity service revenues, they were up 3.6% compared to a year ago.

Wireless service revenues grew 1.7% year-over-year, which is consistent with our guidance that growth in the first quarter would be below the run rate we expect for the full year.

Our wireless service revenue growth was primarily driven by growth in our customer base, including 294,000 postpaid phone net adds in the first quarter.

Pascal Desroches: This is consistent with the outlook we provided for relatively stable ARPU as we gain customers in under-penetrated categories such as the value segment and grow our base of converged accounts that receive discounts but typically stay with us longer. We expect Q2 year-over-year wireless service revenue growth to improve from growth reported in Q1 and maintain our full-year outlook for growth in the 2% to 3% range. This is driven by our outlook for customer gains from our new unlimited and converged subscription plans and our expanding opportunity to sell wireless and home internet services together. It also reflects our recent pricing actions that take effect during Q2. Advanced home internet service revenues grew 27.3% year-over-year.

Was flat versus a year ago. This is consistent with the Outlook we provided for relatively stable, rpool, as we gain customers in underpenetrated categories, such as the value segment, and grow, our base of converged accounts that received discounts, but typically stay with us longer. We expect second quarter year-over-year, wireless service, Revenue growth to improve from growth reported in the first quarter and maintain our full year outlook for growth, in the 2% to 3% range. This is driven by our outlook for customer gains from our new unlimited and converged subscription plans and our expanding opportunity to sell Wireless and home internet services together.

It also reflects our recent pricing actions that take effect during the second quarter.

Pascal Desroches: This includes two months of revenues from fiber customers in geographies we acquired from Lumen, which added about 650 basis points to our reported growth rate in the quarter. Similar to wireless, our organic growth in advanced home internet service revenue was primarily driven by growth in our customer base. Advanced home internet net adds were 512,000, which does not include the 1.1 million customers we acquired from Lumen in early February. This was our best ever Q1 and included 273,000 fiber net adds and 239,000 Internet Air net adds. We continue to expect that our fiber reach will grow by about 8 million locations in 2026, including over 4 million locations we acquired from Lumen. As we ramp our fiber reach, we expect to see improved trends in our fiber net adds over the course of the year, while still considering typical seasonality.

Advanced home internet service revenues grew 27.3% year-over-year. This includes two months of revenues from fiber customers and geographies we acquired from Lumen, which added about 650 basis points to our reported growth rate in the quarter.

Similar to wireless, our organic growth in advanced home internet service revenue was primarily driven by growth in our customer base.

That's home internet. Net ads were 512,000 which does not include the 1.1 million customers we acquired from blooming in early February.

This was our best ever first quarter, and included 273,500 ads and 239,000 internet net ads.

We continue to expect that our fiber reach will grow by about 8 million locations in 2026, including over 4 million locations we acquired from Lumen.

Pascal Desroches: We are also seeing strong growth in our Business Fiber and Advanced Connectivity service revenues, which include business fixed wireless and value-added services. In the quarter, these revenues grew 7.2% year-over-year, which is consistent with the trend last quarter and improved from mid-single digit growth a year ago. As John noted, total Advanced Connectivity business service revenues were essentially flat year-over-year for the first time ever. Based on our improved sales execution and expanding fiber reach, we expect total business service revenues within Advanced Connectivity segment to remain stable in the near term and continue to grow at a low single digit CAGR through 2028. Advanced Connectivity EBITDA grew 5.6% year-over-year, and we improved EBITDA margin by 30 basis points despite a few notable headwinds.

As we ramp our fiber reach, we expect to see improved Trends in our fibernet ads over the course of the Year while still considering typical seasonality.

We also seeing strong growth in our business fiber and advanced connectivity service revenues, which include business fixed, Wireless and value added services.

In the quarter, these revenues grew 7.2% year-over-year, which is consistent with the trend last quarter and improved from mid-single-digit growth a year ago.

As John noted Total Advanced connectivity Business. Service revenues were essentially flat year-over-year for the first time ever.

Based on our improved sales execution and expanding fiber reach, we expect total Business Service revenues within the Advanced Connectivity segment to remain stable in the near term and continue to grow at a low single-digit rate through 2028.

Pascal Desroches: These include high single-digit growth in low-margin equipment revenues, as well as the inclusion of revenues in geographies acquired from Lumen, which did not make a material contribution to EBITDA in the quarter. In addition, about 40% of the adjusted EBITDA benefit from the vendor settlements we called out in Q1 2025 was incurred in the advanced connectivity segment. The improvement in advanced connectivity EBITDA margin was driven by service revenue growth as well as the durable benefit of cost actions that I discussed earlier. Our outlook continues to anticipate an immaterial EBITDA contribution this year from the operating regions acquired from Lumen. This reflects increased spending within these geographies to stand up a business that is positioned for faster growth in fiber and wireless customers as fiber deployment accelerates and as we leverage our existing distribution in these regions.

Advanced connectivity ibida grew 5.6% year-over-year and we improved ibida margin by 30 basis point despite a few notable headwinds.

These include.

High single-digit growth in low-margin equipment revenues, as well as the inclusion of revenues in geographies acquired from Lumen, which did not make a material contribution to EBITDA in the quarter.

In addition.

About 40% of the adjusted EBITDA benefit from the vendor settlements we called out in the first quarter of 2025 was incurred in the Advanced Connectivity sector.

So, the improvement in Advanced Connectivity—even our margin—was driven by service revenue growth, as well as the durable benefit of course actions that I discussed earlier.

Our outlook continues to anticipate an immaterial EBITDA contribution this year from the operating regions acquired from Lumen.

Pascal Desroches: We're really pleased with how the business is positioned coming out of Q1 and continue to expect advanced connectivity service revenues to grow 5%+ this year, with EBITDA growth of 6%+. Legacy service revenues declined about 25% year-over-year, which is consistent with our outlook for 20%+ decline in 2026. We stopped taking new orders for legacy services last year in most of our wireline footprint, and we now have approval to discontinue legacy services in more than 30% of our wire centers. We're actively working with customers in these areas and helping them upgrade to more advanced services like Internet Air and Phone Advanced. There is a lag between when customers migrate to more advanced services and when we are able to discontinue operations of legacy infrastructure.

This reflects increased spending within these geographies to stand up a business that is positioned for faster growth, and fiber and wireless customers as fiber deployment accelerates. And as we leverage our existing distribution in these regions,

We're really pleased with how the business is positioned coming out of the first quarter and continue to expect advanced connectivity service revenues to grow 5% plus this year, with EBITDA growth of 6% plus.

Legacy service revenues declined about 25% year-over-year, which is consistent with our outlook for a 20% plus decline in 2026.

We stopped taking new orders for legacy services last year in most of our W line footprint. And we now have approval to discontinue legacy services in more than 30% of our wire centers.

We're actively working with customers in these areas and helping them upgrade to more advanced services, like internet and phone advanced.

Pascal Desroches: This is the primary reason why the decline in legacy EBITDA of about 40% was greater than the decline in revenue, and we expect this dynamic will persist for the next several quarters. We ended Q1 with net debt to adjusted EBITDA 2.71 times, which is up from 2.53 times at the end of Q4 last year. This was primarily due to the close of the transaction with Lumen. We continue to expect that our net leverage ratio will increase to approximately 3.2 times following our transaction with EchoStar, then decline to approximately 3 times by the end of 2026 and return to a level consistent with our target in the 2.5 times range within approximately 3 years following the transaction. We ended Q1 with $12 billion in cash and with $19 billion available to draw under term loans.

There is a lag between when customers migrate to more advanced services and when we are able to discontinue operations of legacy infrastructure.

Next, several quarters.

We ended the first quarter with net debt to adjusted EBITDA at 2.71 times, which is up from 2.53 times at the end of the fourth quarter last year.

This was primarily due to the close of the transaction with Lumen.

We continue to expect that our net leverage ratio will increase to approximately 3.2 times following our transaction with EchoStar, then decline to approximately 3 times by the end of 2026, and return to a level consistent with our target in the 2.5 times range within approximately 3 years following the transaction.

Pascal Desroches: We are in a strong liquidity position as we prepare to close our transaction with EchoStar. We also continue to expect that we will close the transaction with an equity investor for the acquired Lumen fiber assets during H2.

We ended the first quarter with $12 billion in cash and with $19 billion available to draw on the term loans. So, we are in a strong liquidity position as we prepare to close our transaction with EchoStar.

Pascal Desroches: We returned $4.3 billion to shareholders in Q1 through dividends and share repurchases. We continue to expect to repurchase approximately $8 billion of stock this year and to maintain a consistent pace of buybacks through 2028 as we execute against our plans to return $45 billion plus to shareholders over this time period. I'm really proud of the team's ability to successfully balance our investment in fiber and 5G while maintaining consistent return to shareholders. To wrap up, we continue to execute well, and I'm confident that we're positioned to drive improved growth and consistent capital returns through 2028 as we execute on our strategy. Brett, we're now ready for the Q&A.

We also continue to expect that we will close the transaction with an equity investor for the acquired Lumen fiber assets during the second half of the year.

We returned $4.3 billion to shareholders in the first quarter through dividends and share repurchases. We continue to expect to repurchase approximately $8 billion of stock this year and to maintain a consistent pace of buybacks through 2028, as we execute against our plans to return $45 billion plus to shareholders over this time period.

I'm really proud of the team's ability to successfully balance our investment in fiber and 5G, while maintaining consistent return to shareholders.

To wrap up, we continue to execute well, and I'm confident that we're positioned to drive improved growth and consistent capital returns through 2028 as we execute on our strategy.

Brett Feldman: Thank you, Pascal. Operator, we are ready to take the first question.

Brett. We're now ready for the Q&A.

Thank you. Pascal operator. We are ready to take the first question.

Operator: We will now begin the question and answer session. At this time, we will pause to assemble our roster. The first question comes from John Hodulik from UBS. Please go ahead.

We will now begin the question and answer session.

To ask a question, press star, then 1.

If you are using a speaker-phone, please pick up your handset before pressing the keys.

To withdraw your question, please press star, then 2.

At this time, we will pause to assemble our roster.

John Hodulik: Great. Thank you, guys. Two, if I could. First, on the OneConnect. Can you talk about how widely it'll be rolled out, what kind of support you have from an advertising standpoint, maybe the target market, and then do you think it can drive subs in the near term? Just sort of your view on what the impact that could have. Secondly, the phone churn trend definitely improved up six basis points. You had been seeing double-digit increases. Can that kind of improvement in phone churn that we've seen continue despite the increases from the Unlimited Your Way pricing? Thanks.

The first question comes from John hudek from UBS. Please go ahead.

Great, thank you guys. Um, two, two if I could. Um, first on the, on 1 Connect, uh, can you talk about sort of how, how widely it'll be rolled out, what kind of support you are—from an advertising standpoint—maybe the target market, and then

Do you think it can drive Subs uh in the near term? Is it just sort of a, you know, your view on on what the impact that could have and then secondly, the phone term Trend. Uh, definitely improved up, 6, basis points. You had been seeing double-digit increases in that kind of improvement in in phone. Sure that we've seen continued despite the increases from the unlimited your way. Uh pricing. Thanks.

John Stankey: Good morning, John. Your first question. Look, if we didn't think it was going to have an impact, we wouldn't have started down this path. But to get to maybe the root of your question, and I think as we indicated when we rolled it out, this is going to be kind of an iteration rollout. We've established a platform now with OneConnect that allows us to start looking at the segments and the customers differently. I think you can pretty well understand by how the plan's tailored, the kind of customers that it is targeted toward. One of the things that we see is, first of all, the BYOD segment is increasing more broadly. That's one reason why we started with it.

Uh, good morning, John. Um, your first question. Look, if we didn't think it was going to have an impact, we wouldn't have started down this path. Uh, but to get to maybe the root of your question,

and I think, as we indicated when we

Rolled it out, this is going to be kind of a iteration roll out. We've established a platform now with 1 Connect.

That allows us to start looking at the segments and the customers differently. Um, I think you can pretty well understand by how the plan's tailored.

The kind of customers that it is, um, targeted toward—one of the things that we see is, first of all, the BYOD segment.

John Stankey: We see customers more willing to hang on to their devices a bit longer, and they're certainly becoming more accustomed to porting them from one carrier to the next. We want to tailor this plan to make sure that we can receive those customers and then attach them to a network construct that drives churn down. Our belief is that by allowing them to have the simplicity of taking a number of devices and not thinking about how, whether it's the Wi-Fi in the car, the watch, or anything else that they carry around, we think that that starts to provide the network as the basis for driving customer loyalty and relationships, which plays into our strong suit, and that's also bolstered by the fact that as you notice, it requires that you have fiber broadband.

Is increasing more broadly. That's one reason why we started with it.

Um, we see customers more willing to hang on their devices, a bit longer and their, um, certainly becoming more accustomed to porting them from 1 carrier to the next. And so, uh, we want to tailor this plan to make sure that we can receive those customers. And then attach them to a network construct, that drives churn down. And our belief is that, by allowing them to have the Simplicity of taking a number of devices and not thinking about how whether it's the Wi-Fi on the car, the watch or anything else that they carry around. We think that that starts to provide the network is the basis.

John Stankey: One of the best things we have to drive customer retention and customer lifetime value is by pairing fiber broadband with wireless. This is a plan to allow that to happen. It also tailors well into those account sizes that maybe are less than family plan sizes today that can grow over time. I think you should expect that this platform that we've now laid out there can iterate over time. It can evolve. Over the course of this year, you'll see more variants of that plan come out that start to open the aperture more broadly in the market for customers that can qualify under the construct and work into it. It will be one of several offers in our portfolio.

For, uh, driving customer loyalty and relationships, which plays into our strong suit. And that's also bolstered by the fact that, as you notice, it requires that you have fiber broadband.

Sizes today that can grow over time.

John Stankey: We just redid all of our rate plans, if you notice, and this is a particular plan that's targeted a particular segment group of customers that we think will help with convergence and drive churn in a better direction over time. We also have done some rework on our other base plans that will hit other portions of the market. I think these are just natural evolutions that you see, one, given the maturity of the wireless space, and two, given the shifts that are occurring in convergence in the market that allow us to play offense and go out with something that's pretty important. I don't expect right now, sitting here today, I can tell you massive amounts of volume on it in the first couple of weeks.

Um, and I think you should expect that this platform that we've now laid out there can iterate over time, it can evolve. And over the course of this year, you'll see, um, more variance of that plan come out that start to open the aperture, more broadly in the market. For customers, that can qualify under the construct and and work into it, and it will be 1 of several operas in our portfolio. We just redid all of our rate plans if you notice and this is a particular plan, it's targeted a particular segment group of customers that we think will help with convergence and drive turn in a better Direction over time but we also have done some rework on our other base plans that will hit other portions of the market. And I think these are just natural Evolutions that you see 1 given the maturity of the wireless space and 2, given the shifts that are occurring in convergence in the market that allow us to play offense and and, uh, go out with something that's, that's pretty important. So, I, I

Don't expect.

John Stankey: We didn't expect that to be the case, but we do expect the platform to evolve and become an important part of the portfolio as we move forward. An important part of the portfolio of putting the network first as a basis to attaching the customer and minimizing other constructs of how people have maybe chosen their service provider over time. Related to your second question on churn trend and can it continue? I don't mean to be flip about it, but I think this is over time, the churn dynamic is just math. As we shared and what I tried to articulate in my opening remarks, the best way for us to manage churn is to converge customers.

Right now, sitting here today, I can tell you—um, massive amounts of volume on it. Uh, in the first couple of weeks, we didn't expect that to be the case, but we do expect the platform to evolve and become an important part of the portfolio as we move forward, and an important part of the portfolio of putting the network first.

As a basis to attaching the customer and minimizing other constructs of how people have maybe chosen their service provider over time.

Um, and related to your second question on churn trend, and can it continue. Um, I mean, I don't mean to be flip about it, but I think this is—over time, the churn dynamic is just math.

and as we shared, and what I tried to articulate in my opening remarks,

John Stankey: when we get through the repositioning, the shifting that's going on in the industry right now, which is aligning customers to asset bases, I believe you're naturally going to see that churn dynamic improve. We said we're at 45% converged on kind of our non-Lumen base. You've been getting those numbers in the last several quarters that we've been sharing with you to show that acceleration. We've given you guidance out for several years, where we've gone and done the math on where our fiber footprint is, where our AIA footprint is, the cohorts of customers we're going to target in those particular areas, the ones that we think we can hold over time. We believe that that's what builds the sustainable franchise and leads us to service revenue growth and leadership in the industry by the time we exit this decade.

John Stankey: When we get through the repositioning, the shifting that's going on in the industry right now, which is aligning customers to asset bases, I believe you're naturally going to see that churn dynamic improve. We said we're at 45% converged on kind of our non-Lumen base. You've been getting those numbers in the last several quarters that we've been sharing with you to show that acceleration. We've given you guidance out for several years, where we've gone and done the math on where our fiber footprint is, where our AIA footprint is, the cohorts of customers we're going to target in those particular areas, the ones that we think we can hold over time. We believe that that's what builds the sustainable franchise and leads us to service revenue growth and leadership in the industry by the time we exit this decade.

The best way for us to manage churn is to converge customers.

And when we get through, um, the the repositioning, the shifting that's going on in the industry right now which is aligning customers to asset basis. Um, I believe you're naturally going to see that churn Dynamic improve

And so, we said we're at 45% converged on kind of our non-Lumen base. You've been getting those numbers in the last several quarters that we've been sharing with you to show that acceleration.

John Stankey: That's that reordering of convergence along those asset bases that's going to make that happen. It's going to take a little bit of time for that reordering of customer base to asset base to occur. I think there's going to be a little bit of the accelerated churn dynamic that you've been seeing the last couple of quarters as that shakes itself out. Just like any math equation, you hit that tipping point where you start to get the benefits of the strategy. I think you're going to see it ultimately come back into line. When we tell you that we've got fantastic converged lifetime values on, for example, Fiber and Wireless, then we'll have a dominant part of our portfolio that represents that base, and that's when profitability looks good, and the franchise looks like a really strong franchise moving forward.

Um, we've given you guidance out for several years where we've gone and done the math on where our fiber footprint is uh where our AIA footprint is the cohorts of customers. We're going to Target in those particular areas, the ones that we think we can hold over time. And we believe that that's what builds the sustainable franchise and leads us to service Revenue, growth in growth, and leadership, in the industry. By the time, we exit this decade. And that's that reordering of convergence along those assets bases, that's going to make

Make that happen. It's going to take a, you know, a little bit of time for that reordering of customer base to asset base to occur. And I think there's going to be a little bit of the accelerated churn Dynamic, uh, that you've been seeing the last couple quarters as that shakes itself out, but just like any math equation, you hit that Tipping Point where you start to get the benefits of the strategy and I think you're going to see It. Ultimately come back in the line and when we tell you that we've got fantastic converge lifetime value. Um, for example, fiber and wireless, then we'll have a dominant part of our portfolio. That represents that base and that's when profitability looks good and the franchise looks like a really strong franchise moving forward.

John Stankey: Thanks for the question, John.

Brett Feldman: Thanks for the question, John.

Brett Feldman: Thanks, John.

John Hodulik: Thanks, John.

Brett Feldman: We'll go to the next question, operator.

Thank you for the question, John.

Operator: The next question comes from Michael Rollins with Citi. Please go ahead.

We'll go to the next question. Operator.

The next question.

Comes from Michael Rollins with Citi. Please go ahead.

Pascal Desroches: Thanks, and good morning. John, in your opening comments, you described that AT&T will operate the most advanced and open communications network by the end of the decade. Can you unpack how AT&T is defining the term open, including how that impacts your go-to-market, and how you look at further partnerships or acquisitions to maximize the TAM and your return on capital? Just secondly, if I could, on the account growth sequentially in consumer mobility, can you share what's working for you and how you're balancing growth in accounts and ARPA relative to what you were just describing on convergence versus kind of the core mobility services that you offer? Thanks.

Michael Rollins: Thanks, and good morning. John, in your opening comments, you described that AT&T will operate the most advanced and open communications network by the end of the decade. Can you unpack how AT&T is defining the term open, including how that impacts your go-to-market, and how you look at further partnerships or acquisitions to maximize the TAM and your return on capital? Just secondly, if I could, on the account growth sequentially in consumer mobility, can you share what's working for you and how you're balancing growth in accounts and ARPA relative to what you were just describing on convergence versus kind of the core mobility services that you offer? Thanks.

Thanks and good morning John, uh, in your opening comments, you described that AT&T will operate the most advanced and open Communications Network by the end of the decade. Can you unpack how AT&T is defining the term open? Including how that impacts your go to market, and how you look at further Partnerships or Acquisitions to maximize the tan and your return on Capital? And then just uh, just secondly, if I could um, on the account, growth sequentially and consumer Mobility, can you share?

John Stankey: Morning, Michael. When I think about open and what we're driving toward, the thrust I would articulate in that regard are, one, you know what we're doing in our wireless network, and the purpose of us opening aspects of our wireless network is to manage supply chain costs and performance of equipment and the architecture over time. I think we're leading the industry in that regard. I would expect that shortly as we begin to get to a point where we start to deploy some new spectrum as we close the EchoStar transaction, you'll see the first instantiation of that as we move forward and work our process of deploying that spectrum and how we build our network and what we're able to gain as benefit associated with that. That's one aspect of it.

What's working for you and how you're balancing growth and accountants in arpa um relative to what you were? Just describing on convergence. Um versus kind of the core Mobility Services that you offer. Thanks.

Morning, Michael. Um, so

when I think about open and what we're driving toward the thrust, I would articulate in that regard are 1

Supply chain costs and performance of equipment, and the architecture over time.

And I think we're leading the industry in that regard. And I would expect that shortly as we begin to get to a point where we start to deploy some new Spectrum as we close the echo, start transaction. You'll see the first instantiation of that as we move forward and, and work our process of deploying that spectrum and how we, uh, build our Network, and what we're able to gain as benefits associated with that.

John Stankey: The second aspect is the complete re-engineering of the core of the network that we're doing that I think sometimes is overlooked a little bit. As I've shared with you before, we have multiple routing infrastructures that support different product lines in this business or different segments. What we use for routing infrastructure and consumer broadband fixed services is different than what we do, for example, for our business enterprise services, which is different than how we ship around our wireless packets and services. We've been investing very aggressively to re-architect that network, flatten it, integrate it so that it's one solid routing network that handles all traffic. In doing that, it does a lot of things.

Um and so that's that's 1 aspect of it. The second aspect is the complete re-engineering of the core of the network that we're doing that. I think sometimes is overlooked a little bit.

Um, as I've shared with you before, we have multiple routing infrastructures that support, different product lines, in this business, or different segments. What we use for routing infrastructure and consumer Broadband. Fixed Services is different than what we do. For example, for our business Enterprise Services, which is different than how we ship around.

Our wireless packets and services and we've been investing very aggressively to uh re-architect that Network flatten. It integrate it so that it's 1, solid routing Network that handles all traffic.

John Stankey: One, it opens up the opportunity, given the software stack and how we build that, to begin to offer a much broader set of APIs out into the public domain that allows people to manage and control their traffic differently. That's going to allow for a tremendous amount of flexibility. If you want to think about it in the context of just as hyperscalers opened up the ability to spin up compute and storage through touching parts of a terminal, there's no reason why our routing infrastructure and what we turn out to customers shouldn't have that same software-based capability that is digitally driven through API structures and allow not only our end users, but partner network customers, to be able to control aspects of the network moving forward at a much lower internal operating cost that's all software driven.

John Stankey: As that core becomes software driven, it allows us to also use AI as a basis of us administering and managing that network. Instantiating those APIs out to the broader domain of our customer base is what makes the network flexible around it. I would say that those are the two most fundamental aspects of opening the network that allow for us to be effective moving forward. If we have great preferred access technology, meaning we can get bandwidth in more places than anybody else, hence a deeper fiber network, a denser spectrum footprint, and a better wireless network, then that attracts traffic onto that network.

Uh, in doing that, it does a lot of things. One is it opens up the opportunity, given the software stack and how we build that, to begin to offer a much broader set of APIs out into the public domain. Uh, that allows people to manage and control their traffic differently and, um, that's going to allow for a tremendous amount of flexibility. And if you want to think about it in the context of just as hyperscalers opened up, uh, the ability to spin up compute and storage, um, through touching parts of a terminal, there's no reason why our routing infrastructure and what we turn out to customers shouldn't have that same software-based capability that is digitally driven through API structures and allows not only our end users, but partner network customers, to be able to control aspects of the network moving forward at a much lower internal operating cost that's all software driven. And as that core becomes software driven, it allows us to also use AI as a basis of us administering and managing that network.

Um so instantiating those apis out to the uh broader domain of our customer base is what makes the network flexible around it. Um and so I would say that those are the 2, most fundamental aspects of opening. The network that allow for us to be effective, moving forward. And if we have great,

John Stankey: It's the software control and programming of it and the dense access capillaries that allow people to say, "I can get to more places with better bandwidth and better performance than anybody else, and therefore, that's why I want to be on that network. When it matters, it must be AT&T." That's how you drive returns over the long haul on that investment strategy and that aggregation of capabilities. In terms of account growth and what's working. It should be, I think, fairly apparent from what we shared. What's working is converging customers. When you look at the step-up in the convergence levels that you're getting, and I look at what's happening now, we're getting account growth.

Preferred access technology meaning we can get bandwidth and more places than anybody else. Hence a deeper fiber Network or a denser Spectrum footprint and better, uh wireless network than that, attracts traffic onto that Network, it's the software control and programming of it. And the dense access capillaries, that allow people to see, I can get the more places with better bandwidth and better performance than anybody else. And therefore, that's why I want to be on that Network. When it matters, it must be AT&T. And that's how you drive returns over the Long, Haul on that investment strategy, and that aggregation of capabilities.

Um, in terms of account growth, and what's working?

It, it should be.

I think it's fairly apparent from what we shared. What's working is converging customers.

And so, um, when you look at the step up in the convergence levels that you're getting,

And I look at, um, what's happening now?

John Stankey: If you looked at average line sizes, for example, on our wireless account base, those accounts that are coming in tend to be below average, for what we might have in the embedded base. That's an indicator that we're picking up one and two-line accounts that are new to us. They're new. They're new fiber, they're new wireless. That's really good, because ultimately those one and two-line accounts become the three and four-line accounts of the future. As I said earlier during John's question, if we get them anchored in on a fiber base when they come in, to the highest brand love of any product in the market, it's the best performing product in the market. They have great positive brand perceptions. They're more likely to stay with us longer. They're more likely to buy more from us in the future.

We're getting account growth. And if you looked at like average line sizes, for example, on our wireless account base, those accounts that are coming in, uh, tend to be below average, um, for what we might have in the embedded base and that that's an indicator that we're picking up 1 and 2 line accounts that are new to us, their new new, their new fiber, their new wireless. Um, and that's uh, really good because ultimately those 1 and 2 line accounts, become the 3 and 4 line accounts of the future. And as I said earlier, during John

John Stankey: That's what all the data says on the customer base that's out there. Those new customers, those kind of accounts are the ones that I want to grow. Secondly, we're getting some lift from Internet Air, and the ability to converge both wireless and Internet Air with new customers on a combined basis. We're being more specific in targeting that in places, for example, where we know we will have fiber in the future so that we can grow that customer base today and ultimately meet them with a very, very good, robust, sustainable offering over time. Those two things I would say are probably the biggest impact on the consumer side. I would also tell you, look at the business revenues and look at the business performance and what we've been able to demonstrate to you.

John Stankey: That doesn't happen without some new business account growth that's occurring, in order to stabilize the advanced connectivity service revenues that you've seen in the quarter. Very proud of what the team's done on that, and obviously optimistic that we can carry that momentum forward and there's more that we can do there as we fine-tune our distribution even further.

Brett Feldman: Thanks for the questions, Mike. Operator, we'll take the next one.

Eat them with a very, very good. Robust sustainable, offering over time. And those 2 things I would say are probably the biggest impact on the consumer side and then I would also tell you look at the business revenues and look at the business performance and what we've been able to demonstrate to you, um, that doesn't happen without some new business account growth, that's occurring uh in order to stabilize the advanced connectivity service revenues that you've seen in the quarter, very proud of what the team's done on that. Um and obviously optimistic that we can carry that momentum forward and there's more that we can do there as we fine-tune our distribution, even further.

Operator: The next question comes from Sean Diffley with Morgan Stanley. Please go ahead.

Thanks for the questions. Mike operator will take the next 1.

Sean Diffley: Thanks very much, team. I was curious how you assess and plan for the perceived threat from satellite, more on the fiber and broadband side. Anything you would add on direct-to-cell? Clearly, you have an AST SpaceMobile partnership. Would you ever consider doing MVNOs with emerging players? How would you compare and contrast satellite versus the fixed wireless learnings?

Thanks very much team. Um, I was curious how you assess and plan for the perceived threat from satellite more on the fiber and Broadband side, but anything you would add on direct to sell clearly, you have an a space mobile partnership, you know, would you ever consider doing mvnos with emerging players? And how would you compare and contrast Satellite versus the fixed Wireless learning?

John Stankey: Hi, Sean. Sure. It's a long question, but let me start by reiterating what I just said and what our direction is. Our direction is to build the best converged network offering in the United States. That means in order to do that, you have to have great foundational assets that you own and operate to do that. I just shared with you, for example, why is it important to have a core switching architecture, routing architecture that allows you to see every packet on a network, because that's the way that you're able to manage service performance, security, offer the kinds of capabilities across heterogeneous access technologies like wireless, fixed fiber, Wi-Fi, and other technologies that allow you to ensure the quality of service of delivering a packet over those heterogeneous architectures. We start from a fantastic place with assets. We have great fiber.

Hi, Sean. Um, sure. Let me — it's a long question, but let me start by reiterating kind of what I just said.

And what our direction is, our direction is to build the best.

Converged Network offering in the United States.

Um, and that means, in order to do that, you have to have great foundational assets that you own and operate to do that. I just shared with you, for example, why is it important to have a core?

Switching architecture, routing architecture that allows you to see every packet on a network because that's the way that you're able to manage service, performance security offer the kinds of capabilities uh across heterogeneous, access Technologies, like Wireless fixed fiber, Wi-Fi, other technologies. That allow you to ensure the quality of service of delivering a packet over those heterogeneous architectures.

John Stankey: We've got a great wireless network. We have a great customer base that we know how to manage their accounts. We know how to manage their billing. We can build trust with them over time on the relationships that we have. When you start to think about more access technologies becoming available, such as direct-to-cell, which we're going to see an opportunity to close out white spaces, I think we're naturally positioned to add those capabilities on to the great integration we've already done to be a converged access provider. I don't mean to harp on fiber, but once you get that in place with a customer, it's a really good place, not only because it's the lowest marginal cost to carry a bit of any technology that's available out there, but its performance is superior.

And we start from a fantastic place with assets. We have great fiber, we've got a great wireless network. We have a great customer base. That we know that, we know how to manage their accounts, we know how to manage their billing. We can build trust with them over time on the relationships that we have. And so when you start to think about more access Technologies becoming available such as direct to sell which you know we're going to see an opportunity to close out whitespaces. I think we're naturally positioned to add those capabilities on to the great integration. We've already done to be a converged access provider and uh I don't mean to harp on fibre

John Stankey: When you get top-end performance, the best performance, coupled with low marginal cost in the networking business, that's typically a really good combination for the long haul. We're going to continue to move to integrate partners. I think when I think about LEO and satellites, you've heard me say it before, I think it's going to be great innovation for consumers. I think it's going to open up applications that none of us expected or knew about, and they're going to be new and different, and they're going to help grow the market in total. I think that, when you look at where we're at right now, what's really on the horizon that maybe a couple years ago, we all would have said, could this really happen? 12 to maybe 18 to 24 months from now, we will have always-on connectivity in the United States.

But once you get that in place with a customer, it's a really good place not only because it's the lowest marginal cost to carry a bit of any technology that's available out there, but its performance is superior and when you get uh, top-end performance, the best performance coupled with low, marginal costs in the networking business. That's typically a really good combination for the Long Haul.

So we're going to continue to move to integrate partners. And um, I think, when I think about Leo and satellites, um, you've heard me say it before, I think it's going to be great Innovation for consumers. Um, I think it's going to open up applications that none of us expected or knew about and they're going to be new and different and they're going to help grow the market in total. I, I think that um, when you look at where we're at right now, what's really on the horizon that maybe a couple years ago? We all would have said, you know, could this really happen but 12 to maybe 18 to 24 months from now.

John Stankey: That's going to be really, really important, and I think our customers are going to want that, and I think it's natural that we work with LEO providers that have the capabilities to solve that problem, to integrate those offerings into our services. We have a great position with those customers, and as you've heard me say, my ideal outcome for the satellite space is that there's more than one satellite constellation up there. I've offered that at some point I'd expect that there's probably at least three serving the United States with capable products and services. We're working with one closely right now to make sure that they get off the ground and they're viable. That's AST SpaceMobile. We've been putting most of our R&D and our work on bringing product out with what they will be matching to the market.

We will have always-on connectivity in the United States and, um, that's going to be really, really important. And I think our customers are going to want that. And I think it's natural that we work with LEO providers that have the capabilities to solve that problem, to integrate those offerings into our services. Um, we have a great position with those customers. And as you've heard me say, my ideal outcome for the satellite space,

Is that there's more than one satellite constellation up there, and I've offered that at some point, I'd expect that there's probably at least three serving the United States with capable products and services.

John Stankey: I fully expect that SpaceX will ultimately have a robust direct-to-device capability. I would expect that Amazon Leo will have a robust direct-to-device capability, and who knows, maybe even a fourth shows up. My goal would be that I have a good, strong wholesale relationship, and it may not just be with one of them, it may be with more than one of them, and that we architect this in a way that we can continue to manage the traffic on our network and control packets so that we are able to offer that end-to-end integrated service on a heterogeneous network. That's the direction that we're taking. Now, if you're thinking about the threat of a direct-to-device approach, look, there's a lot to be done in getting Leo constellations up and working on direct-to-device.

my goal would be that I have a good strong wholesale relationship, um, and it may not just be with 1 of them, it may be with more than 1 of them and that we architect, this in a way that we can continue to manage the traffic on our Network, and control packets, so that we are able to offer that end-to-end Integrated Service on a heterogeneous Network,

And that's the direction that we're taking now. If you're thinking about the threat of a directed device approach,

John Stankey: I think it will happen, but I don't think it's going to be a straight line from here to there. There's all kinds of challenges to work through these things. One is getting satellites up in the air. Two is getting them up and keeping them up. It's getting the right spectrum portfolio in place and working through all the issues of power levels and interference that are driven from it. It's getting the devices tuned so they work properly. Satellite works really good outdoors. It doesn't work very good indoors. It's sometimes lost on people that we have spent literally decades investing in communications infrastructure in this country to raise service levels and performance for end user customers that they've become accustomed to.

John Stankey: The landscape is littered with those that have come in and tried to get into the business on the cheap, or get into the business without understanding what the level of performance is necessary to have a minimally viable offering. Customers don't tolerate much interruption anymore, and there's decades of that infrastructure that's built. A lot of it is built on the interior buildings. I know in our company, we put about $1.5 billion a year into doing things to make sure hospitals, stadiums, hotels, and universities all work really well, and you can't just flip a switch and get that done. When I think about an MVNO construct, my approach in terms of how AT&T looks at it is, we like to think about MVNOs in a way where it gets to a part of the market that we can't get to.

Um, look, there’s a lot to be done in getting LEO constellations up and working on directed device. I think it will happen, but I don’t think it’s going to be a straight line from here to there. Um, there’s all kinds of challenges to work through with these things. One is getting satellites up in the air; two is getting them up and keeping them up. It’s getting the right spectrum portfolio in place and working through all the issues of power levels and interference that are driven from it. It’s getting the devices tuned so they work properly. Satellite works really good outdoors; it doesn’t work very good indoors, you know. It’s sometimes lost on people that we have spent literally decades investing in communications infrastructure in this country to raise service levels and performance for end-user customers that they become accustomed to. And the landscape is littered with those that have come in and tried to kind of get into the business on the cheap or get into the business without understanding what the level of performance is necessary to have a minimum, minimally.

Viable offering customers don't tolerate much Interruption anymore and there's Decades of that infrastructure that's built. A lot of it is built into on the interior of buildings. I know in our company we put about a billion and a half dollars a year into doing things to make sure hospitals and stadiums and hotels and universities all work really well. And you can't just flip a switch and get that done. Um, when I think about an mvno construct,

John Stankey: It's an extension in a segment that maybe we're not doing a good job of penetrating, and somebody can do it in a more creative way. We also think about it in the context of we ensure that our network capabilities are used in a way that's consistent with our long-term goal to be the best converged operator in the US, which means that we don't just give traffic away without certain conditions, capabilities, and requirements as to how they do business with us and how that capability is instantiated in the market. It's just not a wide open here, get connection to the network, do what you want with it. Within that context, do I think that I'm looking at satellite LEO right now and saying that that's a place that an MVNO relationship would open up access to customers I don't have today?

uh, my Approach in terms of how AT&T looks at it is we like to think about envy and O's in a way where it gets to a part of the market that we can't get to.

Um, it's an extension in a segment that maybe we're not doing a good job of penetrating and somebody can do it in a more creative way.

And um, we also think about it in the context of, we ensure that our network capabilities are used in a way that's consistent with our long-term goal to be the best converged operator in the US, which means that we don't just give traffic away without certain conditions and capabilities and requirements as to how they do business with us, and how that capability is instantiated in the market. So it's just not a wide open, 'here, you know, get connection to the network, do what you want with it.' And within that context, do I think that I'm looking at satellite LEO right now and saying that that's a place that an MVNO relationship—

John Stankey: No, I don't think that's the case. I think I've got a way to bring the right value to customers broadly in what I just articulated. Look, I don't know that I'm worried about taking on any comer in broadband right now when I've got fiber in a home. As I said, lowest marginal cost, best performance. That usually does pretty well in the market, and I like our investment strategy and where we're going to have 60+ million fiber homes by the time we get to 2030, and living off that base and being very successful with it.

Brett Feldman: All right. Thanks for the question, John.

Brett Feldman: All right. Thanks for the question, Sean.

John Stankey: Thank you.

Sean Diffley: Thank you.

Ship would open up access to customers. I don't have today. Um, no, I I don't think that's the case. Um, I think I've got a way to bring the right value to customers broadly and what I just articulated and um look, I I don't know that I'm worried about taking on any Comer in Broadband right now. When I've got fiber in a home as I said Louis marginal, cost, best performance. That usually does pretty well in the market and I like our investment strategy and where we're going to have 60 plus million fiber homes. By the time we get to 2030 and living off that base and being very successful with it.

Brett Feldman: Operator, we'll go to the next one, please.

Operator: The next question comes from David Barden with New Street Research. Please go ahead.

All right, thanks for the question, John, operator. We'll go to the next one, please.

David Barden: Hey, guys. Thank you so much for taking the question. Really appreciate it. I guess two, if I could. The first would be, John, the EchoStar spectrum acquisition. Could you kind of elaborate how that's going to augment the business and how we generate a return off of that opportunity? Then second, could you update us on the copper retirement program and some of the advancements that you guys have been able to generate at the FCC along that front, and what that means from a cost savings and return standpoint? Thank you.

The next question comes from David Barton. With new Street research. Please go ahead.

Hey guys, thank you so much for taking the question, I really appreciate it. Um, so I guess 2, if I could the first would be um, John the, the the equi star Spectrum acquisition, could you kind of elaborate how that's going to augment the business and how we generate a return off of that.

John Stankey: Sure, Dave. Good morning. On the EchoStar side, look, there's two fundamental things that come here. One, the improvement of performance in the network is noticeable, and there's markets where, because of the deployment of the spectrum, and I'm not speculating on this, as you know, we have a lease on a portion of the spectrum that we're acquiring that we've shared with you, that we've put a large percentage of that already in service. When we do that, we are already testing network perception in those markets that we felt like it would most help in, and we are seeing that perception shift. As a result of that perception shifting, it will help our wireless business just by nature. It will help in terms of customer growth, retention, and all those things that drive value in on that.

Uh opportunity and then second um could we update us on the copper retirement program and some of the you know advancements that you guys have been able to generate at the FCC um along that front and and what that means, you know, from a, from a cost savings and and return standpoint. Thank you.

Sure Dave, good morning. Um, so on the echo star side, look, there's uh, 2 fundamental things that come here 1.

We've put a large percentage of that already in service.

John Stankey: As you know, when we can buy spectrum, there's economic value created that is capital efficiency. It avoids us from having to build growth and capacity in other ways that are more expensive, and that has been since the start of time, and that still plays into the factor. Then as you are seeing, it's also allowed us to expand and increase our AIA, our Internet Air penetration and distribution. I'm very happy with where we stand on that right now. As I said earlier, it's a fantastic tool for us to use, one, to get businesses that we haven't had before, and I think it's a very sustainable technology for certain types of businesses that are out there. Again, I'll go back to where you're seeing some improvement in our business performance. AIA is part of that.

And, um, when we do that, we are already testing network perception in those markets that we felt like it would most help in, and we are seeing that perception shift. Um, and as a result of that perception shifting, it will help our wireless business just by nature. It will help in terms of customer growth and retention and all those things that drive value in on that. As you know, when we can buy spectrum, there’s economic value created. That is capital efficiency and avoids us from having to build growth and capacity in other ways that are more expensive, and that has been since the start of time, and that still plays into the factor. And then as you are seeing, it’s also allowed us.

To expand and increase.

Our AIA or Internet error, penetration, and distribution and, uh, I'm very happy with where we stand on that. Right now, as I said earlier,

John Stankey: It's what's helping us get into customers where maybe we didn't have fiber before, that have a little different broadband portfolio or profile that they need, and we can be relevant, and we can go into large multi-location bids for customers, and now we can do 100% of the bid in many instances, rather than just 65% or 70% of the bid on fixed infrastructure for broadband. That's an important way that it helps us, and I think in particular, with our strength in the business market segment at AT&T, it's a natural pairing for us to be able to do that.

Uh, it's a fantastic tool for us to use, one, to get businesses that we haven't had before. And I think it's a very sustainable technology for certain types of businesses that are out there. Again, I'll go back to where you're seeing some improvement in our business performance; AIA is part of that. It's what's helping us get into customers where maybe we didn't have fiber before, that have a little different broadband portfolio or profile that they need.

And we can be relevant and we can go into large multi-location, bids for customers. And now we can do, you know, 100% of the bid, in many instances, rather than just 65 or 70% of the bid on fixed infrastructure for broadband.

John Stankey: In the consumer space, pre-seeding in markets where we know we're going to have fiber and being aggressive about our deployment to hold converged customers, that growth is really good growth because the transition is from a fixed broadband connection ultimately to a fiber connection, and that transition is a very profitable connection when you have a converged customer in that situation, in the markets where we know we're not going to be in fiber in the near term, finding the right segments to attract that we can hold for a long haul with fixed wireless and wireless together as a converged customer. That's not every customer in those markets.

So, that's a important way that it helps us. And I think in particular with our strength in the business market segments at AT&T, it's a natural pairing for us to to be able to do that. And then in the consumer space, uh, preceding in markets, where we know we're going to have fiber and being aggressive about our deployment to hold converge customers. Um, that growth is really good growth because the transition is from a fixed broadband connection, ultimately to a fiber connection and that transition is a, a very profitable connection when you have a converge customer in that situation. And then in in the markets where we know, we're not going to be in fiber in the near term finding the right segments to attack.

John Stankey: They're clearly what I would call the scaled broadband profiles that are going to probably use terrestrial connections to ultimately sustain themselves, but there's good places we can hunt in those markets that I believe a fixed wireless with wireless combination is a good combination. We've been able to open up and expand that market and grow in that space to drive some return off that spectrum as well. On your second question about copper retirement. Look, probably five years ago, if I were letting you in on the inside baseball and started to set the direction on where we're going to go on aggressively shutting down legacy infrastructure in this business, I would tell you, I probably got some looks across the table from individuals within the business and said, "Never going to happen.

That, um, we can hold for a long haul with fixed Wireless and wireless together as a converge customer. That's not every customer in those markets. Um, there are clearly, what I would call the scaled Broadband profiles that, you know, are going to probably use terrestrial connections to to ultimately sustain themselves. But there's good places. We can hunt in those markets that I believe a fixed Wireless with wireless combination is a good combination. We've been able to open up and expand

In that market and grow in that space to try some return off the spectrum that Spectrum as well on your second question about copper retirement on. Look, I

Um, probably 5 years ago if I were letting you in on the inside baseball and started to kind of set the direction on where we're going to go on aggressively shutting down Legacy infrastructure in this business.

Um,

John Stankey: We're going to be with it a long time." Big compliment to the team, it's like that's not an acceptable outcome, and went to work on what we needed to do to literally get to a path to shut down the infrastructure. To sit here today, five years later, and to have what we have in front of the FCC today, is absolutely fantastic. It's the right move for this country because the old copper infrastructure does nobody any favors. It sucks a ton of power. We've got buildings being cooled and switches that are running with a nominal number of customers on it. It's stuff that was built decades ago. It's not as secure and as robust from a cybersecurity perspective as today's technology can be when built properly. It doesn't offer the same level of resiliency and services that we're building into networks today.

John Stankey: We're going to be with it a long time. Big compliment to the team, it's like that's not an acceptable outcome, and went to work on what we needed to do to literally get to a path to shut down the infrastructure. To sit here today, five years later, and to have what we have in front of the FCC today, is absolutely fantastic. It's the right move for this country because the old copper infrastructure does nobody any favors. It sucks a ton of power. We've got buildings being cooled and switches that are running with a nominal number of customers on it. It's stuff that was built decades ago. It's not as secure and as robust from a cybersecurity perspective as today's technology can be when built properly. It doesn't offer the same level of resiliency and services that we're building into networks today.

I would tell you, I probably got some looks to cross the table from individuals within the business and said you know, never going to happen. Um we're going to be with it a long time.

And um I they complimented the team. It's like, that's not an acceptable outcome.

And went to work on what we needed to do, to literally get to a path to shut down the infrastructure.

and to sit here today, 5 years later,

And to have what we have in front of the FCC today.

Um is absolutely fantastic. It's the right moves to this country because the old copper infrastructure. Does nobody any favours. It sucks a ton of power. We've got, you know, buildings being cooled and switches that are running with a nominal number of customers on it. It's stuff that was built decades ago. It's not as secure. And as robust from a cyber security perspective is today's technology can be when built properly, uh, it doesn't offer the same level of resiliency

John Stankey: Our capabilities of putting resilience in the wireless network that is actually able to withstand other problems that copper, especially aged copper, can't withstand is clearly there, and advanced features that are available on these networks are better. This is a good thing for the customer, it's a good thing for US competitiveness, and it's a good thing for AT&T because we need to get those costs out, we need to get that infrastructure shut down, and we need to remove the distraction from the business, all the mainframes that go with it, and all the business processes that have built up over decades of regulation that have been layered on that. As you heard Pascal mention, 30% of our wire centers are on a definitive schedule for shutdown right now. We have a path to do more.

Thing for AT&T because we need to get those costs out. We need to get that infrastructure. Shut down and we need to remove the distraction from the business. All the mainframes that go with it and all the business processes that have been built up over Decades of Regulation that have been layered on that. And as you heard Pascal mentioned 30% of our wire centers are on a definitive schedule for shutdown right now.

John Stankey: I think you're going to see in the next couple of months, even more activity moving forward. This FCC order that came out is a very strong order in my view. It gives a very good roadmap for how this should work out. We have a very receptive commission to getting this work done. We are mobilized at AT&T to take advantage of these things. We have a good organization built around it. The leadership of that organization has been doing a nice job getting the company in tune with everything we need to do.

And we have a path to do more and I think you're going to see in the next couple of months.

John Stankey: It's not what I would call really sexy work to shut this stuff down, but it's essential work, and that includes what do you do with the copper when you're done with it, and how do you get it out and make sure that you monetize it and do all the things you need to do? We are planning all the way through that and have every intention of being in a really great place by the time we get to 2030. Those cost improvements and that structure is all forecasted in our going-forward guidance that we've given you.

Even more activity, moving forward. This FCC order that came out as a very strong order in my view, it gives a very good roadmap for how this should work out. We have a very receptive commission to get in this work done. Um, we are mobilized at AT&T to take advantage of these things. We have a good organization built around it. The leadership of that organization is been doing a nice job. Getting the company in tune with everything we need to do. It's not, you know what I would call really sexy work to shut this stuff down but it's essential work and that includes.

What do you do with the copper when you're done with it, and how do you get it out and make sure that you monetize it, do all the things you need to do? And we are planning all the way through that and have every intention of being in a really great place by the time we get to 2030 and those costs.

Brett Feldman: Thank you, John.

David Barden: Thank you, John.

Improvements and that structure are all forecasted in our going forward guidance that we've given you.

Brett Feldman: Thanks, Dave. Operator, we'll go to the next question.

Thank you, John.

Operator: The next question comes from Michael Ng with Goldman Sachs. Please go ahead.

Operator: The next question comes from Mike Ng with Goldman Sachs. Please go ahead.

Thanks Dave, operator. We're good next question.

Michael Ng: Hey, good morning. Thanks for the question. I have two if I could as well. First for John. In prepared remarks, you talked about shifting away from device subsidies, competing more on service. Will that be more gradual as OneConnect gains traction? Or do you expect a harder shift away from subsidies that we may see across 2.0 plans as well? For Pascal, it was encouraging to see the reiteration of the guidance. You talked about accelerating growth in Q2. I was just wondering if you could provide some color on key drivers for the EBITDA acceleration throughout the year. How do you expect the Lumen opportunities, cost efficiencies, and new plan traction just impacting the curve of growth throughout the year? Thank you.

Mike Ng: Hey, good morning. Thanks for the question. I have two if I could as well. First for John. In prepared remarks, you talked about shifting away from device subsidies, competing more on service. Will that be more gradual as OneConnect gains traction? Or do you expect a harder shift away from subsidies that we may see across 2.0 plans as well? For Pascal, it was encouraging to see the reiteration of the guidance. You talked about accelerating growth in Q2. I was just wondering if you could provide some color on key drivers for the EBITDA acceleration throughout the year. How do you expect the Lumen opportunities, cost efficiencies, and new plan traction just impacting the curve of growth throughout the year? Thank you.

The next question comes from Mike Ng with Goldman Sachs. Please go ahead.

John Stankey: Good morning, Mike. The short answer to your question is, it's a balancing of the portfolio, is the way I think about it. Our portfolio right now is over-indexed on device, and it's not that devices aren't important to customers and to certain segments of customers. They'll continue and remain to be important. I think we need a more balanced portfolio that makes sure that the customer understands the inherent value of the network underneath the relationship, and the true amount that they're paying for that fantastic service that they depend on every day, and that they're not clouded by the difference of what they're paying for device versus network. I think we have an opportunity to really help people understand the inherent value of what's in the network and what's the difference between what they need to do to access the network.

Hey, good morning, thanks for the question. Um, I have 2 if I could as well. Um, first for John, um, in in prepared remarks, you talked about shifting away from device subsidies competing more on service. Um, will that be more more gradual as 1, Connect gains traction, or do you expect a harder shift away from subsidies, uh, that we may see across, uh, 2.0 plans as well. Um, and then for Pascal, um, it was encouraging to see the reiteration of the guidance. You talked about, um, accelerating growth in 2q. I was just wondering, if you could provide some color on, um, key drivers for the iPad do acceleration throughout the year. Um, you know, how do you expect the Lumen opportunities cost efficiencies and kind of new plan traction? Um, just impacting the the curve of growth throughout the year. Thank you.

Good morning, Mike. Um,

The short answer to your question is, it's a, it's a balancing of the portfolio is the way I think about it.

Um, our portfolio right now is over-indexed on device.

John Stankey: There are other things besides devices that customers get value out of. Putting that at the forefront to ensure that customers have choice about how they choose to allocate those perks, those benefits, and things that are important to their loyalty over time. I think we can do a better job of balancing that portfolio, and I think we will gradually work our way through this over time. I don't think this is throwing the switch, but you've got to get a foundational capability out there which to work from, and OneConnect is a foundational capability that we can iterate on and work from in the coming quarters to continue to work to balance that portfolio. I could probably answer your second question for you because everybody in the company is laser-focused on this particular issue.

And it's not the devices aren't important to customers and to certain segments of customers. They'll continue and remain to be important, but I think we need a more balanced portfolio. That, uh, make sure that the customer understands the inherent value of the network, underneath the relationship, and the true amount that they're paying for that fantastic service that they depend on every day. And that they're not clouded by the difference of what they're paying for device versus Network. And I think we have an opportunity to really help people understand the inherent value of what's in the network. And what's the difference between what they need to do to access the network? And there are other things besides devices that customers, get value out of and putting that at the Forefront, uh, to ensure the customers have choice about how they choose to allocate, those perks, and those benefits and things that are important to their loyalty over time. Um, I think we can do a better job of balancing that portfolio and I think we will gradually

John Stankey: My voice is tired, and I'm going to let Pascal do it for you.

Pascal Desroches: Sure thing. Hey, Mike, pleasure to talk to you. Going into Q2 and improving for the rest of the year, we expect both service revenues and EBITDA to accelerate gradually. There are a few factors at play. One, in our wireless business, we expect to continue to drive growth in converged relationships, including wireless. That should drive improvement. Plus, we have pricing action that begins to take effect in April. For Q2, it's going to be not the entire quarter that benefits, but most of it, and for the rest of the year, full quarter benefits of those pricing actions. Also, we're scaling Lumen. We said coming into the year that Lumen, early on, we're going to have to invest significantly in order to stand up that organization, in order to drive incremental fiber penetration into their footprint, and to really set up ourselves.

Work our way through this over time. I don't think this is throwing the switch, but you've got to get a foundational capability out there in which to work from, and 1 Connect is a foundational capability that we can iterate on and work from in the coming quarters to continue to work to balance that portfolio. Um, I could probably answer your second question for you, because everybody in the company is laser focused on this particular issue, but my voice is tired. I'm going to let Pascal do it for you. Sure thing. Hey Mike, uh, pleasure to talk to you.

going into Q2 and

improving.

For the rest of the year, we

Ex expect.

Service, revenues, and EBITDA accelerate gradually. There are a few factors that play, one, uh,

for, you know, Wireless business.

It will not be the entire quarter that benefits, but most of it, and it will take for the rest of the year—full quarter benefits of those pricing actions.

Also.

We're scaling Lumen. We said coming into the year that, early on, we were going to have to invest significantly in order to stand up that organization, in order to drive, uh,

Pascal Desroches: That process began in earnest in Q1. We'll continue, but I expect every month that passes, the performance of the Lumen asset will continue to get better. We're going to continue to see improvement in fiber net adds and converged relationships. Also, as you get through, in terms of free cash flow, Q1, as a reminder, is always seasonally low for a couple of reasons. One, you have our annual incentive comp payment in Q1. That's a meaningful cash draw in Q1. Two, majority of the devices from the holiday season are paid in Q1. Those headwinds go away, and you also saw in this Q1 that we began to step up with our capital, and that was also a headwind. As we get through the balance of the year, I expect pretty much the same seasonal patterns that we've seen in free cash flow, and we remain confident.

incremental fiber, penetration into their footprint uh and to really set up ourselves that process uh uh began in Earnest in q1, we'll continue. But uh I expect every month that passes, the performance of the lumines that will continue to get better, we're going to continue to see Improvement in fibernet ads and converge relationships.

Also uh as you get through uh in terms of free cash flow q1. As a reminder is always seasonally low for a couple of reasons 1.

You have, uh, our annual incentive comp payment in Q1—that's a meaningful, uh,

Cash drawn, q1.

Pascal Desroches: All in all, look, even at Q2, I think you should see meaningful improvement in our service revenue trajectory as well as our EBITDA trajectory. Feel really good about where we are and the pacing for the rest of the year.

Michael Ng: Great. Thank you, John. Thanks, Pascal.

Mike Ng: Great. Thank you, John. Thanks, Pascal.

2 majority of the devices from the holiday season are paid in q1, those headwinds go away. And uh, you also saw in this q1, that we stepped up. Our we began to step up of our capital and that was also a headwind as we get through the balance of the year. I expect, uh, uh, pretty much the same seasonal patterns that we've seen in free cash flow and we remain confident on all. Look even at T2. I think you should see meaningful improvement in our service Revenue trajectory as well as our ibida trajectory. Uh, so uh feel really good about where we are and the patient for the rest of the year.

Brett Feldman: Thanks, Mike. Operator, we're going to take our last question.

Great. Thank you, John. Thanks, Pascal.

Operator: The last question today comes from Peter Supino with Wolfe Research. Please go ahead.

Thanks Mike operator. We're going to take our last question.

Peter Supino: Hi. Good morning. A question about the broadband market. AT&T reported 2.5 million DSL subs, and that's been a really valuable feedstock for the fiber business over time. It's a great thing that you have a long-term declining business that is going to stop diluting your growth rate over the next couple of years. I'm wondering if the fade of the DSL business in general, including and beyond your own, affects your view of the broadband market over the next couple of years, whether that relates to fiber volume growth or fiber pricing or FWA pricing, all the above. Thank you.

The last question today comes from Peter, subpoena, with wolf research, please go ahead.

Hi. Good morning. Uh, question about the Broadband Market, uh, AT&T reported 2 and a half million DSL subs, and that's been a really valuable feed stock for the fiber business, um, over time.

It's a great thing that you have a long-term declining business that is going to stop, um, diluting your growth rate over the next couple of years. I'm wondering if the, the fade of the DSL business in general, including in beyond your own, um, affects your view of the Broadband Market over the next couple of years. Um, whether that relates to fiber, volume growth, or Fiber pricing, or DS. Um, fwa pricing all the above. Thank you.

John Stankey: Hi, Peter. I don't know that the fate of the DSL base in and of itself causes me to think differently about things. I'd probably offer a couple observations on the market. One is that pace is getting pretty tiny at this juncture. I think one of the things that we should inherently understand is our fiber growth numbers have been relatively consistent over the last number of years. Our ability to find DSL customers that want to be fiber customers is a much more difficult prospect these days because there really aren't many DSL customers left. When you look at our growth numbers on fiber, the question that was asked earlier about new accounts. They're new accounts, they're customers coming in. That's that new dynamic I talked about, and we're getting better at picking up those new customers.

all right, Peter

I don't know that the fate of the DSL base in in and of itself causes me to think differently about things. I probably offer a couple observations on the market.

1 is that base is getting pretty tiny at this juncture and I think 1 of the things that you know we should inherently understand is our our fiber growth numbers have been relatively consistent over the last you know number of years.

Um, our ability to find DSL customers that want to be Fiverr customers is much.

More difficult prospect these days because there really aren't many TSL customers left.

and so, when you look at our growth numbers on fiber, you know, the question that was asked earlier about new accounts,

John Stankey: I think that the other observation I would give is, you've got certain parts of the DSL base that in some cases, customers self-selected. They may be in a situation where it's the best that they can get in a not very good set of choices. Some of that's being taken care of today. That's what satellite serves well. That's what BEAD addresses. But there's also the price-sensitive segment, because in many cases, people could buy in at that, maybe at a little bit lower price than other broadband alternatives in the market. The place I think about where we naturally need to mature at AT&T, that I want to make sure we do well is, we should be able to be a man for all seasons.

Um, their new accounts, you know, their their customers coming in and that's that new new Dynamic, I talked about and, you know, we're getting better at picking up those new new customers.

And, um, I think that the other observation I would give is,

In.

You've got certain parts of the DSL basis in some cases, customers sell selected.

Um, they may be in a situation where it's the best that they can get in a not very good set of choices.

Some of that's being taken care of today. That's that's what satellites serve as well. That's what bead addresses. Um, but there's also the price sensitive segment, uh, because in many cases people could buy in at that, maybe at a, a little bit lower price than other Broadband Alternatives in the market.

And so,

Um, the place I think about where we naturally need to mature at AT&T that, I I want to make sure we do well.

John Stankey: We should be able to handle every customer, one that wants a premium, high-powered, most capable service around, and one that wants efficient, more cost-effective, more value-driven offering. Fiber, when we have it in there, certainly allows us to do that, given the marginal cost structure. I'm profitable at any point, and that's maybe different than DSL. DSL was a high-cost infrastructure to manage, and I've shared with you that when we get fiber in, our operating costs are dramatically reducing in these geographies now. When we get the copper turned down, it's going to be even more. We should be a little bit better on making sure we're hitting all segments of the market with our offerings. Hence, the question earlier about why OneConnect and why these things.

Uh efficient more, cost-effective more value driven offering.

And, um, fiber, when we have it in there, certainly allows us to do that, given the marginal cost structure. I'm profitable at any point, and that's maybe different than DSL. I mean, DSL is a high-cost infrastructure to manage, and I've shared with you that...

John Stankey: We can drive value into some of these segments and make sure that we're monetizing in an effective way on those price options for customers. I think we can be a little bit better at picking up some of that price-sensitive segment, not only with a better portfolio of fiber pricing, as well as what we do with fixed wireless in places where that performance is adequate, given the nature of the householder, the size of the householder, and the demands of the particular customers in those households. You can maybe drive a little bit more of a value profile in what you're offering in that customer base to match that as well. Finally, I'll say this also lines up with the reality of where the broadband market is in my view, which is getting from 0% to 40% penetration as we build fiber is really important.

when we get fiber and, you know, our operating costs are dramatically reducing in these geographies. Now, and when we get the fee return, the copper turned down, it's going to be even more. So we should be a little bit better on making sure. We're hitting all segments of the market with our offerings and hence, the question earlier about why 1 can act and why these things we can drive value into some of these segments and make sure that we're monetizing an effective way on those on those price options for customers.

And I think we can be a little bit better at picking up some of that price sensitive segment. Not only with a better portfolio of Fiber pricing as well as what we do with fixed Wireless in places where that performance is adequate. Given the nature of the household or the size of the household or the demands of the particular customers in those households and you can maybe drive a little bit more of a value profile and what your offering and that customer base to match that as well.

and then and finally I'll say um this also lines up with the reality of where the Broadband Market is in my view which is

John Stankey: That's a really good return when we do that, and we're doing that incredibly well and very effectively. That hasn't changed as we've opened up new footprint and accelerated our build. We see our path to 40% as being really good, really strong. We continue to even refine it and get a little bit better. Although I'm pretty impressed, I've shared with you before that we're probably a year faster than what we expected we would be in the original business case, and that helps drive returns up higher. Getting from 40% to 50% is different. That's a different set of plays that are required than getting from 0% to 40%.

Getting from zero to 40% penetration as we build fibers is really important. That's a really good return when we do that, and we're doing that incredibly well and very effectively, and that hasn't changed as we've opened up new footprint and accelerated our build. We see our path to 40% as being really good, really strong. We can continue to even refine it and get a little bit better, although I'm—I'm pretty impressed. I've shared with you before that we're probably a year faster than what we expected we would be in the original business case, and that helps drive returns up higher.

John Stankey: The reason I bring that up is because I think it's that value segment from 40 to 50 that's an important segment for us moving forward to add new accounts that we can do on an accretive basis. For those of you that are looking at new accounts, that's a driver of it. For those of you who are looking at ARPU tempering, look, it's entirely economically rational, value-creating, and the right thing for AT&T to do to get from 40% to 50%, even if it means we take some ARPU dilution to do that. I think with the size of our base today and what's going on, you're going to see a little bit more of that.

John Stankey: Some of that directs to that customer base that was DSL holdout base that you're referring to, that you need to get really good at figuring out how to pick up with the more value-sensitive, price-sensitive parts of the base.

But getting from 40 to 50% is different, that's a different set of plays that are required than getting from 0 to 40. And the reason I bring that up is because I think it's that value segment from 40 to 50. That's an important segment for us. Moving forward to add new accounts that we can do on a decree of basis. And so, for those of you that are looking at new accounts, that's a driver of it, for those of you who are looking at arpu temperament, uh, look, it's entirely economically, rational and value creating and the right thing for AT&T to do to get from 40 to 50 percent, even if it means we take some RPD solutions to do that. And I think in the size of our Base today and what's going on, you're going to see a little bit more.

Brett Feldman: Thanks, Tim.

Brett Feldman: Thanks team.

More of that, and some of that directs to that customer base. That was that DSL holdout base that you're referring to that you need to get really good at, at figuring out how to pick up, with the more value-sensitive, price-sensitive parts of the base.

Brett Feldman: All right, operator, that's it. You can go ahead and close out the call.

Thanks team.

I operator, that's it. You go ahead and close out the call.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

The conference is now concluded.

Thank you for attending today's presentation.

You may now disconnect

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