Q2 2026 AT&T Inc Earnings Call

July 22, 2026

Speaker #1: All participants are in a listen-only mode. Should you need assistance during the call, please press star, then 0, and an operator will assist you offline.

Speaker #1: the presentation, the call will be open for questions. If you would like to ask a question, please press star, then 1, and you will be placed in the question queue.

Speaker #1: 2. 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.

Speaker #2: Thank you, and good morning. Welcome to our second quarter 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.

Speaker #2: 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.

Speaker #2: As such, they are 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.

Speaker #1: Good morning, and welcome to AT&T's second quarter 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.

Speaker #2: With that, I'll turn things over to John.

Speaker #3: Thanks, Brett. And good morning, everyone. I do appreciate you joining us today. Earlier this year, we provided an Outlook for accelerated growth and execution of our strategy, and that's exactly what we delivered in the second quarter.

Speaker #1: Following the presentation, the call will be open for questions. If you would like to ask a question, please press star, then 1, and you will be placed in the question queue.

Speaker #3: We gained more than $1 million in advanced connectivity subscribers from fiber, fixed wireless, and postpaid phones, with all three product categories posting higher net additions year over year.

Speaker #1: If you are in the question queue and would like to withdraw your question, you can do so by pressing star, then 2. As a reminder, this conference is being recorded.

Speaker #1: I would now like to turn the conference call over to our host, Brett Feldman, Treasurer and Head of Investor Relations, please go ahead.

Speaker #3: This was our best ever second quarter for AT&T fiber net ads and a record quarter for combined fiber and fixed wireless net ads. We also continued to grow our base of converged customers.

Speaker #3: At the end of the second quarter, 42.5% of our advanced home internet customers also have a postpaid wireless account with AT&T, and this convergence rate reached 45% when excluding customers within our acquired footprint from Lumen.

Speaker #2: 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.

Speaker #3: These are high lifetime value subscribers, and our strong customer growth is a key driver of our accelerated financial growth during the second quarter. At a consolidated level, we reported faster year-over-year growth in service revenue, adjusted EBITDA, and adjusted EPS compared to our growth in the first quarter.

Speaker #2: With that, I'll turn things over to John.

Speaker #3: Thanks, Brett. And good morning, everyone. I do appreciate you joining us today. Earlier this year, we provided an outlook for accelerated growth and execution of our strategy, and that's exactly what we delivered in the second quarter.

Speaker #3: We also achieved our highest consolidated adjusted EBITDA margin since we refocused our business on advanced connectivity at the beginning of this decade. This was driven by our improved operating leverage as we gained scale in 5G and fiber, reduced legacy costs as we shrink our footprint, and through continued implementation of our cost transformation initiatives across the company.

Speaker #3: We gained more than $1 million advanced connectivity subscribers from fiber, fixed wireless, and postpaid phones. With all three product categories posting higher net additions year over year, this was our best ever second quarter for AT&T fiber net adds and a record quarter for combined fiber and fixed wireless net adds.

Speaker #3: And we're driving growth in our advanced connectivity segment across both consumer and business channels. During the second quarter, we achieved year-over-year growth in advanced connectivity business service revenues.

Speaker #3: We also continued to grow our base of converged customers. At the end of the second quarter, 42.5% of our advanced home internet customers also have a postpaid wireless account with AT&T, and this convergence rate reached 45% when excluding customers within our acquired footprint from Lumen.

Speaker #3: This reflects our success at repositioning the business around fiber and 5G, just as we did in consumer, and expanding our reach through a more balanced direct, indirect, and digital distribution model.

Speaker #3: These are high lifetime value subscribers, and our strong customer growth is a key driver of our accelerated financial growth during the second quarter. At a consolidated level, we reported faster year-over-year growth in service revenue adjusted EBITDA and adjusted EPS compared to our growth in the first quarter.

Speaker #3: The result is growth in converged relationships and new logos, and you're seeing that momentum in our improved financial performance. It's taken a lot of work to get here, and we continue to expect advanced connectivity business service revenues will grow at a low single-digit CAGR through 2028.

Speaker #3: The strength of our performance comes from the structural advantages we've established after years of consistent and targeted investment. This will be our largest year ever for fiber expansion with plans to reach $8 million new locations, including over 4 million locations acquired from Lumen.

Speaker #3: As I've said in the past, where we have fiber, we win. With fiber and wireless, and I expect that as we expand our funnel of new fiber locations, we'll drive strong growth in our converged customer base and financial results.

Speaker #3: In the dense urban and suburban areas where we build fiber at scale, we believe that our competitors cannot and will not match our network performance or our operating scale and proficiency.

Speaker #3: This includes the AT&T fiber brand, widely recognized among the best home internet products in the market, local teams of technicians and in-home experts, capable technical support infrastructure, extensive owned and partner distribution, sophisticated device logistics, and the ability to harness our national advertising and brand campaigns to rapidly drive penetration as we reach new geographies with our fiber and converged services.

Speaker #3: Simply put, we believe that we are the best positioned to serve customers the way they want to be, from one trusted connectivity provider. When customers consolidate their internet access with us, we see lower churn, outstanding brand affinity, higher lifetime values, and we carry the vast majority of their internet traffic over our advanced infrastructure.

Speaker #3: And for those limited circumstances, when the AT&T network is not available to one of our converged customers, we expect to be in a position to solve many of these corner cases as we move into 2027.

Speaker #3: Consistent with our ability to extend our scale and operating proficiency, I'd like to give you a brief update on our progress integrating our recently acquired Lumen footprint into our operations.

Speaker #3: We spent the past six months standing up operations to support a faster pace of growth and network deployment and customers, as we accelerate the branded rollout of AT&T fiber.

Speaker #3: But we're already utilizing our existing distribution and converged offers to tap into pent-up demand in these under-penetrated areas which has translated into improved growth.

Speaker #3: We're not just adding fiber customers; our June converged gross ads in these territories were up 45% compared to February. Our convergence playbook is taking hold here, just as it has in our traditional footprint, creating a clear runway to deepen customer relationships and accelerate growth in converged accounts as we complete our integration activities and scale the pace of fiber expansion.

Speaker #3: While the benefits of our investment-led strategy are evident today, and our improved operating momentum, we continue to build a business that is best positioned to meet the future advanced networking demands of AI-driven connectivity.

Speaker #3: The rise of agentic AI is fundamentally reshaping network traffic, not just in volume, but in shape, symmetry, and criticality. The proliferation of agentic and autonomous AI workloads will require networks to sense, decide, and act in near real time.

Speaker #3: Emerging use cases, including drones, autonomous driving, robotics, and AR glasses, will all require ubiquitous high-performing uplink-optimized connectivity. Today, industry research shows AI agents generate up to 450% more total traffic per task than human performing the same work.

Speaker #3: An agentic adoption is projected to drive approximately 9x growth in enterprise traffic and approximately 7x growth in consumer traffic by 2035. Distribution of AI inference to the edge necessitates low latency and high-bandwidth connectivity to access endpoints.

Speaker #3: This is why we believe fiber-enabled network convergence at the edge will create a true competitive advantage. Additionally, we're already seeing rapid increases in large-scale data traffic, which demands high-capacity metro and intercity fiber infrastructure.

Speaker #3: As AI fundamentally changes how consumers and businesses connect, it will drive a fundamental change in their expectations for connectivity. We believe AT&T is the only provider building and investing in this infrastructure at the scale necessary today to support the demands a decade from now.

Speaker #3: And we aren't missing any critical elements necessary to execute our strategy. We have the necessary building blocks in place, the technology, agreements, and assets, for our strategic path forward.

Speaker #3: The enabling connectivity of the future is in our hands today, and by the end of this decade, we expect to operate the most advanced and technologically open communications network in the US, built on a foundation of dense interconnected metro fiber and deep nationwide spectrum.

Speaker #1: An agentic adoption is projected to drive approximately 9x growth in enterprise traffic and approximately 7x growth in consumer traffic by 2035. Distribution of AI inference to the edge necessitates low-latency and high-bandwidth connectivity to access endpoints.

Speaker #3: This is exactly the asset base we want as AI begins to shape the next era of connectivity, and I wouldn't trade our assets for anyone else's.

Speaker #1: This is why we believe fiber-enabled network convergence at the edge will create a true competitive advantage. Additionally, we're already seeing rapid increases in large-scale data traffic, which demands high-capacity metro and intercity fiber infrastructure.

Speaker #3: While we position for the future of connectivity, our shareholders are benefiting from our growth today. This is supporting our improved capital returns and provides us with the flexibility to further increase our pace of planned share repurchases this year by up to 25% to approximately $10 billion, to capture what we see as a disparity between our operating fundamentals and the valuation of our stock.

Speaker #1: As AI fundamentally changes how consumers and businesses connect, it will drive a fundamental change in their expectations for connectivity. We believe AT&T is the only provider building and investing in this infrastructure at the scale necessary today to support the demands a decade from now.

Speaker #3: Momentum also picked up this quarter, and our work to exit inefficient copper-based services accelerated by positive actions by the FCC. We appreciate the leadership of FCC Chairman Carr and the Commission for recognizing the urgency to modernize the nation's communications infrastructure and upgrade customers to more reliable service.

Speaker #1: And we aren't missing any critical elements necessary to execute our strategy. We have the necessary building blocks in place: the technology, agreements, and assets, for our strategic path forward.

Speaker #1: The enabling connectivity to the future is in our hands today, and by the end of this decade, we expect to operate the most advanced and technologically open communications network in the U.S., built on a foundation of dense interconnected metro fiber and deep nationwide spectrum.

Speaker #3: Last month, the FCC gave us permission to discontinue legacy copper voice service in about 60% of our wire centers in California, so we can upgrade our customers to AT&T phone advanced, fiber, and wireless.

Speaker #1: This is exactly the asset base we want as AI begins to shape the next era of connectivity, and I wouldn't trade our assets for anyone else's.

Speaker #3: Looking more broadly at our efforts to discontinue copper network services and operations nationwide, we continue to make great progress on our exit plans. We have approval to discontinue legacy services in over 30% of our wire centers, which will be effective by late 2026.

Speaker #1: While we position for the future of connectivity, our shareholders are benefiting from our growth today. This is supporting our improved capital returns and provides us with the flexibility to further increase our pace of planned share repurchases this year by up to 25%, to approximately $10 billion, to capture what we see as a disparity between our operating fundamentals and the valuation of our stock.

Speaker #3: By the end of the year, we expect a couple hundred wire centers to have zero customers. This is an important step, providing a path to unlock access to descaling parts of our cost structure and to further streamline our operations.

Speaker #1: Momentum also picked up this quarter, and our work to exit inefficient copper-based services accelerated, aided by positive actions by the FCC. We appreciate the leadership of FCC Chairman Carr and the Commission for recognizing the urgency to modernize the nation's communications infrastructure and upgrade customers to more reliable service.

Speaker #3: Nearly two years ago, we told you we would establish a path to effect an orderly turn-down of legacy copper services by the end of the decade.

Speaker #3: In my view, we've now reached the tipping point, and that goal is firmly in sight. Finally, before I turn the call over, I'd like to comment on last month's announcement that Pascal has decided to retire at the end of the year.

Speaker #1: Last month, the FCC gave us permission to discontinue legacy copper voice service at about 60% of our wire centers in California, so we can upgrade our customers to AT&T phone advanced, fiber, and wireless.

Speaker #3: He's been a great partner in all, no doubt, have much more to say about his contribution when his work is finished. Until that time, we're executing a deliberate and carefully planned transition, and AT&T is fortunate to welcome back Jennifer Byry.

Speaker #1: Looking more broadly at our efforts to discontinue copper network services and operations nationwide, we continue to make great progress on our exit plans. We have approval to discontinue legacy services in over 30% of our wire centers, which will be effective by late 2026. By the end of the year, we expect a couple hundred wire centers to have zero customers.

Speaker #3: There's no doubt that Pascal's a tough act to follow, but we have the person to do just that in Jennifer, and we'll do so without missing a beat.

Speaker #3: She knows many on our team. She understands the business. Her views on how we should run the company are aligned with how Pascal and I see the world, and she returns with a broader and deeper understanding of the fundamentals of running a software-driven enterprise.

Speaker #1: This is an important step, providing a path to unlock access to descaling parts of our cost structure and to further streamline our operations. Nearly two years ago, we told you we would establish a path to effect an orderly turn-down of legacy copper services by the end of the decade.

Speaker #3: This is something that will be very important to AT&T as we move forward. That said, we still have some important things to accomplish between now and year-end, and we all intend to make good use of the time.

Speaker #3: And with that, Pascal, over to you.

Speaker #2: Thank you, John, and good morning, everyone. At a consolidated level, total revenues in the second quarter were up 2.3% year over year, driven by service revenue growth of 2.7%, adjusted EBITDA was up 5.2% year over year, and our adjusted EBITDA margin increased 110 basis points to 39.1%.

Speaker #1: In my view, we've now reached the tipping point, and that goal is firmly in sight. Finally, before I turn the call over, I'd like to comment on last month's announcement that Pascal Desroches has decided to retire at the end of the year.

Speaker #1: He's been a great partner in all, no doubt. I'll have much more to say about his contribution when his work is finished. Until that time, we're executing a deliberate and carefully planned transition, and AT&T is fortunate to welcome back Jennifer Byry.

Speaker #2: For the full year, we continue to expect consolidated service revenues to grow in the low single-digit range and consolidated adjusted EBITDA to grow in the 3 to 4 percent range.

Speaker #2: Adjusted EPS was 65 cents in the second quarter, which was up more than 20% from 54 cents the prior year driven primarily by growth in adjusted EBITDA and lower depreciation expense.

Speaker #1: There's no doubt that Pascal's a tough act to follow, but we have the person to do just that in Jennifer, and we'll do so without missing a beat.

Speaker #1: She knows many on our team. She understands the business. Her views on how we should run the company are aligned with how Pascal and I see the world, and she returns with a broader and deeper understanding of the fundamentals of running a software-driven enterprise.

Speaker #2: We continue to expect full-year adjusted EPS to be in the range of $2.25 to $2.35. We added over $1,000,000 fiber locations during the second quarter as we accelerated the pace of our deployment.

Speaker #1: This is something that will be very important to AT&T as we move forward. That said, we still have some important things to accomplish between now and year-end, and we all intend to make good use of the time.

Speaker #2: This contributed to higher capital investment of $6.1 billion compared to $5.1 billion a year ago. Second quarter free cash flow increased by roughly $300 million year over year to $4.7 billion, which exceeded the high end of our guidance range of $4 to $4.5 billion.

Speaker #1: But with that, Pascal, over to you.

Speaker #2: Thank you, John, and good morning, everyone. At a consolidated level, total revenues in the second quarter were up 2.3% year over year, driven by service revenue growth of 2.7%. Adjusted EBITDA was up 5.2% year over year, and our adjusted EBITDA margin increased 110 basis points to 39.1%.

Speaker #2: For the full year, we continue to expect $18 billion plus of free cash flow, and $23 to $24 billion of capital investment. Compared to the second half of last year, where we were ramping up our fiber deployment, we expect our capital investment to be more ratable during the second half of this year.

Speaker #2: For the full year, we continue to expect consolidated service revenues to grow in the low single-digit range and consolidated adjusted EBITDA to grow in the 3 to 4% range.

Speaker #2: We also expect higher cash flow from operations during the fourth quarter of this year compared to last year, when our results were impacted by discrete items including legal settlements and a large contribution to our pension.

Speaker #2: Adjusted EPS was $0.65 in the second quarter, which was up more than 20% from $0.54 the prior year, driven primarily by growth in adjusted EBITDA and lower depreciation expense.

Speaker #2: As a result, we expect free cash flow will be relatively stable year over year in the third quarter, with strong year-over-year growth in the fourth quarter.

Speaker #2: We continue to expect full-year adjusted EPS to be in the range of $2.25 to $2.35. We added over $1,000,000 locations during the second quarter as we accelerated the pace of our deployment.

Speaker #2: Our consolidated growth continues to be driven by our advanced connectivity segment, which contributes over 90% of our service revenue, and nearly all of our adjusted EBITDA.

Speaker #2: Advanced connectivity service revenues grew 5.1% year over year in the second quarter, accelerating by 150 basis points compared to our growth in the first quarter.

Speaker #2: EBITDA for this segment grew even faster, increasing 8% year over year, driven by top-line momentum and our continued cost transformation initiatives. The team is really doing a good job here, and we remain on pace to achieve $4 billion in consolidated annual cost savings by the end of 2028.

Speaker #2: For the full year, we continue to expect $18 billion-plus of free cash flow, and $23 to $24 billion of capital investment. Compared to the second half of last year, when we were ramping up our fiber deployment, we expect our capital investment to be more ratable during the second half of this year.

Speaker #2: Wireless service revenues grew 3.3% year over year, driven by growth in our customer base, including 432,000 postpaid phone net adds and the uplift from pricing actions that took effect during the second quarter.

Speaker #2: We are pleased with the execution of our pricing strategy in wireless, including the rollout of new plans and pricing actions during the first half of the year.

Speaker #2: As a result, we expect free cash flow will be relatively stable year-over-year in the third quarter, with strong year-over-year growth in the fourth quarter.

Speaker #2: Impressively, we grew postpaid phone hour per year over year, while reducing postpaid phone churn. Our wireless growth is increasingly driven by new accounts and not simply additional lines of service.

Speaker #2: Our consolidated growth continues to be driven by our advanced connectivity segment, which contributes over 90% of our service revenue, and nearly all of our adjusted EBITDA.

Speaker #2: During the second quarter, we added 147,000 consumer postpaid wireless accounts, which is our best result in more than three years. We believe this is a direct result of our converged go-to-market strategy, which is driving improved growth in new customer accounts that choose AT&T for wireless and home internet.

Speaker #2: Advanced connectivity service revenues grew 5.1% year over year in the second quarter, accelerating by 150 basis points compared to our growth in the first quarter.

Speaker #2: Advanced home internet service revenues grew by more than 27% year over year. This was primarily driven by improved fiber net adds as we accelerate our fiber deployment and center our go-to-market strategy around our converged offers, as well as our acquisition of fiber assets from Lumen in the first quarter.

Speaker #2: Wireless service revenues grew 3.3% year over year, driven by growth in our customer base, including 432,000 postpaid phone net adds, and the uplift from pricing actions that took effect during the second quarter.

Speaker #2: Fiber output declined 1.3% compared to a year ago, which primarily reflects a full quarter impact of our transaction with Lumen, whose subscribers have lower outputs.

Speaker #2: We are pleased with the execution of our pricing strategy in wireless, including the rollout of new plans and pricing actions during the first half of the year.

Speaker #2: Excluding customers in the footprint that we acquired from Lumen, fiber output was approximately flat year over year. This reflects our focus on growing converged customer accounts, which enjoy discounted pricing but typically stay with us longer and increase their spending over time.

Speaker #2: We expect our focus on convergence to drive continued strong net additions in advanced home internet, and postpaid phone subscribers during the third quarter. And continued growth in converged customers.

Speaker #2: During the second quarter, we added 147,000 consumer postpaid wireless accounts, which is our best result in more than 3 years. We believe this is a direct result of our converged go-to-market strategy, which is driving improved growth in new customer accounts that choose AT&T for wireless and home internet.

Speaker #2: In the near term, this will likely put some pressure on fiber output, but we feel really good about our ability to manage our backlog pricing as we grow our base of fiber customers that also subscribe to our wireless services.

Speaker #2: As we said before, our goal is not to maximize output of individual products, but instead to maximize total advanced connectivity service revenues in order to drive attractive returns on our investments in 5G and fiber.

Speaker #2: And we are expecting continued strong growth in service revenue. And as John noted, we are achieving this growth in advanced connectivity service revenues across consumer and business operations.

Speaker #2: Fiber offer declined 1.3% compared to a year ago, which primarily reflects a full quarter impact of our transaction with Lumen, whose subscribers have lower offers.

Speaker #2: Business advanced connectivity service revenues grew 1.8% year over year in the second quarter, driven by momentum in wireless, fiber, and fixed wireless. We have turned the corner and expect AT&T business to remain a driver of growth in advanced connectivity service revenues going forward.

Speaker #2: Excluding customers in the footprint that we acquired from Lumen, our fiber offer was approximately flat year over year. This reflects our focus on growing converged customer accounts, which enjoy discounted pricing but typically stay with us longer and increase their spending over time.

Speaker #2: Our advanced connectivity segment enters the second half of the year with strong momentum, and we continue to expect full-year service revenue growth of 5% plus and EBITDA growth of 6% plus.

Speaker #2: We expect our focus on convergence to drive continued strong net additions in advanced home internet and postpaid phone subscribers during the third quarter, along with continued growth in converged customers.

Speaker #2: In our legacy segment, service revenues declined 26% year over year, and EBITDA declined about 46% as we accelerate the process of powering down our legacy copper network and migrate customers to more advanced and reliable voice and internet services.

Speaker #2: In the near term, this will likely put some pressure on fiber, although we feel really good about our ability to manage our backlog pricing as we grow our base of fiber customers that also subscribe to our wireless services.

Speaker #2: As we said before, our goal is not to maximize the offer of individual products, but instead to maximize total advanced connectivity service revenues in order to drive attractive returns on our investments in 5G and fiber.

Speaker #2: The retirement of our legacy network is a critical piece of our transformation into a scale provider of advanced connectivity. As we complete our network modernization and other transformation initiatives, we expect that by the end of the decade, we will have the best-performing network with a highly competitive cost structure.

Speaker #2: We returned 4.1 billion to shareholders during the second quarter, including approximately 2.2 billion of share repurchases. We are on pace to repurchase nearly $1 billion of stock in July and, as John previously shared, we now expect to buy back approximately $10 billion of our shares in 2026.

Speaker #2: Business advanced connectivity service revenues grew 1.8% year over year in the second quarter, driven by momentum in wireless, fiber, and fixed wireless. We have turned the corner and expect AT&T Business to remain a driver of growth in advanced connectivity service revenues going forward.

Speaker #2: This compares to our prior target of $8 billion of share repurchases this year, and represents a pull forward of our planned buybacks through 2028.

Speaker #2: Our Advanced Connectivity segment enters the second half of the year with strong momentum, and we continue to expect full-year service revenue growth of 5% plus and EBITDA growth of 6% plus.

Speaker #2: Together, our planned share repurchases and expected dividend payments will total approximately $18 billion this year, which is essentially 100% of our outlook for free cash flow.

Speaker #2: Our cash flow and liquidity provides us with flexibility to sustain our dividend and accelerate our planned buybacks, while also maintaining our commitment to reduce balance sheet leverage following our planned acquisition of Spectrum licenses from EccoStar.

Speaker #2: The retirement of our legacy network is a critical piece of our transformation into a scaled provider of advanced connectivity. As we complete our network modernization and other transformation initiatives, we expect that by the end of the decade, we will have the best-performing network with a highly competitive cost structure.

Speaker #2: We are well positioned to fund the transaction, which we expect to close by the end of July. We ended the second quarter with net debt to adjust EBITDA of 2.68 times, which was essentially flat with the first quarter.

Speaker #2: We continue to expect that our net leverage ratio will increase following the close of our transaction with EccoStar to the 3.2 times range and then return to a level consistent with our target in the 2.5 times range within approximately three years following the close of the EccoStar transaction.

Speaker #2: We returned 4.1 billion to shareholders during the second quarter, including approximately 2.2 billion of share repurchases. We are on pace to repurchase nearly $1 billion of stock in July, and as John previously shared, we now expect to buy back 2026.

Speaker #2: I'm really pleased with how we have the company position heading into the back half of the year. We have great operating momentum, a leading position in fiber and converged connectivity, and a team that's motivated to win in the marketplace.

Speaker #2: This compares to our prior target of $8 billion of share repurchases this year, and represents a pull forward of our planned buybacks through 2028.

Speaker #2: Brett, we're now ready for the Q&A.

Speaker #2: Together, our planned share repurchases and expected dividend payments will total approximately $18 billion this year, which is essentially 100% of our outlook for free cash flow.

Speaker #1: Thank you, Pascal. Operator, we're ready to take the first question.

Speaker #3: We will now begin the Q&A session. To ask a question, press star, then one. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker #2: Our cash flow and liquidity provide us with flexibility to sustain our dividend and accelerate our planned buybacks, while also maintaining our commitment to reduced balance sheet leverage following our planned acquisition of spectrum licenses from EchoStar.

Speaker #3: To withdraw your question, please press star, then two. At this time, we will pause to assemble our roster. The first question today comes from Sean Diffley with Morgan Stanley.

Speaker #2: We are well positioned to fund the transaction, which we expect to close by the end of July. We ended the second quarter with net debt to adjusted EBITDA of 2.68 times, which was essentially flat with the first quarter.

Speaker #3: Please go ahead.

Speaker #4: Great. Thanks very much. I was hoping you could elaborate on the traction you're seeing with some of your new plans, like build a plan in One Connect.

Speaker #2: We continue to expect that our net leverage ratio will increase following the close of our transaction with EccoStar to the 3.2 times range and then return to a level consistent with our target in the 2 and a half times range within approximately 3 years following the close of the EccoStar transaction.

Speaker #4: It seems like you're targeting a bit more of the value segment and going down market. Maybe talk about some of the success you're seeing there.

Speaker #4: Is it all incremental and just markets you haven't focused on before? And then just on fiber, you talked about balancing volume and pricing going forward.

Speaker #4: I think you mentioned output flat ex Lumen. How should we think about managing pricing broadly on fiber and levers on the back book? And then last one, just on satellite.

Speaker #2: I'm really pleased with how we have the company positioned heading into the back half of the year. We have great operating momentum, a leading position in fiber and converged connectivity, and a team that's motivated to win in the marketplace.

Speaker #4: Does that change your assumptions on unit economics or penetration rates and maybe some rural markets over the next few years? Thanks very much.

Speaker #2: Brett, we're now ready for the Q&A.

Speaker #1: Thank you, Pascal. Operator, we're ready to take the first question.

Speaker #5: All right. Good morning, Sean. So we're going to do the whole call here in three questions, huh? So let me start with where we are kind of on the plan execution.

Speaker #3: We will now begin the Q&A session. To ask a question, press star, then 1. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker #5: I would say the recalibration we did on the plans was done quite artfully and quite well by the team. And I think you've seen that in the results.

Speaker #3: To withdraw your question, please press star, then 2. At this time, we will pause to assemble our roster. The first question today comes from Sean Disley with Morgan Stanley.

Speaker #5: And I would add to that, as you know, we've done some re-jiggering and pricing on the base. And you see the churn performance that we've been able to generate and so you take all those together and what I think they are indicative of is a pretty seasoned team that understands kind of how to manage in this environment and do it effectively.

Speaker #3: Please go ahead.

Speaker #4: Great, thanks very much. I was hoping you could elaborate on the traction you're seeing with some of your new plans, like Build a Plan in One Connect.

Speaker #4: It seems like you're targeting a bit more of the value segment and going down market. Maybe talk about some of the success you're seeing there.

Speaker #5: I think I mentioned in my remarks, we were at a three-year high for new account additions this quarter. And I would accredit a lot of that to the shifting of the plan and our focus on the value segment, where we see a lot of that new account entry coming in, not add a line into existing accounts.

Speaker #4: Is it all incremental and just markets you haven't focused on before? And then just on fiber, you talked about balancing volume and pricing going forward.

Speaker #4: I think you mentioned our pool flat ex Lumen. How should we think about managing pricing broadly on fiber and levers on the back book?

Speaker #4: And then last one, just on satellite. Does that change your assumptions on unit economics or penetration rates in maybe some rural markets over the next few years?

Speaker #5: And I think that's healthy for us, especially when you look at our overall service revenue performance. The margin numbers that we put forward, our growth in EBITDA I mean, all those things, in my view, are very healthy combination of what you want to try to achieve.

Speaker #4: Thanks very much.

Speaker #5: All right. Good morning, Sean. So we're going to do the whole call here in three questions, huh? So let me start with where we are kind of on the plan execution.

Speaker #5: So yeah, we're being deliberate about moving into some segments of the market where maybe we're a bit underpenetrated. But I think you're seeing we're doing that with a nice balance on profitability.

Speaker #5: I would say the recalibration we did on the plans was done quite artfully and quite well by the team. And I think you've seen that in the results.

Speaker #5: And I would add to that, as you know, we've done some re-jiggering in pricing on the base. And you see the churn performance that we've been able to generate. So, you take all those together, and what I think they are indicative of is a pretty seasoned team that understands how to manage in this environment, and do it effectively.

Speaker #5: And ensuring that we do it in a way that's accretive. And as you know, I've got a typical dynamic here where I want to see percentage of service revenue in the industry grow, and frankly, our goal is to make sure that our average revenue per account grows.

Speaker #5: And as you can see in the disclosures we've given you, we're doing all that. And so that's a good thing. Same thing on fiber.

Speaker #5: I don't think it's any different. Once we put the fiber infrastructure in place, my point of view is there isn't a customer out there that shouldn't be ours.

Speaker #5: We have the best technology. It can be operated at the lowest marginal cost. And yes, it can offer some very premium services with symmetrical gigabit and multi-gigabit services.

Speaker #5: And I think that's healthy for us, especially when you look at our overall service revenue performance. The margin numbers that we put forward, our growth in EBITDA—I mean, all those things, in my view, are a very healthy combination of what you want to try to achieve.

Speaker #5: And there's a segment of the population that wants to pay for that, needs that level of performance. But we also know that there's clearly a segment of the population that's more value-oriented.

Speaker #5: But the silly thing would be to serve those value-oriented customers on a higher-cost infrastructure. And so we want to make sure that our fiber product offerings match to the continuum, both the value-oriented and the performance-oriented shopper.

Speaker #5: And ensuring that we do it in a way that's accretive. And as you know, I've got a typical dynamic here, where I want to see percentage of service revenue in the industry grow, and frankly, our goal is to make sure that our average revenue per account grows.

Speaker #5: And we can do that really well especially when the customers converge, because we're not just optimizing for one product, but we're optimizing for the suite of products that the customer has in the home.

Speaker #5: And as we shared with you, we get lower churn on those customers, a higher lifetime value, excuse me, and higher brand affinity. So that's what drives the lifetime value.

Speaker #5: And as you can see in the disclosures we've given you, we're doing all that. So that's a good thing. Same thing on fiber.

Speaker #5: They stay with us longer. So you should expect that on fiber, we're going to be very, very aggressive at making sure we get our fair share, along the continuum of price points.

Speaker #5: I don't think it's any different. Once we put the fiber infrastructure in place, my point of view is there isn't a customer out there that shouldn't be ours.

Speaker #5: We have the best technology. It can be operated at the lowest marginal cost. And yes, it can offer some very premium services, with symmetrical gigabit and multi-gigabit services.

Speaker #5: And I will do that. And I will use that expertise that I mentioned earlier, that the team has demonstrated, to make sure that as we have the lifecycle with that customer, that we ultimately get a value equation that is accretive to the business, allows us to continue to grow our share of service revenues, and that we improve our share position overall in the industry.

Speaker #5: And there is a segment of the population that wants to pay for that, needs that level of performance. But we also know that there's clearly a segment of the population that's more value-oriented.

Speaker #5: And that's the play we're running. And we know that it's a long game that we have to run it against. And we think about this over multiple years.

Speaker #5: But the silly thing would be to serve those value-oriented customers on a higher cost infrastructure. And so we want to make sure that our fiber product offerings match to the continuum, both the value-oriented and the performance-oriented shopper.

Speaker #5: And I'm very comfortable with mix and the overall performance that you saw this quarter. And carrying that forward. And then on the rural side of things, look, we're investing heavily in urban and suburban for a reason, because we think it matches best to our capabilities.

Speaker #5: And we can do that really well, especially when the customers converge, because we're not just optimizing for one product, but we're optimizing for the suite of products that the customer has in the home.

Speaker #5: We think that's where we can drive returns most effectively. I also think that it's possible you could see some shift in serving architectures moving forward in rural there'll be areas that satellite might serve adequately that allow us to maybe shrink our terrestrial footprint on what I would refer to as poverty sites, the sites that sit out there and pick up relatively small amounts of traffic, but provide continuity of connectivity.

Speaker #5: And as we shared with you, we get lower churn on those customers, a higher lifetime value—excuse me—and higher brand affinity. So that’s what drives the lifetime value.

Speaker #5: They stay with us longer, so you should expect that on fiber, we're going to be very, very aggressive at making sure we get our fair share along the continuum of price points.

Speaker #5: And I will do that. And I will use that expertise that I mentioned earlier, that the team has demonstrated, to make sure that as we have the lifecycle with that customer, we ultimately get a value equation that is accretive to the business, allows us to continue to grow our share of service revenues, and that we improve our share position overall in the industry.

Speaker #5: And that might be able to positively impact our cost structure in those instances. And at the same time, give the customer a really good experience.

Speaker #5: So I do expect rural characteristics of our business to change. As you know, in the fixed part of my business, I'm trying very hard to shrink footprint.

Speaker #5: That's all the comments I made about shutting down wire centers and going to zero customers. I want assets out of those areas. I want to take costs out.

Speaker #5: And that's the play we're running. And we know that it's a long game that we have to run it against. And we think about this over multiple years.

Speaker #5: I don't want to be prevalent there where I want to be prevalent is where I can build fiber. And where I can use fiber to put wireless transmitting entities at the end of it, edge points, and use those networks effectively and consolidating traffic.

Speaker #5: And that's the fundamental underpinning of the business we want to build. And then establish paired relationships or joint relationships with other providers to fill in that small percentage of the time that the customer walks off our network, that 2% of the traffic that maybe we can't get on that infrastructure.

Speaker #5: We think that's where we can drive returns most effectively. I also think that it's possible you could see some shift in serving architectures moving forward in rural areas.

Speaker #5: I do believe there'll be areas that satellite might serve adequately that allow us to maybe shrink our terrestrial footprint on what I would refer to as poverty sites—sites that sit out there and pick up relatively small amounts of traffic, but provide continuity of connectivity.

Speaker #5: I like coming at the customer where we own and operate 98% of the traffic. We have control of it. We have control of the product and the service that we offer.

Speaker #5: And that maybe we do the integration and leasing on the other 2%, as opposed to the other way around.

Speaker #5: And that might be able to positively impact our cost structure in those instances, and at the same time, give the customer a really good experience.

Speaker #1: All right. Thanks for the question, Sean. Operator will go to the next one.

Speaker #5: So I do expect the rural characteristics of our business to change. As you know, in the fixed part of my business, I'm trying very hard to shrink the footprint.

Speaker #3: The next question comes from John Hodlick with UBS. Please go ahead.

Speaker #1: Great. Thanks. And good morning, everyone. John, can we talk about the broadband volumes, especially fiber, and your comments that June ads were significantly better than February?

Speaker #5: Those are all the comments I made about shutting down wire centers and going to zero customers. I want assets out of those areas. I want to take costs out.

Speaker #1: I mean, does that suggest that these numbers are going to continue to ramp? Or do you think the Lumen properties, you're just sort of tapping into some pent-up demand.

Speaker #5: I don't want to be prevalent there. Where I want to be prevalent is where I can build fiber, and where I can use fiber to put wireless transmitting entities at the end of it—edge points—and use those networks effectively in consolidating traffic.

Speaker #1: You're just trying to get a sense for how you expect those volumes to shake out. And then secondly, the comments on the agentic traffic, that definitely confirms a lot of things we've been hearing from the data center companies and other areas of the sort of AI ecosystem.

Speaker #5: And that's the fundamental underpinning of the business we want to build. And then establish paired relationships, or joint relationships, with other providers to fill in that small percentage of the time that the customer walks off our network—that 2% of the traffic that maybe we can't get on that infrastructure.

Speaker #1: And how does AT&T, I realize it's a longer-term view, but how does AT&T as a connectivity provider in both wireless and the fixed side, how do you monetize that over the next, say, five-plus years?

Speaker #1: I know this is sort of a high-level question, but I'd love to get a sense for how AT&T may benefit from all that traffic.

Speaker #5: I like coming at the customer where we own and operate 98% of the traffic. We have control of it. We have control of the product and the service that we offer.

Speaker #5: Yeah. Good morning, John. So let me clarify so that you understand what I said in my comment. What I said is that the converged rate in the Lumen footprint rose to 45%.

Speaker #5: And then maybe we do the integration and leasing on the other 2%, as opposed to the other way around.

Speaker #1: All right. Thanks for the question, Sean. Operator, we'll go to the next one.

Speaker #5: It wasn't suggesting that the broadband sales rate increased 45%. So our ability to pair when we sell a broadband service to pair it with wireless improved to 45%.

Speaker #3: The next question comes from John Hudlick with UBS. Please go ahead.

Speaker #1: Great. Thanks. And good morning, everyone. John, can we talk about the broadband volumes, especially fiber, and your comments that June ads were significantly better than February?

Speaker #5: So what we're demonstrating there is, in the Lumen footprint, we can run the same kind of plays that we've done in the non-Lumen footprint in getting converged customers brought together and all the goodness that comes with that.

Speaker #1: I mean, does that suggest that these numbers are going to continue to ramp, or do you think the Lumen properties—you're just sort of tapping into some pent-up demand?

Speaker #5: Now, we are improving our sales rates in the Lumen footprint, as we've told you, we have expectations that we can take penetrations up in those areas that will start to look like it does in a traditional AT&T footprint.

Speaker #5: And we're systematically moving through that. As I indicated, we have steps to take to get there. What we're effectively doing right now is converting all the infrastructure.

Speaker #5: All the branding, all the support systems that we have with customers, all the methodologies that technicians use when they show up in a house, all the CPE that a customer gets that provides that world-class Wi-Fi that we put in place inside of a home that makes that high-bandwidth connectivity actually sing.

Speaker #1: I know this is sort of a high-level question, but I'd love to get a sense for how AT&T may benefit from all that traffic.

Speaker #5: Yeah. Good morning, John. So let me clarify so that you understand what I said in my comment. What I said is that the converged rate in the Lumen footprint rose to 45%.

Speaker #5: It wasn't suggesting that the broadband sales rate increased 45%. So, our ability to pair—when we sell a broadband service—to pair it with wireless improved to 45%.

Speaker #5: We're converting market-by-market, and we're pretty much getting to the back end of that now. Once we have the AT&T brand in those markets, then we can go in and really start to put a little more gasoline on the fire and start to drive those volumes up.

Speaker #5: And we're getting to that moment now where you're going to see us begin to lean into it. It's showing up in the numbers. That's part of why you're seeing these really strong results.

Speaker #5: But we have another step up to take here as we move through the year. And that's part of our plan when we talk to you about accelerating performance.

Speaker #5: That we're going to make that happen. And then, of course, the other shoe to drop on that is we've got to get the footprint scaling faster, right?

Speaker #5: You've got to get the construction engine up. And we're doing that work as well. But that's a little bit longer cycle time work. It's something that we need to take well into next year to ramp up to the rate and pace of build that we want.

Speaker #5: And we're systematically moving through that. As I indicated, we have steps to take to get there. What we're effectively doing right now is converting all the infrastructure.

Speaker #5: All the branding, all the support systems that we have with customers, all the methodologies the technicians use when they show up in a house, all the CPE that a customer gets that provides that world-class Wi-Fi that we put in place inside of a home—that makes that high-bandwidth connectivity actually sing.

Speaker #5: And we're seeing progress in that area, but it's like anything that has to do with civil work. It's bumpy in places. And you do a little bit better in one geography and a little slower in another.

Speaker #5: We're converting market by market, and we're pretty much getting to the back end of that now. Once we have the AT&T brand in those markets, then we can go in and really start to put a little more gasoline on the fire and start to drive those volumes up.

Speaker #5: But that's pick and shovel work that we've still got to get through to kind of make the equation all hang together. Monetizing the agentic traffic is the way I think about it is this.

Speaker #5: And we're getting to that moment now where you're going to see us begin to lean into it. It's showing up in the numbers. That's part of why you're seeing these really strong results.

Speaker #5: First of all, the wireless network, you need to build better upstream. And so part of why we did the Spectrum acquisition, we did, and why we leaned into the 600 megahertz, is we believe the best way to manage a robust upstream and an agentic environment is to have really strong low-band position.

Speaker #5: But we have another step up to take here as we move through the year, and that's part of our plan when we talk to you about accelerating performance.

Speaker #5: That we're going to make that happen. And then, of course, the other shoe to drop on that is we've got to get the footprint scaling faster, right?

Speaker #5: And we already have an advantage low-band position in the market. The 600 is going to make that advantage even more substantial. And because you can engineer the spectrum a little bit differently, given how those bands are set up, we intend to try to engineer a really robust upstream network that reaches deep into buildings and has a lot of consistency to it.

Speaker #5: And we're seeing progress in that area, but it's like anything that has to do with civil work—it's bumpy in places, and you do a little bit better in one geography and a little slower in another.

Speaker #5: And we think that's what the low band is going to allow us to do. The other thing that's really important, of course, is to get density in the network and owning fiber footprint allows us to get density.

Speaker #5: Eventually, we get there. We know how to do that. We've got everything in place to do that. We've got all the supply agreements. We're normalizing all the construction agreements and all the things we need but that's pick and shovel work that we've still got to get through to kind of make the equation all hang together.

Speaker #5: So we're now introducing into our network pond-fed small cell infrastructure. Taking advantage of all that pond infrastructure, we put out there using the backhaul on the wireless infrastructure to get more radiating points deeper into the network.

Speaker #5: Monetizing the agentic traffic is the way I think about it is this. First of all, on the wireless network, you need to build better upstream.

Speaker #5: That then allows us to use all the capabilities you've been hearing about for multiple years as to why we did 5G. Why do you do slicing?

Speaker #5: And so part of why we did the Spectrum acquisition we did and why we leaned into the 600 megahertz is we believe the best way to manage a robust upstream and an agentic environment is to have really strong low-band position.

Speaker #5: And why do you have quality of service capabilities that you drive in that are driven towards specific applications? This is what this enables. And so do I believe that just like you do in fixed broadband, where we differentiate and we drive better yields on a higher-performing services, we charge more for a gig, than we do for a 500-meg circuit?

Speaker #5: And we already have an advantageous low-band position in the market. The 600 is going to make that advantage even more substantial. And because you can engineer the spectrum a little bit differently, given how those bands are set up, we intend a robust upstream network that reaches deep into buildings and has a lot of consistency to it.

Speaker #5: You are going to see in wireless differentiations in service, in my view. And whether it's an enterprise that needs to buy a slice, that is specific to a particular application that may need to support, or a customer who has a particular way that they operate and do things in their life, that requires it, I think you're going to see service differentiation.

Speaker #5: And we think that's what the low band is going to allow us to do. The other thing that's really important, of course, is to get density in the network, and owning fiber footprint allows us to get density.

Speaker #5: In my view, is it's managing the performance in the upstream that will be the most critical, that will differentiate that. And the last thing I'd probably share with you in the way to think about it is you hear me say often, I think history repeats itself in this industry.

Speaker #5: So we're now introducing into our network pond-fed small cell infrastructure. Taking advantage of all that pond infrastructure we put out there, using the backhaul on the wireless infrastructure to get more radiating points deeper into the network.

Speaker #5: And there was a long history or segment of history where VPN was really, really important to customers. And why was VPN important? One was security.

Speaker #5: That then allows us to use all the capabilities you've been hearing about for multiple years as to why we did 5G. Why do you do slicing?

Speaker #5: And the other was that it managed performance when there were situations of constricted or not plentiful bandwidth. And those are the two fundamental foundations of what made VPN effective.

Speaker #5: And why do you have quality of service capabilities that you drive in—that are driven towards specific applications? This is what this enables. And so do I believe that, just like you do in fixed broadband, where we differentiate and we drive better yields on higher-performing services, we charge more for a gig than we do for a 500-meg circuit?

Speaker #5: The place in networks where we still see restricted bandwidth is in the wireless business. Fiber basically over-provisions, and you don't have to worry about bandwidth in those circumstances.

Speaker #5: You are going to see, in wireless, differentiations in service, in my view. And whether it's an enterprise that needs to buy a slice that is specific to a particular application that they may need to support, or a customer who has a particular way that they operate and do things in their life that requires it, I think you're going to see service differentiation.

Speaker #5: But we know that based on how wireless networks perform now, and probably for the near future, we're still going to have moments where there's restricted bandwidth or restricted performance.

Speaker #5: And so I do believe the dynamics of VPN and why those engineered and highly managed networks were important for a period of time in the wireline space.

Speaker #5: We'll start to become more prevalent in the wireless space just simply because of bandwidth constraints and the need for higher performance given the kind of applications that are going to be always on and mobile moving forward.

Speaker #5: In my view, it’s managing the performance in the upstream that will be the most critical—that will differentiate that. And the last thing I’d probably share with you in the way to think about it is, you hear me say often, I think history repeats itself in this industry.

Speaker #5: And I think that's where that monetization premium comes in as kind of a corollary to what you've seen in the past.

Speaker #5: And there was a long history or segment of history where VPN was really, really important to customers. And why was VPN important? One was security.

Speaker #1: All right. Thanks for the question, Sean. Operator, we're good in the next one.

Speaker #3: The next question comes from David Barden with New Street Research. Please go ahead.

Speaker #4: Thank you, guys, so much for taking the questions. So two for you, John. Just first, in the preparer mark, you said that you were going to solve for corner cases into 2027 in the fiber to the home business.

Speaker #4: I was interested to know if that meant that M&A is potentially in your future. And then the second is your take on what Brendan Carr's announcement was that the upper C-band will be basically undeployable even though it's going to be auctioned in 2027 until 2031.

Speaker #5: But we know that, based on how wireless networks perform now and probably for the near future, we're still going to have moments where there's restricted bandwidth or restricted performance.

Speaker #5: And so I do believe the dynamics of VPN and why those engineered and highly managed networks were important for a period of time in the wireline space.

Speaker #4: How does that affect your thinking about how you deploy capital in the coming years? Thank you.

Speaker #5: Good morning, Dave. So you know me. I'm always dropping little breadcrumbs about future M&A and everything. That comment was not intended for that. The comment was maybe I wasn't clear enough when I said, "If you think about what we do today for a converged customer, we handle 90-plus percent of the traffic they need to get on and off the internet once we have a converged customer through mobile and our fixed services." And occasionally, they walk off the network.

Speaker #5: And I think that's where that monetization premium comes in, as kind of a corollary to what you've seen in the past.

Speaker #1: All right. Thanks for the questions, John. Operator were good in the next one.

Speaker #3: The next question comes from David Barden with New Street Research. Please go ahead.

Speaker #4: Thank you guys so much for taking the questions. So two for you, John. Just first, in the preparer mark, you said that you were going to solve for corner cases into 2027 in the fiber to the home business.

Speaker #5: They get in their boat, and they maybe go out beyond the coast, or they go to a national park where we don't have coverage.

Speaker #5: And so what I talked about handling the corner cases is those moments where they walk off the network. It's the 2%. It's what something like a satellite constellation would be good for.

Speaker #4: I was interested to know if that meant that M&A is potentially in your future. And then the second is your take on what Brendan Carr's announcement was—that the upper C-band will be basically undeployable, even though it's going to be auctioned in 2027, until 2031.

Speaker #5: And so the work that we're doing through a combination of the JV and all the technical work we've been doing up to this point in time for example, with one of the partners we're working with, AST SpaceMobile, those are all going to come to fruition as we a the product that we've been working on with the AST offering will be a very intuitive product that doesn't require the customer to do anything differently.

Speaker #4: How does that affect your thinking about how you deploy capital in the coming years? Thank you.

Speaker #5: Good morning, Dave. So you know me. I'm always dropping a little breadcrumbs about future M&A and everything. That comment was not intended for that.

Speaker #5: They add their device, and it behaves and operates just like it does today as they're moving around. But if they walk off the network, they're not going to walk off the network.

Speaker #5: We're going to provide them a seamless transition into coverage via satellite on a directed device basis. And so those are the corner cases I was alluding to that by the time we get into next year, we will have solved for that other 2%, and we will be in the market doing what customers want, which is providing them the assurance that they can buy from one provider and always be on the internet.

Speaker #5: The comment was, maybe I wasn't clear enough when I said, "If you think about what we do today for a converged customer, we handle 98-plus percent of the traffic they need to get on and off the internet."

Speaker #5: Once we have a converged customer through mobile and our fixed services, occasionally they walk off the network. They get in their boat and maybe go out beyond the coast, or they go to a national park where we don't have coverage.

Speaker #5: And in that respect, we will be first in the market with that. We will be the best in the foundation of what we provide in fixed broadband.

Speaker #5: And so, when I talked about handling the corner cases, it's those moments where they walk off the network. It's the 2%. It's what something like a satellite constellation would be good for.

Speaker #5: And that's a really strong position to be in, and it's what others have to come and beat. And I think it's going to be unbeatable.

Speaker #5: Relative to the announcement on what Commissioner Carr has said about the C-band auction is that it is a long time out. I think we expected it was going to be a long time out from a planning perspective.

Speaker #5: And so the work that we're doing through the combination of the JV and all the technical work we've been doing up to this point in time—for example, with one of the partners we're working with, AST SpaceMobile—those are all going to come to fruition as we move into next year.

Speaker #5: Certainly, we've worked aggressively on the public policy front to try to get auctions back up and moving. And to this administration's credit, they stepped up and have started to get that pipeline going again.

Speaker #5: And it's going to be a—the product that we've been working on with the AST offering will be a very intuitive product that doesn't require the customer to do anything differently.

Speaker #5: But after four years of inactivity from the previous administration, it's hard to make up for lost time. That is really what precipitated our decision to do the EchoStar transaction.

Speaker #5: They add their device, and it behaves and operates just like it does today as they're moving around. But if they walk off the network, they're not going to walk off the network.

Speaker #5: That allows us to have the spectrum we need to kind of control our destiny for the next several years and feel very comfortable about that.

Speaker #5: We're going to provide them a seamless transition into coverage via satellite on a directed device basis. And so those are the corner cases I was alluding to, that by the time we get into next year, we will have solved for that other 2%, and we will be in the market doing what customers want, which is providing them the assurance that they can buy from one provider and always be on the internet.

Speaker #5: That, in a combination of I'm sure there's going to be some opportunities that pop up in the secondary market that we look at and say, "Look, attractive to us." And then you add that into what I said earlier, which is we have this ability now to go and use the dense fiber infrastructure we put in place to begin to be more targeted in how we augment capacity into the network to where we need it in dense areas.

Speaker #5: And in that respect, we will be first in the market with that. We will be the best in the foundation of what we provide in fixed broadband.

Speaker #5: If you think about how wireless networks have now evolved, where there's a pretty healthy amount of spectrum that's out there on most cell towers.

Speaker #5: And that's a really strong position to be in, and it's what others have to come and beat. And I think it's going to be unbeatable.

Speaker #5: Relative to the announcement on what Commissioner Carr has said about the C-band auction, it is that it is a long time out. I think we expected it was going to be a long time out from a planning perspective.

Speaker #5: We're providing really, really good service. The pockets of where you need better density and more bandwidth are becoming more and more contained. We've built a lot on the interior.

Speaker #5: Certainly, we've worked aggressively on the public policy front to try to get auctions back up and moving. And, to this administration's credit, they stepped up and have started to get that pipeline going again.

Speaker #5: If you go into a stadium, you're not hitting the cell site outside. You're hitting infrastructure that's been deployed in the stadium. Same thing in the hospital.

Speaker #5: Same thing in the high-rise building. So now we're in a situation where you go outside of those locations where when you augment capacity, it's going to be much more targeted.

Speaker #5: But after four years of inactivity from the previous administration, it's hard to make up for lost time. That is really what precipitated our decision to do the EchoStar transaction.

Speaker #5: And you're just fine in the broader macro. And if you look at how a typical cell site works, if there's three sectors on a cell site, oftentimes when you hit exhaust, it's not because all three sectors have exhausted.

Speaker #5: That allows us to have the spectrum we need to kind of control our destiny for the next several years, and we feel very comfortable about that.

Speaker #5: That's in combination with—I'm sure there are going to be some opportunities that pop up in the secondary market that we look at and say, "Look, that's attractive to us." And then you add that to what I said earlier, which is, we now have this ability to go use the dense fiber infrastructure we've put in place to begin to be more targeted in how we augment capacity into the network—putting it where we need it and in dense areas.

Speaker #5: It's because there's one face on that cell site that happens to point toward a densely populated area that has a park that is busy on a Saturday or it's a congregating area.

Speaker #5: And so now, with technology, where you can go in and do this, I don't think that the notion of having to get these really dense national swaths of spectrum and painting it with a paintbrush across the US is the game anymore.

Speaker #5: If you think about how wireless networks have now evolved, there's a pretty healthy amount of spectrum that's out there on most cell towers.

Speaker #5: I think the game is using your infrastructure to penetrate where you need more density and then being very selective at where you go and get that broad paintbrush of additional spectrum to add in.

Speaker #5: We're providing really, really good service. The pockets where you need better density and more bandwidth are becoming more and more contained. We've built a lot on the interior.

Speaker #5: You go into a stadium, you're not hitting the cell site outside. You're hitting infrastructure that's been deployed in the stadium. Same thing in the hospital.

Speaker #5: And so my point of view is we're very well positioned to deal with the pipeline that's coming, the length of time, and being very strategic, surgical, and deliberate about how we add into the spectrum portfolio at this time at the same time leveraging this great infrastructure we put in place which is this dense fiber that we have throughout the network.

Speaker #5: Same thing in the high-rise building. So now we're in a situation where you go outside of those locations, and when you augment capacity, it's going to be much more targeted.

Speaker #5: And you're just fine in the broader macro. And if you look at how a typical cell site works, if there are three sectors on a cell site, oftentimes when you hit exhaust, it's not because all three sectors have exhausted.

Speaker #4: All right. Thanks for the question, Dave. Operator, we'll go to the next one.

Speaker #3: The next question comes from Craig Moffitt with Moffitt Nathanson. Please go ahead.

Speaker #5: It's because there's one face on that cell site that happens to point toward a densely populated area that has a park that is busy on a Saturday, or it's a congregating area.

Speaker #6: Hi. Thank you. Two questions, if I could. First, John, when you talked about the AI usage-led growth and the 7X increase by 2035, how do you think about that with respect to the amount of network capacity available for FWA?

Speaker #5: And so now, with technology where you can go in and do this, I don't think that the notion of having to get these really dense, national swaths of spectrum and painting it with a paintbrush across the U.S. is the game anymore.

Speaker #6: Does the do you reprioritize higher value mobility traffic in that scenario? And then just to return to the issue of satellite for just a second, there's been so much speculation about Starlink potentially competing on the basis of an MVNO.

Speaker #5: And so my point of view is we're very well positioned to deal with the pipeline that's coming, the length of time, and being very strategic, surgical, and deliberate about how we add into the spectrum portfolio at this time, while at the same time leveraging this great infrastructure we put in place—which is this dense fiber that we have throughout the network.

Speaker #6: I wonder if you could just comment on not so much Starlink as an augmentation to your network, but Starlink as a potential competitor. And what do you think that would take, and is there a scenario where you would partner with them with an MVNO agreement?

Speaker #5: Good morning, Craig. So look, on the point of view of fixed wireless access, I think I've been fairly consistent about this, which is I don't consider it to be the optimal technology to serve fixed traffic over the long haul.

Speaker #1: All right. Thanks for the question, Dave. Operator, we'll go to the next one.

Speaker #3: The next question comes from Craig Moffitt with Moffitt Nathanson. Please go ahead.

Speaker #4: Hi. Thank you. Two questions, if I could. First, John, when you talked about the AI usage-led growth and the 7x increase by 2035, how do you think about that with respect to the amount of network capacity available for FWA?

Speaker #5: And I have been pretty clear that that's why we invest in fiber, because that is the optimal technology to use. However, it clearly has its point in use in the market at this juncture and in places.

Speaker #5: And I've been pretty clear about those kind of places where I think it has more staying power and longevity than where it doesn't. I've used examples like there's a whole bunch of businesses that we support where fixed wireless access is an excellent technology for them in the nature of their business and will be for years to come.

Speaker #4: Do you reprioritize higher-value mobility traffic in that scenario? And then, just to return to the issue of satellite for just a second, there's been so much speculation about Starlink potentially competing on the basis of an MVNO.

Speaker #5: Given the nature of how they do things and their they tend to be more mobile-dominated businesses with maybe a fixed location to construction yard with a bunch of people that are out every day at sites.

Speaker #4: I wonder if you could just comment not so much on Starlink as an augmentation to your network, but rather Starlink as a potential competitor. And what do you think that would take?

Speaker #5: The yard needs some support, but it doesn't need gigs and gigs of services. And those things tend to move around, and they like the flexibility associated with it.

Speaker #4: And is there a scenario where you would partner with them under an MVNO agreement?

Speaker #5: Good morning, Craig. So, look, on the point of view of fixed wireless access, I think I’ve been fairly consistent about this, which is I don’t consider it to be the optimal technology to serve fixed traffic over the long haul.

Speaker #5: So my point of view is it's a really important tool in the portfolio. But would, to your point, do you always want to be prioritizing your scarce spectrum resources that I just talked about in the answer to the previous question with John to use it for mobility?

Speaker #5: And I have been pretty clear that that's why we invest in fiber, because that is the optimal technology to use. However, it clearly has its point of use in the market at this juncture and in some places.

Speaker #5: The answer is yes. And I never want to compromise buying the next opportunity for a mobile service at the expense of serving Netflix in a fixed location.

Speaker #5: And I've been pretty clear about those kind of places where I think it has more staying power and longevity than where it doesn't. I've used examples like, there's a whole bunch of businesses that we support where fixed wireless access is an excellent technology for them and the nature of their business, and it will be for years to come.

Speaker #5: There's a way to maybe characterize it. And I think our strategy is matched to that. I don't have a problem with using fixed wireless access to test markets and do things like shut down fixed infrastructure that's old and tired and needs to be retired.

Speaker #5: And we're using it extensively in copper. I don't have a problem using it to seed where we can go and build some presence in a market that then indicates we should come and overbuild it with fiber, and we already start with warm revenues in place to do that.

Speaker #5: Given the nature of how they do things, they tend to be more mobile-dominated businesses, with maybe a fixed location, like a construction yard, and a bunch of people that are out every day at sites.

Speaker #5: The yard needs some support, but it doesn't need gigs and gigs of services. And those things tend to move around, and they like the flexibility associated with it.

Speaker #5: And I think we'll do that probably more effectively than anybody else moving forward. But I'm never going to sit here and tell you that the way I want to serve fixed traffic is by buying more spectrum and build more wireless infrastructure is the primary means to do that.

Speaker #5: So, my point of view is it's a really important tool in the portfolio. But to your point, you always want to be prioritizing your scarce spectrum resources, that I just talked about in the answer to the previous question with John, to use them for mobility.

Speaker #5: Speaking more broadly about satellite and satellite's competition on a directed device, I tried to be pretty deliberate in my comments. We sit here today with everything we need to put the best product in the market.

Speaker #5: The answer is yes. And I never want to compromise buying the next opportunity for a mobile service at the expense of serving Netflix in a fixed location.

Speaker #5: I'm not betting on the next turn of a chip. I don't need any fantastic developments and technology in any way, shape, or form to do what I need to do.

Speaker #5: I mean, it's not rocket science for what we need to do to be successful in the market. And so we're doing that today, and I think we can build the best converged product today.

Speaker #5: And we can be in the market and be effective and penetrate today. And when we think about a wholesale arrangement, as I've said before, the motivation for a wholesale arrangement is always to get it a part of the market that you can't get at yourself.

Speaker #5: I don't have a problem using it to seed where we can go and build some presence in a market that then indicates we should come and overbuild it with fiber, and we already start with warm revenues in place to do that.

Speaker #5: And what I just described to you and all the things we're doing in recalibrating our plans, how we're tuning distribution, the success we're having in adding accounts, would suggest to me that for customers that want to buy wireless and broadband fixed broadband together, we're doing just fine in reaching those markets.

Speaker #5: We understand how to do that. We have the technology to do it. We have the distribution to do it. Those have been built up over years.

Speaker #5: We have the infrastructure in place to put a really robust product in front of them. That had been built up over years. And we can do that just fine on our own.

Speaker #5: And I don't necessarily need a wholesale arrangement to go and address that 2% of the traffic that I can't get at today. Because I can get it in 98% of the traffic.

Speaker #5: I'm not betting on the next turn of a chip. I don't need any fantastic developments in technology, in any way, shape, or form, to do what I need to do.

Speaker #5: I'm solving for a much smaller equation. If that number was inverse, maybe I would think differently about it. So I'm not prone to look for a wholesale agreement to go solve a problem I don't have.

Speaker #5: I mean, it's not rocket science for what we need to do to be successful in the market. And so we're doing that today. And I think we can build the best converged product today.

Speaker #5: I am prone to look for a partnership to solve the 2%.

Speaker #5: And we can be in the market and be effective and penetrate today. And when we think about a wholesale arrangement, as I've said before, the motivation for a wholesale arrangement is always to get in a part of the market that you can't get at yourself.

Speaker #2: Thanks for the questions, Craig. Operator, we'll go to the next one.

Speaker #3: The next question comes from Michael Rollins, with Citi. Please go ahead.

Speaker #4: Thanks. And good morning. First, I was curious if you could talk a little bit more about customer behavior. If you look at the decline in churn, the lower upgrade rates, are you seeing the almost the opposite of last year, where customers were replacing devices in the category more quickly, now they may be slowing down?

Speaker #5: And what I just described to you and all the things we're doing in how we're tuning distribution, the success we're having in adding accounts, suggest to me that for customers that want to buy wireless and broadband fixed broadband together, we're doing just fine in reaching those markets.

Speaker #5: We understand how to do that. We have the technology to do it. We have the distribution to do it. Those have been built up over years.

Speaker #4: And is that something that can further press down the churn rate for you? And then second to that, with device prices, potentially going higher for a variety of reasons, how does that influence your approach to subsidies?

Speaker #5: We have the infrastructure in place to put a really robust product in front of them. That has been built up over years, and we can do that just fine on our own.

Speaker #5: And I don't necessarily need a wholesale arrangement to go and address that 2% of the traffic that I can't get at today, because I can get at 98% of the traffic.

Speaker #4: And if that cost to the end customer goes up, does that also help slow this rate of device replacement, help your churn in the process?

Speaker #4: And then just one more separately on capital, allocation. Just curious as you've identified, for example, in this quarter, some additional financial flexibility that the choice was to add to the repurchase target for this year.

Speaker #5: I am prone to look for a partnership to solve the 2%.

Speaker #4: By about 2 billion. Just curious more broadly, if you could discuss if you're able to create more flexibility in the future to pull forward cash available, how you think about buybacks versus debt reduction versus accelerating fiber builds and pressing your advantage with convergence.

Speaker #2: Thanks for the questions, Craig. Operator, we'll go to the next one.

Speaker #3: The next question comes from Michael Rowlands with Citi. Please go ahead.

Speaker #6: Thanks, and good morning. First, I was curious if you could talk a little bit more about customer behavior. If you look at the decline in churn, the lower upgrade rates, are you seeing almost the opposite of last year, where customers were replacing devices in the category more quickly?

Speaker #4: Thanks.

Speaker #5: Hi, Michael. So I think the customer behavior issue on churn is not a single thing. Obviously, we've been wanting to ensure that we can improve our churn performance.

Speaker #6: Now, they may be slowing down. Is that something that can further press down the churn rate for you? And then, second to that, with device prices potentially going higher for a variety of reasons, how does that influence your approach to subsidies?

Speaker #5: You know how important it is to the business from a cost-effective perspective. And you see what it does when we can keep it in check.

Speaker #5: You get margin performance like what you saw this quarter. Which we all aspire to have happen consistently. I think we've been able to achieve that through a combination of things.

Speaker #6: And if that cost to the end customer goes up, does that also help slow this rate of device replacement, help your churn in the process?

Speaker #5: One is data to help us understand the base a little bit better. We've been treating really important cohorts that have helped. I think there is a little bit of suppression right now.

Speaker #6: And then just one more separately on capital allocation. Just curious, as you've identified, for example, in this quarter, some additional financial flexibility that the choice was to add to the repurchase target for this year.

Speaker #5: And device switching that helps. I think that we've done a better job on convergence and bringing people on both products. That helps. And when you kind of go in and look at it, it's a it's always a complex story on churn.

Speaker #6: By about $2 billion. Just curious, more broadly, if you could discuss if you're able to create more flexibility in the future to pull forward cash available—how you think about buybacks versus debt reduction versus accelerating fiber builds and pressing your advantage with convergence.

Speaker #5: It's never like, "Oh, we did this one thing and it worked out." It literally is cohort by cohort, product group by product group. You have to go and look at standalone wireless versus standalone broadband converged customers.

Speaker #6: Thanks.

Speaker #5: Hi, Michael. So I think the customer behavior issue on churn is not a single thing. Obviously, we've been wanting to ensure that we can improve our churn performance.

Speaker #5: Geographic dynamics. So it's always a contribution of those things. But I will tell you, if there's less device upgrading going on, does that ultimately oftentimes help on churn?

Speaker #5: You know how important it is to the business from a cost-effective perspective. And you see what it does when we can keep it in check.

Speaker #5: Yes, it does. And it's a contributing dynamic around it. Getting to your second question, I would expect that device costs are going to go up.

Speaker #5: You get margin performance like what you saw this quarter, which we all aspired to have happen consistently. I think we've been able to achieve that through a combination of things.

Speaker #5: I mean, I don't think it's a mystery to anybody. Apple's certainly indicated that that's a direction they're going. We know that memory costs are going up.

Speaker #5: One is data to help us understand the base a little bit better. We've been treating really important cohorts that have helped. I think there is a little bit of suppression right now.

Speaker #5: I would expect when costs go up, prices go up. And when prices go up, demand goes down. I think that's what happens in economics.

Speaker #5: And normally functioning markets. And it would be my expectation that if costs are going up, prices are going to go up. And demand will probably be suppressed in some way, shape, or form.

Speaker #5: And that is what I would expect to see moving forward. And certainly, probably my expectations and how we run the business moving forward. On your question on capital allocation, look, this is a decision for the board.

Speaker #5: It's not my decision to make exclusively. It's in in a nonstop level. And certainly, the events of the last couple of months have flavored those discussions differently than they might have been a year ago.

Speaker #5: So it's always a contribution of those things. But I will tell you, if there's less device upgrading going on, does that ultimately, oftentimes, help on churn?

Speaker #5: Yes, it does. And it's a contributing dynamic around it. Getting to your second question, I would expect that device costs are going to go up.

Speaker #5: I would tell you, sitting here today, with what I view as being a very suppressed valuation on the stock, I probably have a bias that says I'd like to buy more of it back.

Speaker #5: I mean, I don't think it's a mystery to anybody. Apple's certainly indicated that that's a direction they're going. We know that memory costs are going up.

Speaker #5: Because I think it's incredibly undervalued. Now, what does it look like three months from now? Or how do we calibrate that over the next two or three years?

Speaker #5: I would expect when costs go up, prices go up. And when prices go up, demand goes down. I think that's what happens in economics.

Speaker #5: The board will ultimately make that decision. You can tell what our short-term decision was. The bring some of our buyback forward as a result of this circumstance.

Speaker #5: And normally functioning markets. And it would be my expectation that if costs are going up, prices are going to go up and demand will probably be suppressed in some way, shape, or form.

Speaker #5: As the board reconsiders their authorization that they've already communicated and put out there, we'll refine that moving forward. And it will obviously be an artifact and a reflection of kind of where the stock is currently valued and what's going on.

Speaker #5: And that is what I would expect to see moving forward, and certainly, probably my expectations in how we run the business moving forward. On your question on capital allocation—look, this is a decision for the board.

Speaker #5: I feel like the balance sheet's in a good place. We have a lot of flexibility. To do a variety of things. And can cut it either way.

Speaker #5: But we just got to kind of see how things develop over the next couple of months. The markets it's a little bit different right now.

Speaker #5: It's not my decision to make exclusively. It's something this board is actively engaged in on a nonstop basis. And certainly, the events of the last couple of months have flavored those discussions differently than they might have been a year ago.

Speaker #5: And we're all looking at it, trying to understand it. And we're taking a little bit of time to see how some things settle in.

Speaker #5: And this board will be deliberate. They'll spend some time in September. Their September meeting on this topic. And when we have news to give you, we'll give you some more news.

Speaker #5: I would tell you, sitting here today, with what I view as being a very suppressed valuation on the stock, I probably have a bias that says I'd like to buy more of it back because I think it's incredibly undervalued.

Speaker #1: All right. Thanks for the questions, Mike. Operator, go to the next one.

Speaker #4: The next question comes from Sam McCue with BNP. Please go ahead.

Speaker #5: Now, what does it look like three months from now or how do we calibrate that over the next two or three years? The board will ultimately make that decision.

Speaker #6: Yeah. Morning, everyone. Revenue growth in advanced home internet is still running below that 30% target you had at the year. But while this is doing quite a bit better, has your view changed on how you deliver revenue growth this year between wireless and fiber?

Speaker #5: You can tell what our short-term decision was—to bring some of our buyback forward as a result of this circumstance. As the board reconsiders their authorization that they've already communicated and put out there, we'll refine that moving forward.

Speaker #6: And then Pascal, you talked about flattish underlying fiber after this quarter. Implying close to a 250-bit deceleration from 1Q. Your how should we think about that underlying fiber after for the rest of this year?

Speaker #5: And it will obviously be an artifact and a reflection of where the stock is currently valued and what's going on. I feel like the balance sheet's in a good place.

Speaker #6: Thanks.

Speaker #5: Yeah. Sam, I'll start. And then Pascal can come in. And I think I get what you're driving at. You're referring to kind of the broadband revenue growth.

Speaker #5: We have a lot of flexibility to do a variety of things, and can cut it either way. But we just have to kind of see how things develop over the next couple of months.

Speaker #5: Look, our point of view on this is, as I said, is our goal is that we want to drive growth in service revenues. And we want to drive growth in share of service revenues.

Speaker #5: The market is a little bit different right now, and we're all looking at it, trying to understand it. We're taking a little bit of time to see how some things settle in.

Speaker #5: And in a converged world, there's a lot that depends on whether or not the customer starts as a customer of a wireless that ultimately adds broadband.

Speaker #5: And this board will be deliberate. They'll spend some time in September. Their September meeting on this topic. And when we have news to give you, we'll give you some more news.

Speaker #5: But they start as broadband and add wireless. And based on that, sometimes the incentive to get somebody into a combined relationship shifts from one product to the other.

Speaker #1: All right. Thanks for the questions, Mike. Operator, we'll go to the next one.

Speaker #6: The next question comes from Sam McHugh with BNP. Please go ahead.

Speaker #5: And I don't want my team hamstrung in how they think about that. I want the converged relationship. And if it means that on a percentage basis, that we need to use broadband as the lead to consolidate an account.

Speaker #7: Yeah. Morning, everyone. Revenue growth in advanced home internet is still running below that 30% target you had at the year. But wireless is doing quite a bit better. Has your view changed on how you deliver revenue growth this year between wireless and fiber?

Speaker #5: And we take a little bit of a revenue hit to do that. And then over time, we gain that back. And it sustains a really accretive relationship.

Speaker #7: And then, Pascal, you talked about flattish underlying fiber after this quarter, implying close to a 250-basis-point deceleration from Q1. How should we think about that underlying fiber after—for the rest of this year?

Speaker #5: And wireless, I'm perfectly okay with that. Because the net result of that are the kind of results that you see this quarter. Really strong margin performance.

Speaker #7: Thanks.

Speaker #5: Yeah. Sam, I'll start. And then I get what you're driving at and you're referring to kind of the broadband revenue growth. Look, our point of view on this is, as I said, is our goal is that we want to drive growth in service revenues.

Speaker #5: Churn heading the right way. And growth accelerating. And so I get less concerned about the discrete dynamics of a single product. I pay more attention to average account revenue growth.

Speaker #5: I pay more attention to whether or not we can manage the base effectively through the continuum. And I gave you some data points at the beginning of the call to show you that this is a very capable team that understands how to manage that life cycle.

Speaker #5: And we want to drive growth in share of service revenues. And in a converged world, there's a lot that depends on whether or not the customer starts as a wireless customer that ultimately adds broadband.

Speaker #5: And I have every degree of confidence that in the coming years, we're going to take advantage of that if we run our play effectively to drive those converged numbers up.

Speaker #5: But they start as broadband and add wireless. And based on that, sometimes the incentive to get somebody into a combined relationship shifts from one product to the other.

Speaker #5: Pascal?

Speaker #6: Yeah. Sam, the only couple of points I would add. First, overall, we reiterated our guidance for advanced connectivity service revenue to be 5% plus.

Speaker #5: And I don't want my team hamstrung in how they think about that. I want the converged relationship, and if it means that, on a percentage basis, we need to use broadband as the lead to consolidate an account, and we take a little bit of a revenue hit to do that, that's fine.

Speaker #6: And that underscores our confidence that on a combined basis, we're going to be able to deliver the service revenues that we thought. We feel really good about how we were pacing today.

Speaker #5: And then, over time, we gain that back. And it sustains a really accretive relationship. In wireless, I'm perfectly okay with that because the net result of that are the kind of results that you see this quarter.

Speaker #6: I have no concern. We do trade off between products. And is it possible that you're going to see broadband come in a little less than we guided?

Speaker #5: Really strong margin performance, churn heading the right way, and growth accelerating. So, I get less concerned about the discrete dynamics of a single product and pay more attention to average account revenue growth.

Speaker #6: The broadband guide is a little less. And wireless a little more? Yes. But on balance, we're still really happy with the performance and that's why we reiterated all of our full-year guidance.

Speaker #6: The other point I think is, shouldn't be lost in all this, is in addition to our consumer business, our enterprise business is really performing well.

Speaker #6: We delivered 1.8% service revenue growth on really strong fiber and fixed wireless growth. So there are a lot of things working well. And our goal is to really try to optimize all of them.

Speaker #5: And I have every degree of confidence that in the coming years, we're going to take advantage of that if we run our play effectively to drive those converged numbers up.

Speaker #5: Pascal?

Speaker #7: Yeah, Sam, the only couple of points I would add. First, overall, we reiterated our guidance for advanced connectivity service revenue to be 5% plus.

Speaker #6: And I think the team is doing a great job at that.

Speaker #1: All right. Thanks for the questions. Operator, we're going to take our last question now.

Speaker #4: The last question today comes from Peter Supino with Wolf Research. Please go ahead.

Speaker #7: And that underscores our confidence that, on a combined basis, we're going to be able to deliver the service revenues that we thought. And we, in fact, would feel really good about how we are pacing today.

Speaker #6: Good morning. I want to ask another question on churn. Starting at the industry level, churn seems to be settling down both for you as you forecast at the beginning of the year, and also seemingly for the industry after accelerating in 2025.

Speaker #7: I have no concerns. We do trade off between products. And is it possible that you're going to see broadband come in a little less than we guided?

Speaker #6: And I wondered if you'd just share your perspective on what happened last year, what's happening this year, and maybe put that in context of what you're seeing in terms of consumer sensitivity to price increases like the one that you executed in April.

Speaker #7: The broadband guides a little less, and wireless a little more? Yes. But on balance, we're still really happy with the performance, and that's why we reiterated all of our full-year guidance.

Speaker #7: The other point I think shouldn’t be lost in all this is, in addition to our consumer business, our enterprise business is really performing well.

Speaker #6: Thanks.

Speaker #5: Yeah. Yeah, Peter. So things obviously stepped up a bit. On the promotion side, from last year to kind of moving into this year, and as you've heard me say before, I'm not sure that was all unexpected when LTVs are improving.

Speaker #7: We delivered 1.8% service revenue growth, driven by really strong fiber and fixed wireless growth. So there are a lot of things working well, and our goal is to really try to optimize all of them.

Speaker #7: And I think the team is doing a great job at that.

Speaker #5: It's likely that there's going to be a little bit more activity put in place to promote and try to attract customers. And I think we saw the general per account, per customer economics improving in the industry.

Speaker #1: All right. Thanks for the questions. Operator, we're going to take our last question now.

Speaker #6: The last question today comes from Peter Supino with Wolfe Research. Please go ahead.

Speaker #5: And as a result of that, there was a willingness to invest a little bit more to bring customers in. And that's the pattern we saw last year.

Speaker #7: Good morning. I want to ask another question on churn. Starting at the industry level, churn seems to be settling down both for you, as you forecasted at the beginning of the year, and also seemingly for the industry after accelerating in 2025.

Speaker #5: The fact that it's now hit a different level and maybe it's stabilized a bit, doesn't surprise me. Because I think people rationally look at it and say, do I want to take it the next step up if I'm not seeing fundamental shifts in LTV?

Speaker #7: And I wondered if you'd just share your perspective on what happened last year, what's happening this year, and maybe put that in the context of what you're seeing in terms of consumer sensitivity to price increases like the one that you executed in April.

Speaker #5: And the answer from an economic perspective would be, of course, I'm going to be a little bit more deliberate about that. I can speak for our game.

Speaker #5: And it really didn't change last year to this year, which is we spent a lot of time focusing on getting converged customers. We want people paired with our best products and services.

Speaker #7: Thanks.

Speaker #5: Yeah, yeah, Peter. So things obviously stepped up a bit on the promotion side from last year to kind of moving into this year, and as you've heard me say before, I'm not sure that was all unexpected when LTVs are improving.

Speaker #5: And that in particular, those are accretive and effective customers to chase. And we're getting a lot better at doing that. And we're opening more footprint where we can do that.

Speaker #5: And so we've been directing a lot of our promotional activity we've been directing a lot of our retention activity in a way that plays into our strengths in that regard.

Speaker #5: It's likely that there's going to be a little bit more activity put in place to promote and try to attract customers. And I think we saw the general per-account, per-customer economics improving in the industry.

Speaker #5: And I think that's why you're seeing the strong margin performance you're seeing. We're able to keep our costs in check at the same time, managing good customer volumes, and getting the kind of metric performance on convergence that you're seeing moving forward.

Speaker #5: And as a result of that, there was a willingness to invest a little bit more to bring customers in. And that's the pattern we saw last year.

Speaker #5: The fact that it's now hit a different level and maybe it's stabilized a bit doesn't surprise me, because I think people rationally look at it and say, do I want to take it the next step up if I'm not seeing fundamental shifts in LTV?

Speaker #5: The team is executed well. And making those things happen. So I think that's how it works for us. That's the game I want to play.

Speaker #5: I can't speak to others some aren't I think reporting churn anymore in the same way. So it's sometimes hard to understand exactly what's going on.

Speaker #5: And the answer from an economic perspective would be, of course, I'm going to be a little bit more deliberate about that. I can speak for our game.

Speaker #5: But I can tell you this is what's working for us. And I feel pretty comfortable that play has some durability and sustainability. And why we're engineering ourselves to do that.

Speaker #5: And it really didn't change last year to this year, which is, we spent a lot of time focusing on getting converged customers. We want people paired with our best products and services.

Speaker #5: And I think we're going to see the balance of the year look very much the same to what you saw right now.

Speaker #5: And in particular, those are accretive and effective customers to chase. We're getting a lot better at doing that, and we're opening more footprint where we can do that.

Speaker #1: All right. Thanks for the questions. Appreciate it, Peter. Operator, you can go ahead and close out the call.

Speaker #5: And so, we've been directing a lot of our promotional activity and we've been directing a lot of our retention activity in a way that plays into our strengths in that regard.

Speaker #5: And I think that's why you're seeing the strong margin performance you're seeing, where we're able to keep our costs in check while at the same time managing good customer volumes and getting the kind of metric performance on convergence that you're seeing moving forward.

Speaker #5: The team is executing well and making those things happen. So I think that's how it works for us. That's the game I want to play.

Speaker #5: I can't speak to others. Some are, I think, not reporting churn anymore in the same way, so it's sometimes hard to understand exactly what's going on.

Speaker #5: But I can tell you this is what's working for us, and I feel pretty comfortable that play has some durability and sustainability, and why we're engineering ourselves to do that.

Speaker #5: And I think we're going to see the balance of the year look very much the same as what you saw right now.

Speaker #1: All right. Thanks for the question. Appreciate it, Peter. Operator, you can go ahead and close out the call.

Q2 2026 AT&T Inc Earnings Call

Request DemoDemo

AT&T

Earnings