The paragraph introduces AT&T's Third Quarter 2024 Earnings Call, led by Brett Feldman, the Senior Vice President of Finance and Investor Relations. The call includes CEO John Stankey and CFO Pascal Desroches, with a focus on discussing the company's quarterly performance and financial strategies. It begins with instructions and a safe harbor statement regarding forward-looking comments. John Stankey highlights that AT&T continues to achieve solid results, growing wireless and broadband subscribers. The strategy emphasizes leading the industry in 5G and fiber connectivity, focusing on customer-centric services that drive sustainable success. Stankey also mentions that detailed financial discussions will follow, led by Pascal Desroches.

The paragraph highlights the company's strong performance in the Mobility segment, reporting a significant increase in 5G subscribers and a 6% growth in EBITDA, positioning it well for the fourth quarter. The company anticipates increased phone purchases and upgrades while maintaining low churn rates. In the Consumer Wireline segment, the company achieved positive broadband subscriber growth for the fifth consecutive quarter despite challenges from a work stoppage and Hurricane Helene. The company acknowledged the dedication of its frontline workers during these events, reached new labor agreements, and offered annual wage increases averaging 3.6% to maintain its status as a leading unionized wireless and broadband provider in the U.S.

The paragraph highlights the company's efforts during Hurricane Helene, emphasizing the quick response and dedication of frontline employees in maintaining communication for communities and first responders. It underscores the role of FirstNet, a specialized platform for public safety, which responded to over 200 requests during the recovery and serves more than 29,000 public safety agencies. The FCC's decision to allocate spectrum for FirstNet's 5G deployment is praised. Additionally, the paragraph notes strong customer demand for AT&T Fiber, with over 200,000 net additions for 19 consecutive quarters despite a recent work stoppage in the Southeast. This success is reflected in Consumer Wireline's over 8% EBITDA growth, driven by a 17% increase in fiber revenues, demonstrating the benefits of their fiber investments and 5G momentum.

The paragraph discusses AT&T's strategy of integrating its 5G and fiber businesses to offer converged mobility and broadband services, which is proving successful as customers prefer this combined service. AT&T benefits from owning both networks, experiencing higher customer retention and share in areas with its fiber presence. The company is also expanding its fiber reach through ventures like Gigapower and agreements with open access providers, aiming to bring high-speed Internet to more people. This expansion and convergence strategy is expected to yield higher returns and strengthen AT&T's brand as the largest fiber provider in the U.S.

Since 2019, the company has been reducing net debt and increasing operating leverage through higher EBITDA and strong free cash flow. They aim to achieve a net debt to adjusted EBITDA ratio of 2.5 times by the first half of next year. Recently, they announced the sale of their remaining 70% stake in DIRECTV to TPG, pending customary closing conditions. This move aligns with their focus on leading in 5G and fiber connectivity, improving financial flexibility, and exploring new opportunities. The company is confident in its transformation for continued growth and enhancing shareholder returns. Details will be shared at the Analyst and Investor Day on December 3rd.

The paragraph outlines the company's financial performance, highlighting a slight decline in revenues due to reduced Business Wireline and mobility equipment revenues, although growth in wireless and fiber revenues helped offset this. Year-over-year revenue trends were negatively affected by over $100 million in foreign exchange impacts and a $100 million effect from a joint venture move involving their cybersecurity business. Adjusted EBITDA increased by 3.4% for the quarter, driven by Mobility, Consumer Wireline, and Mexico sectors, despite declines in Business Wireline. The company predicts continued EBITDA growth of around 3% for the full year, managing challenges like hurricanes and a work stoppage, mostly affecting Consumer and Business Wireline. Adjusted EPS was $0.60, slightly down from last year, largely due to various headwinds and a notable goodwill impairment charge. For the full year, adjusted EPS is expected to range between $2.15 and $2.25. Free cash flow increased by $2.4 billion to $12.8 billion, aligning with the company's goal for more consistent quarterly cash flow growth.

In the third quarter, the company generated $5.1 billion in free cash flow, including a $480 million one-time payment for wireless network transformation and continued reduction of vendor financing obligations. Capital investment for the quarter was $5.5 billion, while capital expenditures were $5.3 billion. They plan to increase capital investment in the fourth quarter for network modernization and use improved liquidity to reduce short-term financing. The company is on track to meet their annual capital investment guidance and expects free cash flow to be in the middle of their $17 billion to $18 billion range. In terms of mobility operating results, the company added 403,000 postpaid phone subscribers, slightly down from last year, with a marginal improvement in churn rate to 0.8%. Mobility service revenue grew by 4%, supported by strong market strategy execution and a $90 million one-time revenue benefit. Postpaid phone ARPU increased by 1.9%, while equipment revenue declined with a lower upgrade rate.

AT&T's Cricket brand in the prepaid segment has maintained positive phone net additions for 40 consecutive quarters. The company expects Mobility service revenue growth of around 3% for the year, with a 6.7% increase in Mobility EBITDA to $9.5 billion year-over-year, indicating strong performance and anticipated growth in the high mid-single-digit range for the full year. Promotional activity is expected to increase in the fourth quarter due to seasonal trends. In Consumer Wireline, AT&T Fiber is driving growth, with the addition of 28,000 broadband subscribers, including 226,000 fiber net adds. Despite setbacks from work stoppages and storms, the company is on track to expand fiber coverage to over 30 million locations by 2025 and may exceed this with an additional 10 to 15 million locations. Further details on fiber expansion will be shared on December 3. Additionally, AT&T is successfully transitioning customers from legacy copper-based internet to AT&T Internet Air.

In the third quarter, AT&T reported nearly 500,000 total AT&T Internet Air subscribers, including 135,000 new additions. Broadband revenues increased by 6.4%, driven by a 17% growth in fiber revenues, with full-year growth expected at over 7%. The average revenue per user (ARPU) for fiber rose to $70.36, influenced by higher speeds and Autopay changes, which are seen as beneficial in the long term. Consumer Wireline EBITDA rose by 8.6%, credited to increased broadband revenues and cost transformations, with an expected yearly growth in the mid to high-single digits. Conversely, Business Wireline EBITDA decreased by 20% due to declines in legacy voice services and a challenging comparison with last year's third quarter, which included $100 million in IP sales not repeated this year. Business Wireline performance is slightly below earlier projections due to lower revenues and other factors like work stoppages and storms, with expected full-year EBITDA declines in the high-teens.

The paragraph highlights the financial strategies and performance of a company in managing its debt and investment. Despite expected short-term declines in legacy voice revenues, growth opportunities are identified in 5G and wireless products, including FirstNet. The company continues to balance growth and investment, reducing net debt and deleveraging effectively. They achieved a $1.1 billion reduction in net debt for the quarter, despite a $1.3 billion foreign exchange headwind, and have reduced net debt by $2.9 billion year-over-year while lowering vendor financing. The goal is to reach a net debt to adjusted EBITDA ratio of 2.5 times by the first half of 2025. Most long-term debt is fixed at an average rate of 4.2%. Additionally, they minimized supplier financing obligations significantly. The third-quarter impact from securitization was a $400 million cash source, resulting in a net $1.3 billion cash use.

In the fourth quarter, the company anticipates a sequential increase in direct supplier financing balances due to typical seasonality, but aims to reduce its overall net balance of direct supply and vendor financing on a year-over-year basis, which should decrease interest expenses and improve cash flow quality over time. They reported $600 million in pre-tax DIRECTV distributions for the quarter and expect $1.1 billion in pre-tax cash payments in the fourth quarter as part of the divestment of their 70% stake in DIRECTV. Cash taxes were $600 million in the third quarter, with an expectation of paying about $1.6 billion in the fourth quarter. The team is on track to meet full-year 2024 financial guidance. The Q&A session begins, with Simon Flannery from Morgan Stanley asking about expected phone purchasing trends in the fourth quarter, particularly regarding Apple and concerns about a bigger iPhone cycle. John Stankey responds, noting he doesn't have more specific projections for Apple phone sales than previously given.

The paragraph discusses the anticipation and potential impact of a forthcoming software release on consumer interest and sales. It suggests that consumer interest may gradually increase rather than see immediate, dramatic growth, as software improvements often require time and iteration to become significant. The speaker highlights the company's flexibility to adapt to market changes, especially as the fourth quarter is expected to be active due to the holiday season and device capabilities. The paragraph concludes by noting a realistic and pragmatic industry approach in recent weeks and mentions emerging positive signs in the business wireline sector.

The paragraph discusses the company's strategic shift from focusing on legacy products to becoming a connectivity-based business. While there's some decline in legacy revenue, the new product and service portfolio is gaining momentum, albeit slower than desired. The company is confident that moving towards this new direction is beneficial and will generate long-term value. Despite challenges and uncertainties, the author is reassured about this transition and hints at future detailed discussions about it. The success in the consumer market as a converged provider is seen as a positive indicator for the business market transition. The paragraph also notes that the separate reporting of Business Wireline doesn't fully represent the company's performance in the broader business market.

The paragraph discusses the shift from wireline to wireless services in the business sector, highlighting solid growth driven by this transition. The speaker expresses confidence in the evolving product portfolio and the company's ability to adapt effectively. During a Q&A, John Hodulik from UBS asks about the out-of-region fiber opportunity, partner selection criteria, potential for additional partners, the size of the opportunity including Gigapower, and churn benefits from bundled services. John Stankey responds, emphasizing the importance of having a strong partner dynamic and mentioning that more details will be provided in an upcoming event in December.

The paragraph discusses a strategy involving a Gigapower offer and the potential operation of an open access network in some areas. It emphasizes working with partners to offer a consistent product model without necessarily funding infrastructure. The approach includes leveraging distribution strength, OSS/BSS back-office support, and in-home technology evolution, which can attract investment for long-term, mutually beneficial partnerships. The text recognizes that such partnerships and open access arrangements may broaden brand reach and service capabilities across the population over time.

The paragraph discusses AT&T's strategic outlook and market positioning for the next decade, highlighting optimism about the growth potential in their target market. The speaker notes that initial performance metrics, such as customer acquisition and average revenue per user (ARPU), are positive and comparable to established regions, despite initial expectations of slower penetration due to brand unfamiliarity. They emphasize that the restructuring of the industry is a long-term process and express a cautious optimism about the future, while acknowledging that it's too early to confirm certain trends, like wireless share and churn dynamics, due to the relatively short time in these new markets.

The paragraph features a discussion among company executives about their strategy for consumer broadband and capital allocation. John Hodulik and Brett Feldman lead the conversation, with Peter Supino from Wolf Research asking questions about AT&T's approach to Internet Air and potential M&A opportunities. Supino questions the growth stabilization of Internet Air despite regional expansions and inquires about possible synergies between HFC assets and AT&T's fiber strategy. In response, John Stankey, likely an AT&T executive, expresses satisfaction with their strategic use of Internet Air, mentioning that they're focusing on business customers and leveraging growth in other areas such as handsets, rather than aiming to match competitors' volume.

The paragraph discusses a strategic approach to expanding distribution in the mid-business market and leveraging existing spectrum and infrastructure, such as migrating customers from copper to fiber-optic networks. The speaker acknowledges the slow but steady progression toward fiber being the primary infrastructure for customers, a trend that began in the 1980s and is nearing its final stages. Although the company's growth rate in this area won't match its competitors, the internal projections are on track, and the infrastructure investments, such as in HFC, have yielded good returns. The overall emphasis is on transitioning to more efficient, future-proof technologies.

The paragraph discusses a strategic decision regarding technology investment, arguing against a premature shift to fiber when the existing HFC technology and business model still offer strong potential and profitability. The speaker emphasizes prioritizing capital allocation towards leveraging the current business model, which is viewed as robust with long-term value and consistent returns. Simplifying operations and expanding the business footprint through partnerships are highlighted as key strategies. The speaker expresses confidence in the growth potential and structure of the current market. After concluding his thoughts, the conversation transitions to taking questions from the audience.

In the paragraph, John Stankey discusses AT&T's strategy for building out its fiber network. He highlights a focus on using owned and operated assets to attract the best customers and maximize revenue from new products and services, rather than just maintaining a walled garden approach for AT&T's sole benefit. Stankey suggests that the industry will evolve with more differentiation in converged offerings over the next decade. He also mentions that AT&T may consider becoming an open access provider, allowing them to participate in markets they don't directly access, similar to historical wholesale practices in the wireless business. Additionally, there is a query about whether guidance on positive earnings growth for 2025 is being reiterated.

The speaker believes that their company will attract loyal and profitable customers by offering a simple value proposition and gaining market share. Acknowledging the high fixed costs in their industry, the speaker suggests that there might be future opportunities for growth by adopting a wholesale structure, which could improve business returns. They emphasize the importance of considering industry-wide cooperation and the potential for federating products and services to expand market reach and enhance profitability over the next decade.

The paragraph is part of a discussion involving Pascal Desroches and other individuals about financial expectations and the competitive landscape in the wireless industry. Pascal mentions that the exact timing of a DIRECTV transaction in 2025 could impact earnings per share (EPS) growth on a reported basis, but the company expects its EBITDA and operating income to grow organically. John Stankey comments on the wireless competitive landscape, describing it as competitive yet understandable, with no irrational moves from competitors. He expresses confidence in the company's long-term ability to compete effectively. Michael Rollins from Citi also inquires about factors driving growth in postpaid phone ARPU and its sustainability over the next few years.

The speaker discusses their cautious approach to growth in the industry, prioritizing quality over quantity to benefit shareholders. They observe increasing consumer use of their products and see potential for improvement in the business market, particularly by enhancing distribution and expanding presence in certain segments. They highlight the opportunity to combine Internet Air, voice products, and fiber offerings to improve effectiveness. Regarding ARPU (Average Revenue Per User), they note that even if it plateaus due to growth in the value market segment, it wouldn't be a concern as long as there's growth in that area.

The speaker discusses their company's strategy for increasing ARPU (Average Revenue Per User) by encouraging existing customers to upgrade and purchase additional products and services, such as insurance and enhanced plans for better network performance. They aim to address value mismatches within their customer base to optimize pricing, a strategy that has been successful in the past and is expected to continue yielding positive results. However, they also express a desire to improve performance in lower market segments, acknowledging that this might impact ARPU slightly. The conversation then shifts to a question from Jim Schneider of Goldman Sachs, who asks about the potential acceleration of fiber net additions next year due to increased location coverage and penetration, and whether there will be a consequent rise in CapEx due to fiber investments, a trend noted among their competitors.

The paragraph discusses the company's steady pace of growth and investment in expanding its footprint, particularly in fiber, over the past several years. The speaker notes that while there is some seasonality in consumer buying cycles, they do not anticipate any dramatic changes in their growth rate or strategy in the coming year. The company has invested heavily in the past four years to reposition itself and is now a leading provider in the market. As costs decrease over time, they plan to moderate their capital intensity. Future strategies will be discussed further at an upcoming Investor Day.

In the paragraph, Sebastiano Petti asks about the expected impact of a postpaid phone ARPU increase in AT&T's fourth quarter, referencing previous guidance and a $90 million one-time benefit. Pascal Desroches confirms the impact will be reflected in the fourth-quarter guidance and clarifies that the $90 million adjustment is within postpaid ARPU due to simplified billing. John Stankey discusses the 4.9 gigahertz spectrum award to FirstNet, noting that deploying infrastructure takes time and that it won't affect spectrum availability for several years. Petti also inquires about AT&T's interest in spectrum transactions, given recent industry movement in the secondary market.

The paragraph discusses the speaker's interest in the secondary spectrum market to leverage harmonized spectrum acquisitions that enhance network capacity without significant capital investment. They emphasize the strategic benefits for shareholders and customers, highlighting the company's improved cash flow and capital position. The speaker also mentions opportunities for collaboration with the FirstNet authority, pointing out mutual benefits in deploying dedicated bands and using existing spectrum and services.

The paragraph discusses the potential opportunities and strategies for leveraging 5G services to enhance public safety services through FirstNet. Brett Feldman, the operator, allows for one last question from Kannan Venkateshwar of Barclays, who inquires about future financial strategies, particularly concerning operating leverage and cash flow for the year 2025. Pascal Desroches responds by emphasizing the company's commitment to continued investment for business growth, particularly sustaining advancements in their Mobility business, and anticipates maintaining EBITDA growth.

The paragraph discusses the positive outlook and future strategies for the Consumer broadband business, emphasizing the potential for increased profit margins by expanding fiber operations to rival larger competitors. It highlights cost reduction opportunities through AI, machine learning, and real estate rationalization. The speaker anticipates improved free cash flow by 2025, following significant vendor financing paydowns in 2023 and 2024. Although investments have lowered free cash flow recently, they are expected to enhance long-term growth in both revenue and profits. The call concludes with an acknowledgment from Brett Feldman and the operator, thanking participants.

This summary was generated with AI and may contain some inaccuracies.