AT&T Inc at Bank of America Media, Communications & Entertainment Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Funk - Bank of America - Analyst : Absolutely. So wanted to start maybe with current events. So last week, you -- last Tuesday, you announced agreement to acquire EchoStar spectrum, both the 600 and then the mid-band spectrum. You did a call after the announcement. But maybe go back and just give us a little bit of the history to the lead up to the agreement to acquire that spectrum. And then from your seat in the CFO office, the framework that you put around the acquisition and the approach to valuation.

Question: Michael Funk - Bank of America - Analyst : Great. Thank you, Pascal, for that. I think you touched on it, but the cost to deploy the 600, I think last week, you said that the cost of deploying the spectrum will fit within your capital spending plan envelope that you've already provided to us, right? But that's also net of less densification and maybe some other factors as well. Can you discuss the cost broadly on a gross basis to deploy? I think there's some debate about how much it's going to cost to deploy this 600?

Question: Michael Funk - Bank of America - Analyst : And one more question on this. We'll move on to more looking forward or operating. You could avoid that capital spending simply through a spectrum swap and a carrier that has 700 rebar deployed and they've already deployed the 600. Is there a reason or a logic behind why that type of swap, would it make sense to AT&T? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 12:00PM, T.N - AT&T Inc at Bank of America Media, Communications & Entertainment Conference

Question: Michael Funk - Bank of America - Analyst : Great, thank you. I want to skip over to talking about the wireless market in general. So looking back entering 2025, I think there was a pretty broad consensus that we were in a sweet spot for wireless, where carriers were able to take price and you had relative stability on a competitive basis and churn rates were stable and relatively low. And then we came into the year and the promotional activity may be higher than people expected, churn rates ticked up, maybe more negative reaction to price increases some carriers talk. So the concern was elevated going through 2Q about competitive activity, churn rates and SAC. And I think at Q2 if I'm going to paraphrase for you. But you said, look, we expect a similar environment in the second half of the year, right, implying flattish churn rates going through -- going through the second half. So now that we're basically two-third of the way through 3Q, in my opinion, it seems like maybe it's been more rifle shot or targeted competitive activity relative to 2Q maybe it's slackened a little bit. Can you comment on what you're seeing during the quarter and your previous comments about churn rate and that remaining consistent?

Question: Michael Funk - Bank of America - Analyst : No, that's outstanding. You touched on it for a moment, but Doge, do we feel that, that impact is behind us? Or could there be more to come, do you think, from Doge and then linking the immigration question too. Some have suggested that impact of immigration plus just fewer second line additions than we saw kind of during even post COVID, could shave $3 million off of net adds in 2026. I'm not asking to give '26 guidance -- does that rough math, at least the scale of it? Does that make sense to you? -- the Doge and then the trending in net adds.

Question: Michael Funk - Bank of America - Analyst : Okay. I wanted to maybe skip a little bit more higher level strategic if that's okay, okay with you. You've made significant investments in the last year and highlight a lot of opportunity, whether it's inspective investment or expanding the fiber footprint. So how have your financial priorities changed or shifted over that same period of time?

Question: Michael Funk - Bank of America - Analyst : Great. Thank you for that. In your updated guidance at a 2Q '25 results, obviously, before the announcement you made last week. So can you update us on how the EchoStar transaction impacts your thinking on short and long-term guidance?

Question: Michael Funk - Bank of America - Analyst : Okay. And just to touch on.

Question: Michael Funk - Bank of America - Analyst : Accretion, EPS and free cash flow.

Question: Michael Funk - Bank of America - Analyst : And I want to make sure I have the building blocks to that correct. So I guess, number one, you'd be contemplating more revenue from EchoStar, being the preferred provider on the MVNO side, right? That's number one. Second, you are probably rolling out FWA more aggressively, so higher FWA revenue, right, that's two. Faster decommissioning of the legacy copper plants that be cost savings additive to EPS and free cash flow. And then I guess you know also less densification would be part of that as well. Those the four colors.

Question: Michael Funk - Bank of America - Analyst : Sorry, which one did I miss?

Question: Michael Funk - Bank of America - Analyst : The wireless attach.

Question: Michael Funk - Bank of America - Analyst : And I guess the counterbalance, that's going to be the cost of the deal, right, $23 billion, whatever, 500 basis points cost to debt, whatever the number is, you're over $1 billion and just for funding the deal.

Question: Michael Funk - Bank of America - Analyst : Okay. I'm going to follow up with Brett later on the capitalized interest for my modeling purposes, I don't go in the rabbit hole right now with that one. I want to come back to seasonality because there were a couple of things that you mentioned. You mentioned greater upgrade rates around April, I think, around some tariff fears, which you've heard pretty broadly, right, that makes sense, human behavior. But then you also mentioned the expected uptick in competitive seasonal activity. as we head through September into the back half of the year. So should I expect that seasonality is going to be less because maybe some pull forward we saw? And then how does the seasonality and general effect your thinking around the churn rates that we saw in the beginning of the year continuing through or even being higher in the back half of the year?

Question: Michael Funk - Bank of America - Analyst : Okay. Just for your consensus gathering, I think we're forecasting 1% increase in iPhone sales year-over-year? So BofA is not expecting a big upgrade cycle this year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 12:00PM, T.N - AT&T Inc at Bank of America Media, Communications & Entertainment Conference

Question: Michael Funk - Bank of America - Analyst : Okay. Outstanding. You made several changes to guidance during 2Q around the mobility business. What's driving those guidance changes from mobility?

Question: Michael Funk - Bank of America - Analyst : Now it's a great segue into the next question. You touched on a bit high-quality subscribers with something that you just mentioned. And I think when I spoke with you all a few months ago, something that stuck with me was the thought of improving execution on migrating subscribers up during their life cycle. And actually we have Jen here today, thank you again for being here. Can you just talk a bit about that, about the potential to further improve the mobility business as you start to, I guess, execute better on migrating customers up during their lifetime, right, to become higher premium customers?

Question: Michael Funk - Bank of America - Analyst : It seems like a very natural playbook.

Question: Michael Funk - Bank of America - Analyst : And I can't believe I'm just getting to fiber now because a big part of your story now going on, well, quite a long time, but you did increase your fiber passing target to, I think, 60 million plus or more than 60 million, I forget the most recent comments around that more than 60 million. Brent is shaking his head.

Question: Michael Funk - Bank of America - Analyst : Yes. I think John went on TV a while ago and said more than 60 million, so I'm safe with there. As you expand your fiber footprint, does it change your return profile, right? Because obviously, you're hitting different homes, different types of consumers. And then what levers do you have to pull as a CFO to ensure that you meet the expected or the mandatory rate of return?

Question: Michael Funk - Bank of America - Analyst : And just quickly on the cost to build comment that you made, I think you said 2%, 3% over the last several years. You see the increase in aggregate, right? That's having annualized, that's total cost increase. So what have you done to keep that cost down. I presume it's probably mostly on the labor and the efficiency side because you're going to do so much about the raw materials and components that you're including? And then why do you think that's going to go up? Is that simply just the math around less population density in areas or are there other expectation from?

Question: Michael Funk - Bank of America - Analyst : Okay. FWA. We talked about it a little bit earlier when we talked about EchoStar. But has your strategic focus or view of FWA changed recently, especially after the EchoStar announcement, obviously, more focus there? And then how should we think about that strategy or trend versus other recent fiber investments that you've made?

Question: Michael Funk - Bank of America - Analyst : It's in-store promotion pretty much today, right. You have actually been reaching out to consumers in their homes REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 12:00PM, T.N - AT&T Inc at Bank of America Media, Communications & Entertainment Conference

Question: Michael Funk - Bank of America - Analyst : And it also appears opportunistic to lean in a little bit more today given where cable is on their heels, correct? Opportunity to take more share in the broadband market near term?

Question: Michael Funk - Bank of America - Analyst : And I don't want to skip over this one here really quickly. The mid-band spectrum from EchoStar, just to reiterate, once you get FCC approval, you can employ that immediately. You don't have to wait until a deal close, correct?

Question: Michael Funk - Bank of America - Analyst : Any anticipated considering or pushback from the regulators in the deal?

Question: Michael Funk - Bank of America - Analyst : Okay. Last question for you, Pascal. Purely in your CFO hat. The kind of the future state looking out, we've pulled forward some capital spending now post bonus depreciation reinstatement, you kind of increased the envelope. So future state, are we just a less capital-intensive company with better free cash flow growth, better operating leverage? What does that future state look like? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 04, 2025 / 12:00PM, T.N - AT&T Inc at Bank of America Media, Communications & Entertainment Conference

Question: Michael Funk - Bank of America - Analyst : Perfect timing. Pascal. Thank you again so much for doing this.

Question: Michael Funk - Bank of America - Analyst : Hey, thank you all for coming.