AT&T Inc at Citi Global TMT Conference Transcript

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

Question: Mike Rollins - Citi Investment Research (US) - Analyst : With that out of the way, Jen, great to have you here. And it's an opportunity for us to really dive deep into what you're doing in fiber and mobility. So thank you so much.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : Great. Well, let's start maybe with mobility. The AT&T team, over the last number of months, they've been using the terms healthy and normalizing. And at the same time, behind all this, there's been some positive pricing actions and possibly pricing power exercise within the category. So curious how you frame the competitive environment, and if you can unpack what those terms mean 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 05, 2024 / 7:50PM, T.N - AT&T Inc at Citi Global TMT Conference

Question: Mike Rollins - Citi Investment Research (US) - Analyst : Very helpful. I'm going to introduce our first survey question for our audience, and it will give us a little preview of where we're going to end up with the conversation. So just have to find it here on the tablet.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : You're going to see -- yes. So we'll introduce this question here on what the expectations are for AT&T postpaid subscriber growth in 2025. You mentioned the opportunity to grow subscribers. So we're giving our audience a choice. And for those streaming, I'll just read them: below or worse than negative 1%; negative 1% to zero; zero to 1%; over 1%; or over 2% in terms of the way they're going -- they perceive growth for you for 2025. But before we get to volume, if we can maybe speak for another moment on the price side. So as we always try to think about the P times Q math, are we getting at an industry level at a new normal? As you're describing the idea that equating price with the value and just thinking about how much more we use our phones and the consumption, the ARPU has lagged that substantially over the last number of years. So do you feel that this is a sustainable source of revenue in terms of the pricing element of the P times Q math?

Question: Mike Rollins - Citi Investment Research (US) - Analyst : You mentioned upgrades. And this is a big question that we've been getting as you look at the customer base and we look at the customer base, we're finding that customers are holding onto their devices. And I think our last industry model showed an average of about 45 months, but they're holding onto their device and just like the longest duration since we began measuring this. So you'll have you learned some insights into why these device replacement rates have been extending so much. And does that inform you on, you know, what may happen over time in terms of customer behavior?

Question: Mike Rollins - Citi Investment Research (US) - Analyst : Have you learned anything from your customer engagement around AI as a feature of that is a catalyst to push upgrades or what some are calling a super cycle for upgrades.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : There's another factor that goes into upgrades, which is carrier incentives, whether you want to get more people on 5G from a network traffic perspective or to drive retention in terms of giving the same deals to everyone, as you look at this coming cycle, are there any incentives that AT&T has to drive device upgrades more quickly? And is that or is this an opportunity just for you to take market share by pushing this promotional strategy?

Question: Mike Rollins - Citi Investment Research (US) - Analyst : Great. Let's see the results of the survey. So we have a pretty wide dispersion of 11% for subs next year. The postpaid phones have declined by more than four larger number than negative 1%, a modest decline and negative [one to zero] is 11%, modest positive growth, zero to plus one at 22% and 56% of respondents moderately positive of plus one to plus two. So as we impact what goes into customer growth, think about gross adds and churn. So maybe first, on the churn side, you talked about how churn is very low and just kind of curious, I'm going back to these best deals for everyone. How much of that is a significant factor in churn versus other things that are creating your attention?

Question: Mike Rollins - Citi Investment Research (US) - Analyst : Some of the questions that we get are around is for all the carriers is there's been a bigger focus on cohorts. So whether, for example, you have maybe more customers right now on device promotions. So maybe that's helping churn maybe more than it. What does it look like over the longer term or you have customers coming up from a lease like cohorts, we had bunch of them upgrade like three years ago and does that create a risk for churn? And how do you look at these cohorts on both sides of this equation for churn? 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 05, 2024 / 7:50PM, T.N - AT&T Inc at Citi Global TMT Conference

Question: Mike Rollins - Citi Investment Research (US) - Analyst : Ready for next year.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : We'll see a little preview where we're going again. So I'll come back to this topic in a moment. Does AT&T need to offer a converged mobile and fiber broadband solution in more markets? Yes, AT&T should accelerate the pace of deployments organically and or with M&A? Yes, maintain the organic pace of deployments with no material M&A, FWA provides a sufficient alternative. And I know converged product bundles are not necessary. So we'll see what our audience thinks on this question, and I'll give us a lot to talk about, especially with today's news. But before we get there, just a couple of quick things so first, from a branding perspective, AT&T has had a few incidents this year, a network outage in February to data breaches. How have these incidents impacted the brand? And do you see a need or opportunity to do something to proactively shore up the brands.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : Switching gears to ACP for a moment and then we'll get into the topic of convergence. ACP just didn't seem to have a material impact on your results for those prepaid subs or financials during the second quarter from it. Is there a specific reason maybe why it was less disruptive? And should investors expect any incremental pressures from this in the third quarter or over the course of the second half?

Question: Mike Rollins - Citi Investment Research (US) - Analyst : Very helpful. And we'll see what the results of the survey are, and we'll jump into convergence to that. So does AT&T need to offer converged mobile and fiber broadband switching markets.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : It looks a little more blue red.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : So for those joining us over the streaming service, we got a 50%. Yes, AT&T should accelerate the pace of fiber deployments organically. And with M&A and 50%, yes, maintain the organic pace of fiber deployments no material M&A. So the split is whether to do M&A to get there or not, but 100% saying essentially, yes, except for that split. So as we get into this and we talk about convergence and we'll get to this question as well for you in a few minutes. But maybe just as a backdrop, AT&T put some new disclosure during the second quarter and shared the benefit of capturing additional mobile market share of 500 basis points where you offer fiber in those markets. And just curious, how does AT&T get there how much of that was an intentional converged or bundle promotion and how much of it was just having the brand in the markets together and in just that general cross-sell?

Question: Mike Rollins - Citi Investment Research (US) - Analyst : So you've got a bigger fiber footprint over time and more convergence offers in those markets. What's the strategy going forward for your mobile business where you don't sell fiber broadband? 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 05, 2024 / 7:50PM, T.N - AT&T Inc at Citi Global TMT Conference

Question: Mike Rollins - Citi Investment Research (US) - Analyst : And maybe just taking a step back, just to think about the broadband market. Overall, penetration rates seem somewhat mature, move rates have been down. And as you considerable the direct as you consider the addressable market for AT&T? Are you seeing the overall broadband market slow? And is this in any way exacerbating your performance one way or another?

Question: Mike Rollins - Citi Investment Research (US) - Analyst : And is there seasonality still that we should just be mindful of quarter to quarter, especially 2Q and 3Q.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : And if I go back to maybe some comments from the management there was a comment from AT&T, CEO. that indicated that AT&T can jointly market wireless and fiber together as the company gains more scale with the fiber footprint, how much fiber scale do you need in a market or

Question: Mike Rollins - Citi Investment Research (US) - Analyst : You mentioned earlier that AT&T is a little bit of a different approach for FWA versus some of your competitors. Does that quarterly opportunity to grow the fixed wireless space expand as there are more mid-band upgrades in the network and a greater amount of spectrum is lit up across the country.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : Shifting gears to a question on the macro. You have customers across the country on wireless in fiber. Are you seeing anything on the macro side in terms of payment behavior or spending patterns that gives AT&T any incremental insight into the state of the economy.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : And just one other question going back earlier in the conversation, I think you made a reference to value segmentation, and we've learned that you brought in new leadership for the prepaid business. So curious how you think about growth potential in prepaid regardless of the economic backdrop.

Question: Mike Rollins - Citi Investment Research (US) - Analyst : Well, Jen, thank you so much for joining us today.