AT&T Inc at Deutsche Bank Media Internet and Telecom Conference Summary

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

Question: Bryan Kraft - Deutsche Bank - Analyst : <_ALACRA_META_ABSTRACT>Okay. Why don't we just start off with the press release that the company put out yesterday afternoon just talking about free cash flow guidance for the first quarter. Can you just explain, just what you were trying to communicate with the press release and why you put it out? I think you know that's just kind of the questions we're getting on.

Question: Bryan Kraft - Deutsche Bank - Analyst : So reiterated free cash flow guidance for the year, wanted to just put out some prescriptive guidance on one cube because different analysts are using different definitions of cash flow. Not everyone's conforming yet to the ex-DTV distribution definition.

Question: Bryan Kraft - Deutsche Bank - Analyst : Okay, great, that's really helpful. So maybe to get back to the core questions here. So on your growth strategy, a year ago we were on the stage. I asked you if you wanted to take a moment to walk through really how much AT&T had evolved over the preceding four years, given how sentiment among investors really suggested that nothing had changed or improved at all. Since then though, and this is before the last few days, so the numbers outdated, but your stock is up 65%. Investors clearly have taken notice and gained more confidence in the company. So the question is what do you think finally changed the perception of AT&T in the market and what were the important accomplishments over the past year that you think helped to build that confidence? And then, maybe if you could talk about what lies ahead for '25 and your key priorities?

Question: Bryan Kraft - Deutsche Bank - Analyst : Okay. Great. Let's talk about wireless a bit. Can you talk about your assessment of the health of the wireless industry, the industry growth drivers over the next few years in the competitive environment? And what's -- within that, what's your confidence level on AT&T's ability to continue to drive a healthy balance of mobile subscriber volume and ARPU growth and to achieve that 2% to 3% mobility service revenue growth over the next three years that you've guided to? And I think maybe as you're talking about this topic, if you could talk about the public commentary last week around January softness with the postpaid phone. Any additional commentary you'd add there?

Question: Bryan Kraft - Deutsche Bank - Analyst : Okay. So temporary blip in churn in January and then things got better in February and March.

Question: Bryan Kraft - Deutsche Bank - Analyst : Okay. All right. Great. AT&T is the lowest market share among the 3 MNOs. Do you see an opportunity to grow share? So what segments of the market do you think offer the greatest opportunity for growth? How do you envision changes in immigration policy under the new administration impacting industry volumes? And what sort of impact do you expect for AT&T specifically? So a couple of questions in there, but if you could address those, that would be great.

Question: Bryan Kraft - Deutsche Bank - Analyst : And then I wanted to talk about upgrades for a moment, kind of the theme that people have been focused on ever since Apple Intelligence was announced last summer. Not that it's had an impact yet. But handset upgrade rates continued to trend downward in 2024. So what are your expectations for '25? Do you think we'll see some inflection upward? What's assumed for upgrades in your free cash flow guidance? And maybe also if you could talk about the AT&T guarantee that you announced in early January, which came with a pretty significant advertising campaign, what led to launch that program, and any discernible results from it that you've seen yet?

Question: Bryan Kraft - Deutsche Bank - Analyst : Okay. Let's talk about FirstNet for a minute. So this has been a nice growth driver for the company for the past several years. How solid is your position in the first responder segment? One of your competitors has launched their own priority network for first responders and is claiming to have won contracts with certain major US. cities. So can you just talk about what's really going on in the first responder segment from a competitive perspective given the seat that you have to that show? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:50PM, T.N - AT&T Inc at Deutsche Bank Media Internet and Telecom Conference

Question: Bryan Kraft - Deutsche Bank - Analyst : Cable. So Comcast is getting ready to launch new packaging of its mobile and broadband services. It sounds like it will be similar to what Charter launched last fall, although we haven't seen the details yet. Based on your experience competing with Charter, how do you think it might -- this new offer from Comcast might impact results in mobility as well as on the wireline broadband side?

Question: Bryan Kraft - Deutsche Bank - Analyst : Okay. Satellite-directed device has been kind of a popular topic lately. How important is it to AT&T to have the relationship with AST SpaceMobile that gives you this direct-to-device capability? What do you think it does to enhance your competitive position? And do you see any risk in the short term from not having the D2D texting capability on the Android side between now and the launch of AST's commercial service next year?

Question: Bryan Kraft - Deutsche Bank - Analyst : Okay. Let's talk about your fiber footprint a bit. So you've got the largest fiber footprint in the US and did fiber-to-the-home footprint in the US. You ended '24 at 29 million locations. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:50PM, T.N - AT&T Inc at Deutsche Bank Media Internet and Telecom Conference You've announced plans to get to 45 million on an O&O basis, plus another 5 million through JVs and commercial open access. What's the opportunity here for AT&T? How does it fit into the broader corporate strategy and growth outlook? And related to that, how did the investment case for expanding fiber-to-the-home footprint evolve to a point where it became attractive to increase to build to 45 million homes? The expanded fiber build is going to require a faster pace of new builds each year too. So if you could talk about what shape the acceleration in that build pace looks like in 2025 and over the next few years, that would be great. And then just curious as to whether you see the potential for increasing your fiber exposure beyond the 50 million target that you have, whether it's through organic or Gigapower or acquisitions.

Question: Bryan Kraft - Deutsche Bank - Analyst : Okay. Great. And I think the natural next question relates to convergence. You've talked a lot about this opportunity for AT&T. You recently reached 40% mobility penetration of fiber subscribers. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:50PM, T.N - AT&T Inc at Deutsche Bank Media Internet and Telecom Conference What does that mean for the business? And how much opportunity is there to continue increasing share of the base taking both services? And then somewhat related, on the fixed side, fixed wireless side, Internet Air is another leg to the fixed broadband strategy and also has been a solid contributor to growth. So if you could maybe talk about that as well.

Question: Bryan Kraft - Deutsche Bank - Analyst : And maybe we could talk about wireline business some more. So net adds have been ramping up over the past several quarters. Are you at a normal run rate now for net adds? Or is there room, do you think, to further increase the quarterly pace of customer growth? And then on the margin side, consumer wireline margin was 33% last year. You've guided to 40% longer term. Some of your competitors have margins that are higher than that. So how should we think about the levers for margin expansion in consumer wireline? I think you've given some targets for timing and cost savings associated with retiring the legacy copper infrastructure. Maybe if you could also talk about how that effort is progressing and what you've accomplished so far and the next steps that you need to take there?

Question: Bryan Kraft - Deutsche Bank - Analyst : Great. Let's talk about business wireline for a moment. You've guided to mid-teens EBITDA decline this year and to low double-digit CAGR through 2027 decline in business wireline. What is that path to stabilizing EBITDA look like? What gives you confidence in being able to stabilize EBITDA in, say, three to four years? And maybe if you could also talk about the importance of business wireline strategically for AT&T.

Question: Bryan Kraft - Deutsche Bank - Analyst : That's true. And it seemed like no one believed it would ever happen in the consumer business, until it did. And the sentiment and the way people view that business is completely different.

Question: Bryan Kraft - Deutsche Bank - Analyst : They were focused on getting people connected outside of the office. That was the priority. Okay. Maybe we could go to network and CapEx for a moment. So you've guided to flat CapEx over the next few years at $22 billion a 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. MARCH 11, 2025 / 12:50PM, T.N - AT&T Inc at Deutsche Bank Media Internet and Telecom Conference At the same time, you're planning some acceleration though in fiber investment. So what's going on underneath the hood that keeps that investment constant? And what could cause any deviation in either direction on CapEx, for example, changes in corporate tax rates or restoration of bonus depreciation?

Question: Bryan Kraft - Deutsche Bank - Analyst : Understood. Then the last question I wanted to ask you just relates to spectrum. I think that AT&T has talked about the need for more spectrum to be made available for the industry. We're starting to see some movement in Congress at Commerce and at the FCC toward that end. What are your expectations for additional spectrum to be auctioned? And what's AT&T's appetite to participate like?

Question: Bryan Kraft - Deutsche Bank - Analyst : Okay. All right. Great. We'll wrap it up there. Thanks, Pascal. I appreciate it. Thanks.