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GLOBAL-500-2023-ATT

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F500 2023-ATT

AT&amp;T falls 17 spots on this year’s list. The decline largely reflects the company’s 2021 divestiture of its Time Warner and DirectTV media and entertainment businesses; overall, revenue in 2022 was down 10% from the previous year. 
<ul> 
 	<li>AT&amp;T was able to draw more customers to its wireless phone business in 2022 with the help of discounts and trade-ins. In the last three months of 2022, AT&amp;T added more than 650,000 subscribers to one of the most lucrative parts of its business—postpaid phone ervice—outdoing some of its rivals.</li> 
 	<li>The company increased prices on its wireless plans in June 2022 to cope with inflationary pressures.</li> 
</ul>

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Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

G500 2022-32-AT&T

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F500 2022 AT&T

Having acquired Time Warner and DirecTV in 2018 in an attempt to become a major media player, AT&amp;T spent much of 2021 dealing with the fact that the attempt ultimately failed. It sold off its underperforming media businesses, merging them into a new company, Warner Bros. Discovery, while reaping some $40 billion in cash to help reduce its debt load. Overall, AT&amp;T shed 28,000 employees over the course of 2021, as well as 14.5% of its share price. Despite the setbacks, AT&amp;T’s core businesses fared well: Its fiber internet service ranked No. 1 in customer satisfaction in 2021 based on an American Customer Satisfaction Index survey. AT&amp;T added 3.2 million phone subscribers in 2021, a tally that exceeded its net new customers gained in the previous 10 years combined. AT&amp;T is now focused on growing its 5G network and fiber-optic footprint.

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G500-2021-026-AT&T

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F500-2021-11-ATT

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This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-022-ATT

Revenue at the newly created communications and entertainment conglomerate increased 6%, but profits dropped 28% amid merger costs, pension charges, and changes in the value of some assets, among other items. CEO Randall Stephenson, in what would turn out to be his last year at the helm, focused on breaking down barriers in the company's WarnerMedia unit and creating a streaming video strategy to attract cord cutters. Now it will be up to new CEO John Stankey, who took over July 1, to keep all the pieces working in harmony—from an expensive new 5G wireless network to newly launched streaming service HBO Max.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-009-ATT

Revenue at the newly created communications and entertainment conglomerate increased 6%, but profits dropped 28% amid merger costs, pension charges, and changes in the value of some assets, among other items. CEO Randall Stephenson, in what would turn out to be his last year at the helm, focused on breaking down barriers in the company's WarnerMedia unit and creating a streaming video strategy to attract cord cutters. Now it will be up to new CEO John Stankey, who takes over on July 1, to keep all the pieces working in harmony—from an expensive new 5G wireless network to the rollout of new streaming service HBO Max.

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Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Perks

100% health coverage

Unlimited sick days

Telecommuting

Job sharing

Subsidized childcare

Compressed work weeks

Fully-paid sabbaticals

On-site fitness/subsidized gym

On-site medical care facility

Health insurance for part-timers

Sick days for part-timers

College tuition reimbursement

Student loan debt repayment

Medical facility at all locations

Hiring/staffing (past 12 Months)

Full-time and part-time job growth

# of job applicants

Jobs filled internally

# New graduates hired

Sector

Industry

Current All-Star Rank

Previous All-Star Rank

Industry Rank

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Overall Score

Innovation

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Use of Corporate Assets

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Quality of Management

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Long-Term Investment Value

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Global Competitiveness

Strongest Dimension

Years on list

Previous rank

State

Key Financials (last Fiscal Year)

Revenues ($M)

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Profit Ratios

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AT&amp;T is among the world’s largest telecommunications companies, offering wireless communications, broadband internet, and entertainment services. The company held a decades-long telephone monopoly in the U.S. before a 1982 antitrust settlement broke it into parts. In 2023, AT&amp;T was the world’s largest telecommunications company by revenue. In 2022, AT&amp;T finished merging its spinoff WarnerMedia with Discovery, a reorganization that resulted in the creation of Warner Bros. Discovery.

Q2 2026

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Q4 2025

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Q1 2025

Q4 2024

AT&T (T): Company Profile, Stock Price, News, Rankings

legacy

AT&T

at&t

morning, and welcome to AT and T's First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. Following the presentation, the call will be open for questions. And as a reminder, this conference is being recorded. I would now like to turn the conference call over to our host, Brett Feldman, Senior Vice President, Finance and Investor Relations.

Thank you and good morning. Welcome to our first quarter call. I'm Brett Feldman, Head of Investor Relations for AT and T. Joining me on the call today are John Stankey, our Chairman and CEO and Pascal Duroche, our CFO. 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. As such, they are subject to risks and uncertainties described in AT and T's SEC filings. Results may differ materially. Additional information as well as our earnings materials are available on the Investor Relations website. With that, I will turn the call over to John Stankey.

Thanks, Brad. I appreciate everyone joining us this morning. And I'm pleased to share that we followed a strong performance in 2024 with a solid start to 2025. In the first quarter, we reported growth in consolidated service revenue and adjusted EBITDA driven by strong postpaid phone and fiber net adds. We also grew adjusted EPS and free cash flow when excluding DIRECTV, with both metrics performing consistent with the outlook we provided in March.

Pascal will run you through the details of our first quarter results and outlook. So I'm going to use my time to cover two topics that are top of mind for our management team. First, I'll review the core operating principles driving our strategy. This includes how our differentiated position as the largest converged provider across five gs and fiber is fueling growth in high value customer relationships. After that, I'll discuss why we expect to deliver on our 2025 financial guidance and commence our planned share repurchases during the second quarter despite operating in a macro environment with diminished visibility.

So let's start with the core operating principles that are enabling us to drive our long term strategy forward. As always, we begin with a focus on the customer. This is why we launched the AT and T Guarantee, which is a promise to our customers that will provide them with connectivity they can depend on, the deals they want, and the service they deserved guaranteed or will make it right. AT and T is the first and only carrier that offers a guarantee for wireless and fiber networks to both consumers and small businesses. A key reason we can make this promise is because of the significant fiber expansion and network modernization investments we're making to be the best connectivity provider in America.

A little over three years ago, we set a target of passing over 30,000,000 total locations with our fiber network by the end of twenty twenty five. I am proud to say that we expect to achieve that target before mid year as we continue to ramp towards our objective of reaching 50,000,000 plus total locations with fiber by 2029 through a combination of our organic build, gigapower and other commercial open access agreements. We're also making great progress at retiring our legacy copper network as we transition to modern five gs wireless and fiber technology and we have an opportunity to move even faster following recent FCC orders. We appreciate Chairman Carr and the FCC for their leadership to advance the tech transition and update requirements to better reflect today's technology and competitive marketplace. Our customer focused, investment led business model has positioned AT and T as a trusted provider of critical connectivity services.

As a result, we're well positioned to drive sustainable growth through a range of market and economic cycles. Our first quarter results present further evidence that our differentiated strategy is working. We came into the year with an expectation that the wireless industry would see further normalization in net adds and overall activity levels. So far, this has played out and to no surprise, we have seen shifts in offers and promotions as the major providers compete for a moderating pool of new customers. Despite a slow January, we were able to fine tune our offers and competed very well against this backdrop for the balance of the quarter.

This was especially true within our fiber footprint, which is the largest and fastest growing in The U. S. As we have said before, where we have fiber, we win in fiber and five gs. This dynamic continues to drive growth as shown by our increasing rate of converged customer penetration and significant wireless share gains within our fiber footprint. These trends continued and in some cases strengthened in the first quarter.

For example, a significant portion of wireless gross adds that took our lead offers during the first quarter were with converged accounts. This is a key reason why we had more converged household gross adds within our fiber footprint during the first quarter compared to last year. As a result, our converged penetration continues to climb, with more than four in 10 AT and T Fiber households also now subscribing to our mobility services. This is a key trend because accounts with both fiber and wireless services have lifetime values that are more than 15% greater than customers with standalone services. The message here is that the primary driver of our growth is our success at executing our fiber and five gs playbook and that our increased investments in customer acquisition and retention are driving sustained growth in high value customer relationships.

The fundamentals of our business are very strong and we continue to feel confident that our strategy and plans for 2025 are on track. However, all companies in The U. S. Are now operating with less visibility as the Administration pursues policies that are intended to facilitate its laudable goal of creating more equitable global trade and improved domestic manufacturing capabilities. Like others, we are closely monitoring this journey to rebalance global trade and its impact on the broader economy.

The announced tariffs could potentially increase the cost of smartphones and other devices, as well as the cost of network and technical equipment. The magnitude of any increase will depend on a variety of factors, including how much of the tariffs our vendors pass on, and the impact that the tariffs have on consumer and business demand. Based on the ninety day pause on reciprocal tariffs and our visibility into the supply chain, we believe we can manage the anticipated higher costs within the 2025 financial guidance we provided at the beginning of the year. Our expectations reflect our strong financial performance in the first quarter, the historical resilience of demand for our critical connectivity services across economic cycles and our decision to reduce discretionary expenses and accelerate cost actions that we had planned for later in this year. That said, this environment remains fluid and will provide further updates based on the ultimate impacts of the reciprocal tariffs.

The priorities we laid out at our twenty twenty four Analyst and Investor Day have not changed and we continue to operate our business to achieve the financial plan and capital returns we outlined in December. As we shared during that presentation, these long term plans are based on an outlook that assumes a macroeconomic environment with low single digit GDP growth and moderating inflation. If we ultimately face a lower growth environment over this period, we have the option to adjust our operating posture to prioritize cash flow. This gives us confidence in our ability to execute the expanded capital returns program announced at our Analyst and Investor Day and we plan on commencing share repurchases this quarter. We also continue to evaluate opportunities to deploy our financial flexibility towards strategic investments that complement our organic growth plan, additional capital returns, or further improvements to our balance sheet.

With that, I'll turn it over to Pascal. Pascal?

good morning, everyone. Let's start by reviewing our first quarter financial summary on Slide five. At a consolidated level, total revenues were up 2%, service revenues were up 1.2%, and adjusted EBITDA was up 4.4%. The primary driver of this solid performance was growth in our mobility and consumer wireline businesses, which continues to more than offset secular pressure on business wireline. As a reminder, beginning with our first quarter results, adjusted EPS and free cash flow exclude DIRECTV.

Adjusted EPS was $0.51 in the quarter, which was $03 higher than the prior year when excluding DIRECTV. First quarter free cash flow was $3,100,000,000 which was up more than $350,000,000 on a comparable basis. First quarter capital investment of $4,500,000,000 was slightly lower year over year due to lower vendor financing payments, reflecting the good progress made in reducing these balances for the past couple of years. For the second quarter, we expect capital investment in the 4,500,000,000.0 to $5,000,000,000 range and free cash flow of approximately $4,000,000,000 and we continue to expect full year free cash flow of $16,000,000,000 plus. Now let's look at the trends we're seeing in our Mobility business on Slide six.

Our Mobility business delivered solid results to start the year, growing both revenues and EBITDA in a wireless market that remains both healthy and competitive. Total mobility revenues were up 4.7% year over year with service revenues up 4.1%. Service revenue growth was primarily driven by strong customer growth, including 324,000 postpaid phone net adds as well as continued postpaid phone ARPU growth. Postpaid phone gross adds increased by about 13% year over year, which more than offset a normalizing trend in churn. Postpaid phone churn of 0.83% was up 11 basis points from the first quarter last year.

This increase was primarily driven by the normalization of customers reaching the end of their equipment promotional financing periods in the fourth quarter, which is a trend we highlighted on our prior call. We also saw some shifts in competitive offers during the quarter that impacted churn. Importantly, involuntary churn remained low and consistent with our expectations. Based on the current market dynamic and the return to a more normalized cadence of promotional roll offs, we expect postpaid phone churn to remain at a similar level in 2Q with typical seasonality in the back half of the year as we approach the holidays. First quarter Mobility EBITDA grew 3.5% year over year.

EBITDA margins of 43% was down 50 basis points versus last year. This was due to increased advertising and marketing spend related to the launch of the AT guarantee as well as higher spending on customer acquisition and device upgrades. We're very pleased with the uptake rate of our offers among new and existing high quality customer cohort. This is evident in our postpaid phone ARPU, which grew 1.8% year over year and in the continued growth of our base of converged accounts. Before I discuss our first quarter consumer wireline performance, I want to provide some insights into the trends we're seeing in our mobility business so far in the second quarter.

Postpaid phone net adds remained solid, with both gross adds and churn broadly in line with our expectations. However, upgrades have trended higher than expected since the announcement of the reciprocal tariffs in early April, which we believe triggered an acceleration in consumer upgrade behavior. If upgrade rates remain elevated, this could represent a pull forward from the second half of the year. Now let's move to Consumer Wireline results on Slide seven. In the quarter, Consumer Wireline performance was led by solid broadband subscriber growth for both AT and T Fiber and AT and T Internet Air.

We delivered 261,000 AT and T Fiber net adds, up from 252,000 in the first quarter of last year. This was driven by growth in our consumer locations served with fiber, which reached 23,800,000 at the end of 1Q and growing contribution of net adds in regions served with Giga Power Fiber. We love the return profile of fiber and the lift it provides our mobility business only makes investing in fiber more attractive. AT and T Internet Air net adds were 181,000 in the quarter, which is a significant improvement from a year ago, driven by broader availability across our distribution channels. Our combined success with these two services helped us deliver 137,000 total broadband net adds in the quarter.

This marks our seventh straight quarter of overall broadband subscriber growth and second consecutive quarter with more than 100,000 broadband net adds. We grew Consumer Wireline revenue by 5.1% versus the prior year. This was driven by fiber revenue growth of 19%, reflecting subscriber gains and solid fiber ARPU growth of 6.2%. Consumer wireline EBITDA grew 18.6% for the quarter. Our first quarter results benefited from vendor settlements that positively impacted our total wireline operating expenses by approximately $100,000,000 Roughly $55,000,000 of the impact was in Consumer Wireline with the rest in Business Wireline.

This item has no impact on guidance as it was factored into our full year plan. Now let's turn to Business Wireline on Slide eight. Starting this quarter, we're providing more detail on the revenue components within Business Wireline to match the disclosures and targets we provided at our Analyst and Investor Day. Business Wireline revenues declined approximately 9% year over year, primarily due to continued pressures on legacy and other transitional services, which declined 17.4%. This was partially offset by growth in fiber and advanced connectivity services, which grew 4.5%.

About one third of these revenues are from value added services, which are variable on a quarterly basis. The remaining two thirds, which is predominantly fiber connectivity, is growing at a faster rate and accelerated relative to the fourth quarter. Business Wireline EBITDA declined less than 2% versus the prior year. I want to call out a few factors that contributed to this improved trend. On the top line, we benefited from pricing actions on legacy services, which helped moderate revenue declines, although we expect this benefit to diminish over the next few quarters.

On the expense side, Business Wireline operating and support costs were down about $400,000,000 year over year. This decrease is due to solid execution against our cost saving initiatives, including lower force, contractor and access costs. Lower expenses also reflect the vendor settlements I mentioned earlier as well as the prior deconsolidation of our cybersecurity business. While I appreciate that our first quarter EBITDA performance is pacing ahead of plan, some of the favorability was nonrecurring, and we are facing an operating environment with less visibility. So we expect to see a normalization in the trajectory of Business Wireline EBITDA during the remainder of the year.

We also saw solid trends across Business Solutions, which includes the contributions from Business Mobility and FirstNet. As we announced earlier this month, we now have more than 7,000,000 FirstNet connections, which is a tremendous milestone. We continue to grow connections because FirstNet truly is in a league of its own. Let's be clear, no matter if it's New York City Police Department, the Fire Department in New York City, the Federal Bureau of Investigation, or any of the nearly 30,000 public safety agencies and organizations that use FirstNet, FirstNet continues its strong momentum and remains the first responder communication solution of choice. Now let's move to Slide nine to discuss our capital allocation.

Our capital investment is largely driven by our fiber deployment and wireless network modernization. These remain strategic priorities, and we expect these initiatives to remain on pace with the time lines we outlined at our Analyst and Investor Day in December. We continue to expect our full year capital investment to be in the $22,000,000,000 range. During the first quarter, we made further progress on strengthening our balance sheet and reduced net debt by about $1,000,000,000 This was driven by our strong free cash flow and net proceeds related to asset sales and strategic investments, partially offset by $1,200,000,000 of currency headwinds related to the weakening of the U. S.

Dollar. As a reminder, we fully hedged the FX impact on our debt with the offset reported in other liabilities. We ended the quarter with net debt to adjusted EBITDA of 2.63 times versus 2.68 times at the end of last year. We've worked hard at strengthening our balance sheet and continue to operate the business with a net leverage target of net debt to adjusted EBITDA in the 2.5 times range. Since the beginning of 2020, we have reduced our net debt by $32,000,000,000 Based on this improvement in our balance sheet, expected proceeds from the sale of our 70% stake in DIRECTV and our financial outlook for the remainder of the year, we are now in a position to begin executing on the incremental capital returns we outlined at our Analyst and Investor Day.

We expect to begin share repurchases under our $10,000,000,000 authorization this quarter with at least $3,000,000,000 completed by year end and the remainder during 2026. We're really pleased with the team's performance and our start to the year, and we're excited to continue to build on this progress. Brett, that's our presentation. We're now ready for the Q and A.

Thank you, Pascal. Operator, we're ready to take the first question.

Thank you. We will now begin the question and answer session. Today's first question comes from Peter Cipino with Wolfe Research. Please go ahead.

Hi, good morning. A question on tariffs and another on the growth environment. If tariffs increase the cost of phones, I wonder how you would envision AT and T and the industry potentially reacting to that on a sustained basis. And then with your comments on the possibility of a slower growth environment, I wonder if you could refresh us on the expense reduction opportunity outside of Consumer Wireline and what else you might have in mind for a slower growth marketplace? Thank you.

Good morning, Peter. So first of all, let's kind of start with our customer base and customers and what might happen or not happen in tariffs. As I said in my comments, visibility is not great around what the future holds. But if I think about the dynamics of handset costs, it's probably important for us to take a step back and realize we're dealing with SKU costs on handsets right now that are quite a bit more expensive than they were even four years ago or three years ago. And whenever those dynamics have occurred, we've come up with different solutions in the marketplace that ultimately allows the customer to manage through those things.

Customers of course make choices from their point of view as to what they wish to do like possibly extending life cycles of handsets. And we've done that within the context of our business model even though we've been seeing average cost of handsets increasing over time. As you know, we've done a nice job of improving the profitability and performance of this business. So if tariffs are the next driver of an increase in the unit cost of handsets, imagine we're going to have to go through the exact same play, which is first of all understand what the customer needs and then make some adjustments to how we support them in that process. But that process is going to be taking that cost as we've traditionally done and largely moving it through to the end user and fitting it into the business model of ultimately what we can afford to drive the right level of returns in our business.

And I think we've demonstrated over time that we've done that fairly effectively. So I think that if ultimately costs are passed to us from those that we buy handsets from Unfortunately for the customer, we're going to have to come up with some new ways for them to figure out how to digest that increase in pricing. I don't see the business model dramatically changing to accommodate subsidy levels that are much different from what's out there today and the modest adjustments we make to those day in and day out, but we'll find different creative ways to build plans and approaches and supports that allow them to continue to use the network effectively and do what they need to do and feel good about it. And I also don't know, I mean, if I step back and think about consumer behavior in this handsets are just one part of a broader ecosystem of decisions that consumers are going to have to make on goods and services and if their flat panel TV in their house is going to be more expensive and if their laptop is going to be more expensive and how they choose to kind of manage this dynamic within that ecosystem, I think we're all going to learn, but I feel pretty good that we've demonstrated we can get through that cycle.

In terms of the growth environment, look, we've I thought we've given you some pretty good views around how we're managing costs across the business in its entirety. It's not just consumer wireline where we laid out for you in the Analyst Day what we're doing across the entire wireline business. And there's certainly in that $6,000,000,000 pool that we're looking at plenty of opportunity to address things that we can move forward and readjust and we're being pretty diligent about that. But we're also improving other parts of our business actively and we've shared some of that with you. We've talked about what we're doing broadly across our call centers.

We've talked to you about how we're getting more efficient in our software development and our information technology organizations, shared with you that we've done a lot better in how we've managed our digital channels for acquisition and customer awareness and that's before I think we've really gotten good at the operational side of our digital channels, which we're investing pretty heavily in that I think we can have some additional uplift and the efficiency of how we bring customers into the business and support them. So, I think we gave you an indication that we're very comfortable with our guidance for this year is there's a lot of places we know we can go and operate the business a little more effectively and continue to work our expense lines more aggressively. I think you saw that in the first quarter. We clearly invested a little bit more in customer acquisition, but I'm pretty proud of the overall margin performance that the team delivered and how we balance those things out. And I think we know how to do that and we'll continue to do that going forward.

Peter, one other thing to add. Q1 when you look at it was impacted by launch expenses associated with our guarantee. So the organic expense performance was really, really good.

Thanks, Peter. We'll go to next question please.

Our next question comes from Benjamin Swinburne with Morgan Stanley. Please go ahead.

Thanks. Good morning. Two questions. John, I doubt you'll answer this specifically, but I figured I'd ask anyway. There was a press report back in March around AT and T and talks to acquire Lumen's mass markets consumer fiber business.

Curious if had any comment on that or maybe just if you can't or won't talk more broadly about how you're thinking about inorganic investments at AT and T, just given the transformation over the last few years, but also the success you're having with your fiber strategy in general? And then I was curious if you could talk a little bit more about the FCC's recent orders on kind of legacy infrastructure. It sounded like you thought maybe you could move quicker. I don't if that's on wire centers or that $6,000,000,000 pool or kind of all of the above, but could you come back to that comment and tell us what's happened and how that may impact your ability to take costs out of the business even faster than you have already sort of laid out for us? Thank you very much.

Good morning, Ben. I'm not going to make any comments on rumors and speculation that you referenced. What I can tell you is, I'll repeat what I've said about inorganic activity in the business. Always keep my mind open to something that I think can improve value for the shareholder that's clear and centered on what we have laid out as our key strategic thrust in the business and that's to be the best in connectivity. I've articulated that anything that allows me to accelerate what I believe is reordering of assets for converged connectivity in the markets, it becomes a make buy kind of analysis, which is I know what I can make it for and I have plenty of opportunity to make more infrastructure investment in the business and across the nation demonstrated that we're pretty good at that completing our recent commitments early, our cost per, we've been giving you a lot of insight into how effectively we've been doing that on our fiber build.

I think you should take some satisfaction in what you see happening in the fixed wireless growth. That's an artifact, not exclusively, but partly because of our modernization efforts in the wireless network that as we complete those things, it opens up geographies that we previously had closed that we can now sell into. So you can see that we're getting operational execution around those things. And as long as I can build opportunity and do it effectively, that's a good thing to do. And I think it's a sensible deployment of shareholder capital.

If something were to come up inorganically that looked like it rivaled those types of business cases or looked similar to that or gave me a way to accelerate that were the market power of accelerating that did something good. Of course, I'd be open to it. And as I've said earlier, I continue to be looking for opportunities in the business to find those nice tack ons, bolt ons, add ons to our connectivity business that are a little less capital intensive that might be that next thing that we can interest our customers in making an incremental purchase decision from us that is complementary to connectivity and how they use our core services. And don't know if and when something like that will pop around, but certainly if it does, I would spend a lot of time understanding whether or not we can build some organic value for the shareholder as a result of it. On the FCC orders, here's what I would tell you right now.

I think we're in a great place. We talked a little bit about this in December when we had you all together and I think I characterized it at the time that we've been working on this for a number of years and that there had been a lot of pick and shovel work to get to this time and a lot of which we weren't necessarily exposing you to or talking about. But to get to the moment we talked about in December, it took years of work at the state level, took a lot of work internally about reordering data and structuring organizations differently to get focused on things, to get the work set up properly. And I felt like we had it all in a pretty decent package and I used the characterization in December and I said it felt like we're about ready to move from maybe an environment where there was a bit of regulatory headwinds or a little reticence to change to one with regulatory tailwinds. And that ended up being true.

And I think this FCC since it's seeded what ninety days ish ago has already moved to take out some procedural steps on the applications that we had pending to begin doing the things in wire centers that we articulated to you in December we needed to do to pull those costs out. And I think we're sitting at somewhere along the lines right now about 25% of our wire centers where we have what I would call fairly clean sailing to act on all the plans that we told you we needed to do to sunset and we have more applications now pending and we're actively working with the FCC about how to do that more effectively. I would tell you right now my bias internally as I talk with our folks is, I think we now are focused on the effectiveness of our execution and less on the effectiveness of our operational execution and less on the effectiveness of the execution of our legal and regulatory affairs organization. And I'm going to say that deliberately because internally I know there'll be a couple departments that will be running down the hallways cheering and skipping and saying that they're not on the critical path anymore.

And that's the way I feel. And I feel that we are now at a point where our operating groups need to go get the work done. And there's plenty of runway in front of them to do that and they are doing that and beginning to step up on that and that's how the management team is focused. We still have regulatory steps to get through, but I'm not worried about those becoming inhibitors for us to achieve the guidance that we put in front of you back in December.

And our next question comes from John Hovland with UBS. Please go ahead.

Great. Thank you. And I think just two quick ones. First for Pascal. Is there any way to frame the impact of the or quantify the impact of the higher upgrades that you're seeing so far in the second quarter?

I guess you gave us the free cash flow for the quarter, but anything on what that could do to wireless margins or wireless EBITDA growth? That's number one. And then on the business side, if we add back the vendor adjustments, it looks like EBITDA was only down about 5%. Is this a good rate going forward? I mean, the trend had been above 20%.

You guys have been done a great job on the cost side, but is this about the level that we should expect as we look out over the next twelve months in that segment? Thanks.

Hey, John. Thank you for the question. First on upgrades, here is the way we're I think you should think about it. Probably late in Q1 and it continue and as I mentioned in my comments in Q2, it accelerated in Q2, we saw an acceleration of upgrades. We think some of this may be a pull forward in anticipation of the tariffs.

So in terms of Q2, I would expect elevated levels of upgrades. I mean, you see Q1 as a bench should be as a benchmark. I think thinking about it in the context of at least around the same levels. And so as you make your way through the balance of the year, of course, we're always impacted by the normal seasonality that you get with upgrades being more heavily weighted towards the second half of the year. But I think that's a good way to think about our upgrade and remains to be seen how much of this was pulled forward from second half.

In terms of business wireline performance, I would start and say, we're really pleased with the execution of the team. There's a new leadership team in place there and they've come in and I think they've gotten the organization focused on driving growth in Connectivity revenues and we're pleased with how that is going. But importantly, they've taken some steps to really rationalize some of the cost base, recognizing that they still have a pretty meaningful base of legacy revenues. I think this quarter, you benefited from price increases in on legacy plants. Those price increases typically come with higher churn as you make your way through subsequent quarters.

So I think as you think about the balance of the year, we do expect some of the trends to moderate and that we will see a pickup in legacy revenue declines as you make your way through. Also, this quarter, we benefited from the settlement I mentioned in my commentary. That was think about that as around $45,000,000 So we're really pleased, but I think it's too early to really change our outlook for that segment.

Thanks, John. We'll go to the next question please.

Thank you. And our next question comes from Michael Rollins at Citi. Please go ahead.

Thanks and good morning. Two topics, if I could. First, AT and T reported an acceleration of fixed wireless net adds and it's coming at a time when you're expanding the mid band five gs coverage. So curious if you can give us an update on how AT and T is looking at the penetration and financial prospects from fixed wireless? And do these network enhancements give you an expanded opportunity to take more share of broadband outside of the 50 plus million passings that you're trying to get to with fiber by the end of this decade?

And then just second, on ARPU. I'm just curious, when you think about the pricing actions that AT and T has employed over the last couple of years, and you said that against the competitive backdrop and macro landscape. Could you just frame the opportunities for AT and T to continue to improve ARPU for both postpaid phones and the fiber subscribers? Thanks.

Morning, Mike. So as I just mentioned, part of what's happening on the fixed wireless side is as we've done the modernization of the conversion of the Ocotel Lucent excuse me, Nokia, I'm dating myself, the Nokia footprint into the Ericsson footprint, that conversion as we go into those geographies opens up territory where we because we had not done the modernization to the level we like with all of our spectrum assets and the most modern equipment, they typically were not open for fixed wireless access. And that has opened up some footprint that will continue to open up as we go through that over the course of the next couple of years. And I would also tell you on the margin, we're seeing better performance off of that investment than what we would have anticipated. So as we kind of thought about one of the economic reasons why we felt this was the right move, we understood that we would get some better yields off the network given the equipment deployments we were using, the more modern equipment, some of the strategies around how we would actually integrate on a single vendor solution and those are helping.

We've also been doing the network is a living breathing thing. We've gotten better yield and traffic management in some ways that we can use some of those efficiencies back against the network in places that maybe we hadn't anticipated two years ago that have opened up some opportunity. And I would just tell you our strategy overall around how we think about using fixed wireless access has not changed. But what's happening is, I think you're seeing the learning benefits of focus. The business in my estimation has a much clearer point of view right now on the multi year capital deployment and what we're doing and what footprints in terms of our investment.

And so this is it's not just about where you're deploying fiber and where you aren't, it's about what you need to do to make sure that you can transition out of legacy services, so that you have the right infrastructure in place, whether it be wireless, fixed to serve those customers. I think that clarity and the repeatability of that month in and month out is allowing all the organizations that are necessary to serve customers and sell product to get a lot better at what they're doing. And so we're moving up that learning curve of where we want to deploy our fixed wireless muscle, all consistent with what I talked about before, which is we'd like to use it as a catch product from legacy broadband services that we're not going to invest in building fiber in. We'd like to use it as a holding product when we know we're going to be building fiber within a period of time, but we can provide a better solution or some market penetration on a converged basis until that fiber gets there. What we can do in the business segment where the portfolio of the business is clearly a great match for fixed wireless long term because of their usage characteristics and demand characteristics.

All those reasons that we think are the right use cases to deploy, we're just getting better at our muscles around how to find those customers and how to activate that through our various channels and partners to drive that volume. And so I feel really good about the customer base that's coming in. We continue to test that and look at it and say are we getting the right customers that are going to have longevity that are going to be profitable. And I think we'll continue to find places to ramp this modestly as we move forward. But nothing's really changed in our point of view other than we're getting better at all aspects of how we run our business yields on the wireless network efficiency, lining up markets to distribution channels, coming up with the right offers that we can make accretive over the long haul.

And I think that just means we're going to get better over time. On the ARPU side, look, I'm sorry to sound like a broken record. We're going to continue to do what we've done pretty consistently over the last five years, which is we're going to find opportunities in our customer base where we think utility and value has improved tremendously. And because of the performance of the products and how customers are using them allow us to have opportunities to possibly adjust what that means for pricing. I think we have done that pretty artfully over the last several years.

You see the right trends in our ARPU performance. I think in this quarter, you shouldn't see anything in there that you look at and say that's disconcerting or different than what you've been seeing over the last number of years. We're also going to be very sensitive to the realities of the markets we're in. If we walk into a slower growth economic environment or there's a dynamic that goes on later in this year where growth is not what we expected it to be then we'll be smart about how we work with our customers over the long haul and make sure that we do the right thing to keep the franchise healthy and make sure that we're providing value in the right ways back to those customers. So, I will tell you great products, superior products generally allow you to have a little bit more pricing flexibility and I've been saying all along, you should expect that since fiber is the best fixed broadband product in the market over time, you're going to continue to see margins improve on it.

You're going to see its scale operationally. You're going to see it get more profitable and you are seeing that and I don't think we're at the end of that runway of that dynamic continuing to materialize.

All right. Thanks for the questions, Mike. We're going to go to the next one operator.

Absolutely. Our next question comes from Bryan Kraft of Deutsche Bank. Please go ahead.

AT&T (T) Q1 2025 Earnings Call Transcript

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