AT&T Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the AT&T First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. If you should require assistance during the call, please press star then zero. I would also like to remind you that this conference is being recorded. I would now like to turn the conference over to your host, Michael Viola, Senior Vice President, Investor Relations. Please go ahead, sir.

Okay, thanks, Greg. Good morning, everyone, and welcome to the first quarter conference call. Like Greg said, I'm Mike Fiola. I'm head of the Investor Relations here at AT&T. And joining me on the call today is Randall Stephenson, AT&T's chairman and CEO, and John Stevens, AT&T's chief financial officer. Randall's going to provide an update of the key 2019 initiatives, and then John's going to cover our operating results. Then, of course, we'll follow that with a Q&A. 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're subject to risks and uncertainties. Results may differ materially, and additional information is available on the Investor Relations website. I also need to remind you that we're in the quiet period for the FCC Spectrum Auctions, Spectrum Auctions 101 and 102, so we can't address any questions about that today. And as always, our earnings materials are available on the IR page of the AT&T website, and that includes the news release, investor briefing, 8K, associated schedules, et cetera. And so now I'd like to turn the call over to Randall Stevenson.

Okay, thanks, Mike. And we do appreciate you joining us this morning. I came to you back in January, and I outlined six priorities for 2019, and we have those again listed on the third slide. But if I could quickly summarize, what I would tell you is in all six of these areas, we're either on track or well ahead of schedule. And the first one, as you remember, I told you that paying down the $40 billion in debt that we took on to acquire Time Warner, that that would be our top priority. And we are on target to retire 75% of that by year end. This quarter, we generated free cash flow of $5.9 billion. and brought our net debt down by $2.3 billion. And that puts us well on track for generating at least $26 billion of free cash flow for the full year. And then already here in the second quarter, we've sold our stakes in Hulu and Hudson Yards. That generated an additional $3.6 billion of cash. And then John Stevens' team is doing their typical great job. They're driving down working capital and restructuring some collateral arrangements And this is also adding significant cash flow, and it's giving us very clear line of sight to reaching our target of $6 to $8 billion from asset monetizations. So bottom line, we committed to driving our net debt to EBITDA ratio to around two and a half times by year end, and we are right on track for achieving that. Second priority was mobility, and we had another really strong quarter, and it continues to grow and build momentum with customers. Our wireless service revenues increased by 2.9%. EBITDA grew, and that's even with some significant accounting pressures. Our postpaid and prepaid phones grew very nicely and, in turn, remains low across both products. So, all in all, I'd have to tell you I'm very pleased with our wireless performance. And then stabilizing profitability of our entertainment group. This was a must-do for us this year. And John Donovan and his team are exceeding expectations. And not only are they stabilizing EBITDA, but they're growing it by nearly 7%. There was a small one-time item in there from a carriage dispute settlement, but even removing that, growth was very healthy, I think around 5% excluding that. And so that was led by 8% growth in broadband revenues. I've got to tell you, our fiber product, the AT&T fiber product, is doing very well in the marketplace. On the cost side, the team is doing terrific work on controlling content costs, promotion costs, and all the other operating costs. And then finally, some aggressive customer segmentation and targeting are driving some higher video ARPUs. And so I think what you should expect is as we work through the year, we'll continue to see declines in traditional TV subs, particularly those areas where we can't bundle with broadband. But as we get into the second half of the year and we roll out our thin client video product, there will be a much lower-priced product in the marketplace. What I think you'll see is subscriber losses should lessen as we get into 2020. And then I think the DirecTV Now customer base, that's our streaming over-the-top product, that should be pretty stable for the rest of the year. We might see some slight customer losses in the second quarter as the price increases continue to flow through, but second half of the year should be decent. Bottom line, I remain comfortable that we're either going to meet or exceed our entertainment group EBITDA target for the full year, and that's going to lay the groundwork for continued stability as we move beyond 2019. At WarnerMedia, it's been a really strong start to the year. Revenue growth was solid. Operating income grew by double digits. Our merger-related synergies are on track, and we expect to hit $700 million in run rate by the end of this year. Snakey and his team have reorganized the business to compete in a world of streaming and streaming content. We brought in some great new talent, like Bob Greenblatt. He's a known commodity. He's running WarnerMedia Entertainment. and is also leading the SVOD development project for us. And I've got to tell you, I think he's one of the best around, and I couldn't be more excited to have him on board. Bob and his team's top priority is to develop our new SVOD service. And as we've discussed, this is a service that will be centered on HBO and significantly enhanced by the Warner Brothers Library, which is a very, very deep and prolific library. The closer we get to launching this service, the more excited I get. We're planning a WarnerMedia day for everybody in the September to October timeframe. And we'll bring in all the executive team across from WarnerMedia, and we're going to give you a detailed look at the product, and that includes the breadth of new and existing content. So just stay tuned for that, and we're making significant investments here, and we think our customers are going to love this product. Now, every facet of our strategy is built on a foundation of world-class connectivity. And a few years ago, we set out to build the best video delivery platform in the world. And we invested billions of dollars securing spectrum licenses. And we made it among our highest priorities to go after and to win FirstNet. That's the national network for first responders. And today... Our first net build has now passed the halfway mark and is running well ahead of schedule. We now have more than 7,000 agencies signed up across the country with more than 570,000 subscribers, and those numbers are growing. This initiative, along with our vast portfolio of spectrum, has catapulted AT&T into the leadership position in network quality. Over the last few months, AT&T has been recognized as both the best as well as the fastest wireless network, and FirstNet has enabled us to accelerate our 5G and fiber build-out. Our 5G service is now in parts of 19 cities, and we'll have 5G coverage nationwide next year. We're the only carrier to offer 5G service to businesses and consumers, and we're well ahead of our competition here. And our AT&T Fiber network now surpasses 20 million locations. That's both consumers and businesses. And in short, our network investments are paying off, and we're not done yet. Finally, Brian Lesser and his team continue to grow Zander. That's our advertising business. Revenues were up 26%, including the AppNexus acquisition. They had strong EBITDA margins, and we're continuing to invest in new product development and capabilities as we integrate more of Turner's ad inventory. So we're very pleased with the progress we're making. Our strategy is working. Our key initiatives are on track, and you can expect strong execution on these priorities as we continue in the quarters ahead. And so with that, I'm now going to turn it over to our CFO, John Stevens, and he'll take you through the results.