AT&T Inc.

Welcome to the AT&T Fourth Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, there will be 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, and an operator will assist you offline. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Michael Viola, Senior Vice President of Investor Relations.

Please go ahead. Thank you and good morning, everyone. Welcome to our fourth quarter conference call. I'm Mike Loyola, Head of Investor Relations for AT&T, and joining me on the call today is Randall Stephenson, AT&T's Chairman and CEO, John Stanky, Chief Operating Officer for AT&T, and John Stevens, AT&T's Chief Financial Officer. Randall will begin the call with a brief overview of the 2019 accomplishments and a look at our three-year plans. John Stevens will then discuss fourth quarter results And then John Stanky will walk you through key areas of our 2020 operating plan. John Stevens will then close the presentation with an update on our capital allocation plan and 2020 financial guidance. Then we'll take your questions. Before I begin, I want to call your attention to our safe harbor statement, which says that some of our comments today may be forward-looking, and 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 want to remind you that we're in the quiet period for the FCC Spectrum Auction 103, so we cannot address any questions about that today. As always, our earnings materials are available on the investor relations page of the AT&T website. That includes our news release, investor briefing, 8K, and other associated schedules. And so with that, I'm going to turn the call over to Randall Stephenson.

Randall? Thanks, Mike. I want to start on slide three to close out 2019. And coming into 2019, we laid out a detailed plan for the year. And that plan was the series of specific steps necessary to exit 2019 on a path of sustained growth. A simple summary of slide three is that we met or exceeded every single one of those objectives. And the roadmap is set for the next three years. I told you that our top priority for 2019 was to reduce our debt and exit the year at around two and a half times debt to EBITDA. Done. We have now reduced net debt by about $30 billion since we closed Time Warner. And at the end of 2019, our net debt to adjusted EBITDA was about two and a half times. We gave you the formula for exactly what it would take to get to this debt level. First, we would need to generate $26 billion of free cash flow. Done. We exceeded that handily, generating a record $29 billion for the year. Second, we would need to monetize non-strategic assets and generate $6 to $8 billion of cash. Done. We actually generated nearly $18 billion, more than double our target, and we've already announced an additional $2 billion, which will close in 2020. On adjusted EPS, we came in right on plan, low single-digit growth. At WarnerMedia, we achieved the 2019 merger synergies, and were preparing to launch HBO Max in May. Growing wireless service revenues was critical, and those revenues were up nearly 2% for the full year. We stabilized entertainment group EBITDA and brought in our capital investment right on plan. And after sustained investment in our network, AT&T exited 2019 with the best and fastest wireless network in the United States. Our 5G network covers 50 million people today, and we expect to have nationwide 5G coverage in the second quarter. As we look forward, our 2019 performance positions us well for the next three years. Our plan is very straightforward, and we've laid it out for you on slide four. We see revenue growth every year and expect a 1% to 2% three-year CAGR through 2022. By 2022, adjusted EBITDA margins expand by 200 basis points. Adjusted EBITDA grows by about $6 billion. Free cash flow hits between $30 and $32 billion. And adjusted EPS grows to between $4.50 and $4.80. This is a plan that generates a lot of cash over the next three years. And the board has developed a very thoughtful capital allocation approach that will maintain a solid balance sheet and drive shareholder value. First, we'll continue to invest aggressively and at top tier levels into our core businesses. We expect to invest $20 billion in 2020. Leading in 5G is critical for AT&T, and we're not slowing down. We're more than 75% complete on our first net build, and that will continue. And we're continuing to deploy fiber. In terms of our capital structure, Over the last 18 months, we've retired the lion's share of the debt we issued to acquire Time Warner and will continue to pay down debt, but at a much slower pace. Our cash will be focused over the next three years on retiring the shares we issued to acquire Time Warner. By the end of 2022, we will have retired 100% of the debt and 70% of the shares from our Time Warner transaction. In fact, we retired 56 million of these shares in 2019. We also plan to retire about $100 million more in the first quarter of this year through a $4 billion accelerated share repurchase agreement. By 2022, our leverage target is a very comfortable net debt to adjusted EBITDA ratio of 2.0 to 2.25 times. You can also expect us to continue streamlining our portfolio as we monetize additional assets of $5 to $10 billion this year. And as I said earlier, we've already executed agreements that will generate $2 billion this year. John Stevens will cover the specific steps in the plan later, but first he's going to cover our fourth quarter results. So I'll turn it over to you now, John.