AT&T Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the AT&T Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. If you should require assistance during the call, please press star then zero, and an operator will assist you offline. Following the presentation, the call will be open for questions. If you would like to ask a question, please press one and then zero, and you will be placed into the question queue. If you are in the question queue and would like to withdraw your question, you can do so by pressing 1 and then 0. And as a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Amir Rozwedowski, Senior Vice President, Finance and Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to our second quarter conference call. I'm Amir Rozwedowski, Head of Investor Relations for AT&T. Joining me on the call today are John Stanky, AT&T's Chief Executive Officer, and John Stevens, our Chief Financial Officer. John will provide opening comments, followed by John Stevens, covering second quarter results and our liquidity and capital position. After that, John Stanky will come back with a business transformation update and discuss the HBO Max launch. Then we'll take your questions. Before we begin, I need to call your attention to our safe harbor statement, which says that some of our comments today may be forward-looking. As such, they're subject to risks and uncertainties. Results may differ materially. Additional information is available on the Investor Relations website. And as always, our earnings materials are also available on the Investor Relations page of the AT&T website. I also want to remind you that we are in the quiet period for the SEC Spectrum Auction 105, so we cannot address any questions about that today. With that, I'll turn the call over to John Stanky. John?

Thanks, Amir. I'm delighted to have you on board. You know, you delivered that safe harbor statement much better than Mike Biola ever did. Seriously. We appreciate the great job Mike did leading our team for many years and working side by side with him. I'm going to miss seeing him around and wish he and his family all the best in their retirement. So good morning, everyone. I hope you're all doing well as we continue to live with the impacts of COVID-19, which I expect are going to be with us for some time. We're planning and operating under the assumption that significant accommodations for COVID will be the business norm well into next year. The unfortunate reality simply sharpens our focus and strengthens our resolve on the business transformation path we chartered and the investment focus we've adopted. Given that, let me walk you through our priorities moving forward. As a company, our purpose is to create connection. We create connection with each other, with what people and businesses need to thrive every day, and with stories and experiences that matter. That purpose leads us to our market focus. First, as a broadband provider, our high-speed fiber and wireless broadband networks connect the people and businesses that form the foundation for how we live and work. Second, as a software-based entertainment provider, we deliver compelling entertainment experiences through HBO Max, and ATT TV, giving us the opportunity to establish meaningful relationships with the majority of US households. And third, the fantastic stories we tell and share on our platforms drive direct customer engagement and insights and create emotional attachments that can drive long-lasting customer loyalty across our product set. We're executing our plans to provide great connectivity and great content along with better value and service to drive more customer engagement across all of AT&T. Our goal is to give our customers a reason to actively engage with us every day. In fact, multiple times a day. Every touchpoint represents a chance to learn more about what they want. And bringing connectivity and engagement together will allow for the crucial insights to guide future investment and open new opportunities for subscription and advertising supported products. So that's our setup and that's the way you'll hear us talking about things going forward. To grow, we know we have to be more effective and efficient in our execution. As part of our transformation initiative, we have more than 50 different work streams underway that will enhance not only how we work together, but how we deliver improved service levels and greater value for our customers, including competitive pricing that drives market momentum and targeted investment to achieve growth in those key products I mentioned. Our success relies on AT&T becoming a more agile and efficient company that's able to meet our customers' needs in highly competitive and quickly evolving markets. Our transformation began with the new operating model we put in place at Warner Media last year to organize our teams around entertainment networks, live programming, content production, and affiliate and advertising sales. That allowed us to work together across Warner Media and all of AT&T to successfully launch HBO Max. A few months ago, we took the next step and move Zander to WarnerMedia so we could accelerate our progress in building software-based entertainment platforms supported by both subscription and advertising, like the AVOD version of HBO Max we plan to launch next year. Last month, we made changes on how we're organized and operate at AT&T Communications to improve our focus on customer service, simplify and rationalize our product portfolio around our growth areas, and operate with more speed and efficiency. I fully expect that the AT&T that emerges from this transformation work will look different than what we know today. We couldn't make this transition without a solid balance sheet and a deliberate capital allocation plan. We have strong cash flows that allow us to allocate capital effectively. We're continuing to invest significantly in our growth areas of fiber, 5G, which is nationwide as of today, FirstNet, and HBO Max. We remain committed to our dividend, which we've increased for 36 consecutive years. We finished the quarter with a dividend payout ratio of about 50%. We expect to end the year with our payout ratio in the 60s, likely at the low end of that range. We continue to reduce our near-term debt obligations and maintain high quality debt metrics. Finally, we remain committed to an ongoing discipline review of our portfolio of businesses and assets to identify those we can monetize because they're no longer core to our business. Now let me offer my perspective on the quarter before I turn it over to John Stevens to walk you through the details. Our core subscription businesses proved to be resilient in the face of the economic downturn. Our mobility and business wireline segments performed well, and we grew EBITDA margins in both areas. We continued to add new fiber customers, though COVID limited our ability to go into some customers' homes for installs. Our software-based entertainment businesses performed well. ATT TV subscriber growth in its first full quarter was better than we expected. And it's our highest performing video product on customer satisfaction, double the level of our legacy TV services. HBO Max had a strong launch on track to hit its targets we laid out for you last fall. We're already seeing how HBO Max can increase our broadband ads, and increased wireless ARPU. Obviously, COVID had a significant impact on our WarnerMedia segment with advertising revenues, content production, and theaters all shut down. We'll talk more about that a little later in the presentation, but I cannot imagine being at this moment absent the moves we made last year to reconfigure our WarnerMedia operations and refocus the business on the growing and important direct to consumer opportunity. With that, I'll turn it over to John.

Thanks, John. And good morning, everyone. Our financial summary for the quarter begins on slide five. Adjusted EPS was 83 cents a share. That included COVID impacts from incremental costs related to compassion pay and production delays and lost revenues from foregone international roaming and delayed theatrical releases. Combined, COVID had a $0.09 a share impact to second quarter EPS. Adjustments for the quarter include an overall accrual for severance and a non-cash write-down of real goodwill based on the overall economic conditions in Latin America, foreign exchange rates, and COVID impacts. The severance accrual reflects the workforce adjustments we're making as part of our cost reduction and transformation plans. Cash impacts from these severances will occur over the next several quarters. Revenues were down from a year ago, including an estimated $2.8 billion of lost or deferred revenues impact from COVID. This was mostly due to the absence of theatrical and television releases. and lower advertising from delayed sports programming and a slow economy. Lower international rolling revenues impacted mobility. In our reported results, foreign exchange had an impact of about $500 million in lower revenues, primarily in our Latin America segment. Corresponding expense reductions offset most of the impact on operating income. In fact, adjusted operating income margins were essentially flat but were up when excluding COVID impacts. Cash flow was impressive, even during the pandemic. Cash from operations came in at more than $12 billion, and free cash flow came in at $7.6 billion. A variety of items supported cash, including solid accounts receivable collections and some benefits from the CARES Act. And we continue to invest in our growth areas. CapEx was $4.5 billion, with gross capital investment at around $5 billion, a difference primarily attributable to the timing of vendor payments. Plus, we invested an additional $1 billion in new 5G spectrum in the quarter. And we invested nearly $400 million in HBO Max, in line with our full-year estimate of $2 billion. We were active in the debt markets during the quarter, managing our towers for financial flexibility and allowing us to take advantage of historically low interest rates. We'll talk more about that in a moment. Let's look at our segment operating results, starting with our communications segment on slide six. Our subscription business led by Mobility Broadband and Business Wireline remained resilient. Mobility had another good quarter. Even with the impact of COVID, Equipment revenue helped offset declines in service revenues, which were down due to a decline in international roaming revenue and waived overage and late fees. Without those COVID impacts, we estimate service revenue would have grown more than 2%. Even with many of our stores being closed during much of the quarter, mobility equipment revenues grew. with growth in digital sales and a strong rebound as stores reopened late in the quarter. Mobility EBITDA continues to be a solid story. EBITDA of $7.8 billion was up year over year with both EBITDA margins and service margins expanding, and that's inclusive of COVID impacts. Our total reported phone growth was essentially flat We had more than 135,000 prepaid phone net ads that helped offset a decline in postpaid phone. Our quarterly subscriber counts for the postpaid wireless, video, and broadband reflect an estimate for customers who will likely disconnect service once the Keep America Connected pledge ends. In short, we're treating these subscribers as disconnects in the second quarter. While this impacts net ads, churn, and service revenues, we believe this is the most transparent and accurate way to account for this. About 340,000 of our post-paid phone subscribers were counted as disconnects, even though they were still on our network. If you add those back to our results, we would have had about 190,000 post-paid phone net ads and much lower churn. Postpaid phone churn was down two basis points, even with the Keep America Connected accrual. We also had a record low prepaid churn of under 3%. The popularity of our unlimited plans also increased, thanks in part to our elite package that includes HBO Max. In our entertainment group, we had lower video and advertising revenues. This includes an estimated $300 million impact on both revenue and EBITDA from COVID from lower advertising demand and lower commercial volumes. AT&T TV gains helped offset premium video losses and at the same time had about a 90% attach rate with our broadband services. Premium video losses remained about the same as the first quarter. Broadband customers continue to look for faster speeds. We added more than 220,000 AT&T fiber subscribers and the number of customers opting for gigabit speeds increased by more than 750,000 in the quarter. We now have 4.3 million AT&T fiber customers with nearly 2 million of them on one gigabit speeds. I should point out our total broadband numbers do not include 159,000 subscribers who are counted as disconnects, even though they remained active on our network through the Keep America Connected program. We continue to drive ARPU growth in both video and IP broadband. In fact, premium video ARPU was up more than 6% as we continue to focus on long-term value customers. Business wireline performance was solid as enterprise customers trusted the reliability and flexibility of our network. EBITDA was essentially stable year over year and margins expanded by 90 basis points. Revenues were consistent with recent trends as slower declines in legacy products were partially offset by a growth in strategic and managed services. This EBITDA strength was even more impressive when you consider that a year ago, we had an IP sale which helped both revenue and EBITDA results. If you back that out, revenue would have been down just 1.7% and EBITDA would have grown. Let's move to WarnerMedia and Latin America results, which are on slide seven. As John mentioned, the COVID impact is most evident in our WarnerMedia results. Altogether, COVID had about a billion and a half dollar revenue impact in the quarter. Lower expenses resulted in a favorable impact on EBITDA. The biggest news of the quarter from WarnerMedia was the successful launch of HBO Max, which John will cover in more detail in just a minute. Turning to our Latin America operations, foreign exchange was a major factor as we're slowly economies and the onset of COVID. Mexico was impacted by lower equipment sales from COVID related stores closures. This also impacted prepaid customers' ability to renew their service. Even with this, Mexico EBITDA improved year over year. Brie also continues to work against significant economic and foreign exchange headwinds, which have become even stiffer with COVID. But even in this challenging economic environment, Rio continues to generate positive EBITDA and cash flow on a constant currency basis. We closed our Venezuela operations in the quarter to comply with sanctions of U.S. laws. This had minimal impact on Rio's financial results, but did reduce its subscriber base. Now, let's go to slide eight for an update on capital structure. We exited the quarter with a very strong financial position. Cash flows were strong, our capital allocation remained focused, and we made large strides in effectively managing our debt portfolio. Our strong free cash flow in the quarter gives us even greater confidence that we'll hit our full-year goal of a total dividend payout ratio in the 60% range, likely at the low end of that range. We also continue to invest. We now expect gross capital investment to come in at the $20 billion range for the full year, consistent with our original 2020 guidance. The FirstNet build continues to run ahead of plan. We expect additional network benefits as our 5G build is expected to reach nationwide coverage today. The network and the entire FirstNet team has done a great job. in building out our 5G network. We've been active in the bond market. Rates are low, demand is healthy, and we used this opportunity to issue about $17 billion in long-term debt at rates significantly below our average cost of debt. This allowed us to materially reduce our near-term debt towers, making our debt obligations for the next few years very manageable. We'll continue to be disciplined with debt management Ongoing liability management strategies are actively being considered to maintain and improve flexibility and reduce risk. We have several other levers we can pull to optimize our capital structure. We expect to close about $2 billion in pending sales from CME, real estate, and tower monetizations this year. We also expect to close our Puerto Rico wireless sales soon with those funds used to redeem some preferred interests. And you should expect us to continue exploring other opportunities. And I would like to turn it back to John for an update on our business transformation and HBO Max. John?

Thanks, John. Let me give you more detail about our business transformation on slide nine. If anything, COVID has led us to ramping these efforts. We're moving forward on the 50 work streams I mentioned earlier. which we believe can generate $6 billion in savings over three years. We've made good progress in hitting our short-term objectives, but there is much to do over the next couple of years. A workforce realignment and reduction of labor costs is underway. We restructured some of our benefit plans earlier in the year, and we made several moves to streamline operations. Within the communications business, We're also streamlining our distribution. The closure of retail stores during COVID gave us a unique opportunity to review our retail and third-party distribution capabilities. Some of our least productive stores won't reopen. Other locations will shift to independent distributors. And we're enhancing our online and omnichannel capabilities to align with how customers want to do business with us. Our market and product focus will drive simplification into our operations and resize our operating and technology footprint, all while taking further advantage of our evolution to cloud and virtualized services. Our shift to software-based entertainment with ATT TV is validating our assumptions on customer self-install. We expect this, coupled with the growth of our fiber-based broadband subscribers, will improve service levels and reduce field operating costs. We're also giving our call center representatives improved capabilities to streamline and enhance the sales and service function, and we're rationalizing and modernizing our billing and collection systems. Last, we're pursuing incremental opportunities to take out additional costs around corporate functions across the company. As I mentioned earlier, we've had some success in this regard, but work remains to further streamline the functions that support those directly serving customers. Bottom line, we're off to a good start on our transformation work. We have management teams in place on each of our major initiatives and a senior level governance structure to guide and resource this work. We're in great shape to do exactly what we said we're going to do. Now, I want to provide you with an update on the success of our HBO Max launch on slide 10. First, I want to give full credit to the entire HBO Max team, which put together a flawless launch. I'm extremely proud of their efforts and accomplishments. We effectively established a new distribution framework for WarnerMedia. The platform performed superbly. Activations were strong, and the content is world-class, and the team developed and launched the service in a short time frame and managed to get it all over the finish line in the middle of a pandemic. We're right on track with the targets we discussed with you last fall for HBO Max subscribers, activations and revenues. HBO Max's diverse library of content appeals to everyone in the family, letting us reach a much broader demographic than our traditional HBO service. With that broader appeal, we've been able to expand beyond the traditional HBO subscriber base. We finished the quarter with 36.3 million U.S. subscribers to HBO Max and HBO, up from 34.6 million at the end of last year. Customer engagement has exceeded our expectations. It's the early days, but the average number of weekly hours spent viewing Max is 70% more than on HBO Now, clearly demonstrating the strength of our library and our success broadening the appeal of the product to more family members. It's our WarnerMedia-owned content that's at the top of the viewing list, And that's driving the majority of the total hours consumed on the platform. In the streaming business, your content library is the key to keeping customers, but it's the new originals that drive subscriber acquisition. With COVID shutting down content production in March, we've been challenged to get all the originals on the platform that we planned. But we like the early reception of what we've been able to get in front of the customer base thus far. We launched Max with six new originals. All were found in the top 25 viewed series on the platform. By August, we'll have 21 new original series on Max, which we expect to sustain our near-term acquisition efforts. Like everyone else in the industry, We're working on ways to resume production, and we hope to see that engine start to fire back up next month. Having said that, it's one of our more challenging things we're doing to respond to the pandemic, and it's going to take time to return to our February production levels. We view getting our production back online as critical to making our 2021 subscriber plan. One month after launch, HBO Max had about 3 million retail subscribers and 4.1 million subscribers had activated their Max account. Of those, more than 1 million were wholesale subscribers through AT&T. As you might expect, we're seeing more rapid activation with subscribers who are active users of the HBO Digital offers but we still have work to do to educate and motivate the exclusively linear subscriber base, and we'll continue to work with our wholesale partners to drive these activation rates. We're also bundling HBO Max with some of our premium wireless and fiber plans. We're seeing a positive pull-through that's at or better than the wireless unlimited plan step-up assumptions we shared with you in October. You'll recall this, coupled with the 5G handset upgrade cycle, was one of the key drivers to growing wireless service revenues in the latter half of the year. Finally, we worked hard to make HBO Max available to consumers through nearly every content distributor in the United States. We've tried repeatedly to make HBO Max available to all customers using Amazon Fire devices, including those customers that have purchased HBO via Amazon. Unfortunately, Amazon has taken an approach of treating HBO Max and its customers differently than how they've chosen to treat other services and their customers. We're glad to have agreements in place with, among others, Apple TV and Google Chromecast to give customers the right to stream HBO Max on those devices. Amir, that's our presentation. We're now ready to go to the Q&A.

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

Thank you. As a reminder, if you'd like to ask a question, please press 1 and 0. Your first question comes from the line of John Hudlick from UBS. Please go ahead.

Thanks, guys. Maybe if we could drill down into the entertainment segment a little bit. John Stevens, I think you mentioned something about sort of the non-cash piece that may have affected sort of EBITDA on a year-over-year basis. We could get more color on that. And then anything you guys can tell us on volume trends? I realize there's a real lack of visibility as we look into the second half. But, you know, the video losses got a little bit better, even with the KC. pulled out, but just how you see sort of video and broadband trends as we look out into the second half of the year would be great. Thanks.

Thanks, John. Thanks for your question. Let me give you a couple of thoughts as John joined in. One point is we did get a little bit better on the customer trends, and that did include, I think it was 91,000, if you will, accrued disconnects. Customers were still providing service. So if you back that out, it was a step down. It was an improvement. But we're in the middle of a pandemic, and so we're being real careful with how we address this situation. Secondly, we were real pleased with the AT&T TV rollout. It has been successful. It is working. Once again, because of the pandemic, some of the in-home installs and some of that activity has been limited. So once again, we're cautious as we come out of that. To specifically reference, we amortize installment costs like the whole industry does, and because of AT&T TV, those installment costs from a cash basis are going down, but the amortization of prior installment costs are still here, and we've taken a more conservative view on the lifing of those. So those costs are up year over year. So when you adjust for that, we actually had cash to actually grow when you make that adjustment. But for COVID, we would have saw an increase. So it's a challenging business. Continue to focus on cost savings and continue to generate a lot of cash out of it. But the important piece is this utilization of AT&T TV Now. and taking into that overall strategy of software-based entertainment programs. John, you want to add anything to that?

John, there's clearly gross pressure, and I'd offer a couple thoughts around this. Our churn on the base approved again sequentially, and that's even with the Keep America Connected adjustment in there. And so the base dynamic is actually getting better in the teams customers and servicing them in the right way. But the gross pressures are pretty significant. I would say to the extent a reason comes back for people to engage in pay TV, such as sports returning, where there's some feeling of something that they're missing, if that doesn't recover, it's going to continue to pressure throughout the balance of this year. Now, what I really like about what I see about our opportunity, if we start seeing that growth recover, is, as we shared with you, the ATT TV response has been really strong. Customers like the product. It's a much better product to use. It's clearly something that allows us to attack more of the market, given the lower SAC costs that John described. And the broadband attachment has been far superior to where we were with the previous product set, and I think that's one of the reasons you saw the sequential improvement in fiber as we move forward here. So I think that dynamic is going to be good for us as we move through the year, but I really need to see some reason for a customer to want to get into the pay TV product, and that's going to probably correlate to what we see on the sports portfolio.

Thanks, guys.

Thanks, Ken.

Your next question comes from the line of Phil Cusick from J.P. Morgan. Please go ahead.

Hey, guys. Thanks a lot. So still on the pledge, what's been the response from those customers in July as you asked them for payment? And can you quantify at all how much revenue you didn't recognize from those customers in the second quarter?

Yeah, let me give you this cheat sheet way of doing it.

I think about it as a, I think the most conservative way is just taking a month's revenue on a postpaid customer, and you guys have the ARPU numbers, so you can understand what that revenue would be like. I'd also try to give you that focus in our detailed schedules that we provided. We provided a recommendation of what we saw as the revenue pressure and mobility from COVID. It's included in there, and I think that revenue for the for the quarter was $250 million, inclusive of the international roaming and these kinds of payments. So what I would suggest to you is that's the easiest way to calculate it. A couple of things. One, we're actively contacting, working with, and trying to retain these customers, and certainly we haven't given up on them and they haven't given up on us. So Clearly, we are hopeful of retaining many of these customers, but since they're not paying us, our rules would, our accounting processes, our transparency processes would tell us just to treat these as disconnects. I know some others in the industry have different views on it. They may push this off to the third quarter later in the year or may make base adjustments and so forth. We're just not doing that. We're just taking it up front and laying it out for you, not only on wireless devices, but on video and on broadband. And I point those out because the video and the broadband numbers are measurable also, 91,000 video and almost 160,000 on broadband. But hopefully I explained, I mean, if you think about that postpaid number, one month's revenues, you know, at a normal ARPU kind of gives you an indication of the kind of money we're talking about.

Yeah, so I'm just curious. So three weeks into July, as I expect you, you've been contacting these customers regularly. What's been the response? Can you give us any kind of hit rate or what they look like in terms of responding with some ability to pay?

Yeah, so there's been generally a positive response. I will tell you, we assumed that we'd get some of these customers back in this accrual, just so you know that. I mean, there isn't as much as accrual that we would win some of those back. We're doing a little bit better than that accrual, but it's still too early. We still have a significant number And quite frankly, I want to point out, we refer to this as the Keep America Connected programs or pledges. There's a number of them out there. There's not only at the federal SEC level, but there's a number of them out there at the state-by-state level. So this is something that will be with us through the whole quarter.

Okay.

I'm not going to give you a specific number, Phil. I'm honest. I just would tell you on all three segments, we are working really hard to retain those customers.

Okay, but doing a little better than your accrual. That's good. One other if I can. Can you quantify at all the sports cost amortization that will probably come back given the league's plans for the third quarter? We saw really great margins from Turner this quarter. I want to make sure I understand where we should be ready for that to go in the third quarter.

Yeah, I think if you look at what we spelled out in the best indication, that's going to be what we spelled out in the COVID schedules where we listed out those impacts. But you're right, Phil. We will have sports costs come back in for the NBA particularly, and we'll have those revenues come back. And as we expressed to you, those just two pieces of direct costs are generally leave a pressure on the business. And we got relieved of that pressure in the first quarter because of the delays. And now we'll recognize that accounting in the third quarter here. So we will see that. And I think you see the biggest piece of that really showing up in the COVID schedules that we disclosed.

Thanks, John.

Thank you, Phil.

Your next question comes from the line of Simon Flannery from Morgan Stanley. Please go ahead.

Okay, great. Good morning. Thanks so much. John, I think you said COVID is going to be with us for a while. Could you just give us a little color on what's happening in the wireless stores today? How are sales comparing to a year ago levels? Are you getting back even with maybe some of the rollbacks we've seen in some of the southern states as well? And what's going on on the business wireline side? Those results were very strong. How are those conversations going today? And then you outlined the transformation benefits, $6 billion. Perhaps just help us understand how is that going to be fairly rateable over the next three years? Any color around timing would be great.

Sure. How are you doing, Simon? First of all, traffic has bounced back in the stores pretty well. It's still not quite entirely back. You know, you have pockets where it's maybe back to normal other shared with you, we're now giving customers other options on how to fulfill. So in some cases, using omni-channel capabilities or doing work online and simply rolling by the front of the store to pick something up. But I'd say by and large, I don't feel in any way, shape, or form we're impeded in retail relative to what customers wish to do with us. And it's just a matter of what we're seeing generally in the broader population of people being out and about. We're starting to see a little bit of life coming back into the handset cycle right now. I'd expect a little bit later this year there'll probably be some new product in the market from certain manufacturers that is going to further stimulate some store traffic and feel like we're dealing with it fairly effectively. So not really worried about the retail dynamic at this point, and I think it's recovering reasonably well. The biggest wild card on that is what's happening in states that are pressured a little bit with COVID. Hopefully, as people try to get the infection rate under control, it's not an entire lockdown again. From my point of view, that doesn't seem to be necessary. My observation is we're able to manage the dynamics in retail pretty well in terms of safety and how people do business. There's other activities that are probably the higher risk things, but who knows? As we all know, the decision-making is not always as clean and factual as it needs to be in those cases, so we're going to have to see where that goes. On the business side, we had a strong quarter, and I would say that I would expect it will be hard to sustain that level into third quarter, and we've expected, you know, we kind of forecasted that and how we've characterized for you how the year shapes up. You know, we're going to see pressure, especially in the lower end of the business market. We've already taken a fair amount of it. If you look in the entertainment segment, you know, we were really heavy in bars and restaurants and that we have and they've been hit really hard and a lot of them have not come back. And then in the data services side and telephone services side, for the small end of the market, I expect there's going to be continued pressure there. Now, if there's a silver lining relative to our portfolio, I think as you're aware, our enterprise segment is probably more oriented to mid and larger businesses, generally speaking, overall. I think they'll be in a better position to sustain what's going to be a tough economic environment. But, you know, that business does cycle with how the economy moves, and we're going to see some pressure on that as we move into the third quarter and what that does for our performance there. And I think we've got it pigeonholed pretty well relative to how we've set expectations with you on cash moving through the year. On where we are with our – Six billion efforts. You know, I think what you – I wouldn't say it's ratable. The way I would say is, you know, we've got probably some short-term things we were able to do early in the cycle. You're starting to see that momentum come in. You clearly see we're doing some work right now on the reserves we set up for some restructuring that we put out that is directly tied to our plans around what we're doing for some of the efficiency work and restructuring that's going on. You kind of see the midterm where maybe it drops off a little bit as we're working some of the technology initiatives and business improvement initiatives that take a period of cycle as you move through software development that's necessary. And then as you get into the latter part, those bounce in and start to occur. So I'm not going to call it an inverted V. It's not that, but you get a lot up front. you see a little bit of softening and then it pops up in the tail end that comes back in. So it may be risk adjusted in that fashion. Right.

That's helpful. Thank you.

Next question. Next question comes from the line of David Barton from bank of America. Please go ahead.

Hey guys, thanks so much for taking the questions. Um, uh, this one might be for either one of the two Johns. Um, Could you guys address the timing and or criteria and some of the kind of political considerations about restarting the buyback program and whether it's a certainty that that buyback program comes back in 21 or not? And then the second question is, I guess, related to the wireless business. I guess maybe this one's for John Stevens. Two forces are the pressure from overage and roaming the revenue line offset a little bit by the equipment on the lower equipment velocities. And then also you have this hazard pay for the union forces. Could you kind of talk about which of these forces is going to be stronger? Is the hazard pay going away and that's going to give you a lift? Is the equipment going to accelerate and that's going to be a pressure? When does the roaming come back? If we could get some color on those moving forces, it would be helpful. Thank you.