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.