AT&T Inc.

Q2 2021 Earnings Conference Call

7/22/2021

spk_0: ladies and gentlemen thank you for standing by welcome to a panties second quarter two thousand twenty one earnings call at the time all participants are in listen only mode if you should require assistance during the call please press start than zero and operator was just you offline following the presentation the call will be open for questions if you would like to ask a question please press one and zero you'll be placed in the question que if in the question q and you would like to withdraw your question you can do so by pressing the one and then zero as a reminder discoveries is being recorded i would like to during the conference call over to your host the mayor rise with our ski senior vice president finance and investor relations
spk_1: please go it
spk_2: thank you and good morning everyone welcome to our second quarter call i'm a mere without he had of investor read him into joining me on the call today are john thinking or ceo and pascal the road or cfl awful joining us for the q and a portion of our call or jeff mcalpine the ceo of our communications group and jason collar feel for one a media before we begin i need to call your attention to are safe harbor statement it says that some of our comments today maybe forward looking as such there subject to risks and uncertainties describe in a tnt that if he filing results may differ materially additional information is available on the investorrelations website and as always are earning materials are on our website i also want to remind you that we are in the quiet period for the fcc spectrum auction one ten so unfortunately we can answer your questions about that today with that altering the call over to john thank you john good morning everyone and thanks for being with us at the risk of being repetitive or i guess consistent depending on your take the framework for what i want to cover today should be familiar to you it's been four quarters since we articulated a simplified strategy and how we plan on evaluating our success going forward based on three priorities first we wanted to grow subscriber relationships two or three market focus areas of five g fiber and h b o max second we initiated an effort to transform our business to be effective and efficient and everything we do so that we can allocate increase resources to support these focus areas and third we committed to deliberate capital allocation to support increased investment and growth improve returns narrow our operating focus and restore flexibility to our balance sheet to achieve these priorities we made some difficult near term decisions to set our business is up for success in the coming years that success is defined by improving our competitive position to the investment and best in class products and experiences for our customers by doing so we believe the execution of the strategy would drive better returns and profitable long term growth let's look at what we've achieved in the past year on slide for
spk_3: we made notable progress and each of our priorities
spk_2: and wireless regaining share lowering churn and had our best twelve months of postpaid phone that adds in more than a decade and we just posted record quarterly wireless it and fiber customers is similarly responded to the combination of a premium service and attractive prices and we've grown are base by more than one million subscribers
spk_3: by year and live expanded our fiber footprint by three million consumer and business customer locations
spk_2: and just over a year after launch we've grown our domestic h b o max and h b o subscribers by ten point seven million we transformed h b o from a six billion dollar business that was not growing to and eight billion dollar run rate business the grew at nearly forty percent this quarter we've also made solid initial progress and our cost transformation efforts which produced two billion dollars in savings that we reinvested into our core growth areas where streamlining our operations and effectively growing digital fulfillment channels or nps scores have improved significantly and are fiber customers continue to raiders number one in customer satisfaction turn levels have dropped substantially to our second quarter postpaid phone turn matched a record low and in broadband we had our lowest turn on record and the highest second quarter fiber gross as ever at one or media we continue to deliver great content in the first half of the year we introduced hit series such as mayor of east down and acts and our line up in the back half of years even stronger with new seasons of popular series such as succession raised by wolves curb your enthusiasm and love life
spk_3: that's on top of the day in day movies will have on the platform such as space jam a new legacy the suicide squad doom and matrix for when the emmys were announced last week h b o max and h b o led the field with a hundred and thirty nomination the most of any network a platform in total one or media received more than one hundred and eighty nominations
spk_2: i'm really proud of the way the team is executing
spk_3: and speaking of good execution
spk_2: were seen indications that are directv deal with tpg my clothes and the next few weeks i had a what we expected also we're pleased with the new management teams ability to exceed operational expectations since we announce the transaction our intention with water media is the same we want to hit a strong exit velocity for both of these businesses at which point the combination with the right partner only expands the respect of opportunities for success going forward and we continue to invest in strong levels more than sixty billion in the last twelve months and five g wireless including spectrum fiber and premium content finally we announced are closed and number of non core acid dispositions supporting our path to balance sheet flexibility
spk_3: the same time we position each of our three major businesses agency communications one or media and directv the right capital structure the right assets the right management team and indicated a ladder to the right partners to optimize their returns to drive material value creation going forward
spk_2: these decisions were not easy and in some cases they compelled us to rethink how to best deliver returns to our shareholders leading us to balance long term value creation
spk_4: with an attractive dividend
spk_2: is or second quarter results demonstrate the momentum and our strategic areas of focus is real supporting our view the we have the right business strategy and capital structure in place for longer term success today we're updating our twenty twenty one outlook for are consolidated business that are works far from over we know that consistent execution is the only way to winning keep our investors' confidence in the strategy we put forth
spk_3: i couldn't be more pleased with the progress we're making
spk_2: i'll turn it over to pass gonna discuss the details of the corner as golf
spk_5: thank you john and good morning everyone
spk_6: the second quarter we saw impressive growth across mobility fiber and to be on max we added nearly eight hundred thousand posts pay phone that's our best second quarter in more than ten years subscribe alma mater continues to be strong and we continue to take takes the because had your up showrunners that record low level and our average promotional span poor net ad is significantly lower than a year ago thanks to the consistency in are offering the story with fiber remains much the same we continuously solid subscriber growth with most of those customers new to eighteen see add broadband reviews grew more than eight percent h b o max continues to exceed our expectation having surpass the more and of our global subscriber targets six months ahead of plan we are now raising expectations to seventy seventy three million global subscribers by the end of the year
spk_5: we also lots or domestic at the point of version of h b o max as well as our international offering in thirty nine latin american territory that the end of the corner that sets us up for additional customer growth as our addressable market expand let's not turn to slide seven pocket could a financial results
spk_6: last year we saw the brunt of the pandemic impact on our cue to resolve while the pandemic is still having some impact on our results were seeing our businesses emerge stronger than before with growth accelerating in our market focus areas revenues were up one in three billion dollars or so
spk_2: seven point six percent from a year ago gains more media mobility and consumer while i'm more than offset the clients in video and legacy business services adjusted ebitda the clyde mostly due to pandemic impact it's having a sports cars and last year second quarter we'll talk more about that in a mommy
spk_6: we expect most of that reverse itself next quarter in fact we expect consolidate it ought to be flagged up modestly next quarter and improving their after a just a dps with a quarter was eighty nine said that's up what and seven percent year over year this includes about two hundred million a pretax
spk_5: ain't possibly from mark to market gains on benefit plan investment adjustments for the quarter included a four point six billion dollar pretax noncash right down of the real assets based on our sales transaction announced yesterday cash flows continue to be resilient cats
spk_6: i'm operations came in at ten point nine billion for the quarter free cash flow was seven billion even with a two point four billion dollar increase in water media casket and investment or dividend payout ratio was about fifty five percent cashflows this quarter were also impacted by the capitalization of interest of about two hundred and fifty million dollars associated with our recent he danced spectrum purchases which are recorded as investing activities
spk_5: this accounting treatment stops wants the spectrum is deployed left now look at our segment operating results starting with our communication business on slide eight
spk_6: our communication segment grew revenues driven by games in mobility and consumer wireline mobility groped continues to accelerate and we delivered another terrific quarter or simple postpaid phone offers continue to resonate with customers
spk_5: revenues were up more than ten percent with service rep news grown five percent postpaid phone turn mac a record low and we continue to have strong customer grope especially in our postpaid found days or postpaid for customer net at improved by nearly a million year over year
spk_6: yeah and even that is up two hundred million or highest iba dark water on record this growth k without a material return international roaming reviews and a difficult compassion to laugh he is key to that included more than a hundred million of games on power sales as you think about the balcony year keep in mind we are expecting a normal handset introduction saigon the third quarter vs last year's fourth quarter a lot also on the timing front we expect our recent agreement with this to body boost to wireless service reviews and twenty twenty two
spk_5: this is why are like continues to deliver consistent margins and followed either didn't even as customers transition away from higher margin legacy services and products
spk_6: we saw the quite sure poop in a book iba and he did our margin year over year compasses were impacted by benefits related to the pandemic and a year ago quarter we expect similar touting coffee in the third quarter however with continued product rationalization a cost management would very common with maintaining this while i margin in the high thirty percent for the remainder the year or five got continues to be solid we added two hundred forty six thousand fiber customers in the quarter broadband ought to grew by six point one percent year over year or as the fiber penetration rate is now more than thirty six percent up from about thirty one percent a year ago and nearly eighty percent of net at our new a broadband customers we've reached a major influx important or consumer wireline business broadband revenue growth now surpassed his legacy declines this helped ride consumer wireline grab use up two point nine percent we expect broadband refuse to continue to outpace legacy decline he would i tried are also expect continue improving as we make our way to the second half of the year
spk_3: let's move toward immediate results which are slide nine
spk_2: we feel really good about our execution that one media coming out of pandemic subscription advertising and content revenues had accelerated customers love h b o max and subscriber growth is exceeding expectations
spk_6: and we had a successful lot of folk ad supported you national h b o max offerings layton quarter revenues were up one of thirty percent thanks to high subscription advertising and content run
spk_3: direct to consumer subscription refuse his group nearly forty percent reflecting the success of h b o max advertising revenues were up nearly fifty percent driven by sports and up but a supply been really strong
spk_6: carter another revenues were up thirty five percent reflecting the recovery a tv production and theatrical releases the retire sports had a big impact on advertising revenues and even and a quarter in fact sports contributed more than four hundred million of advertising read news and we incurred sports cause of one point one billion in the quarter so discreet losses from sports increased more than six hundred million year over year due to last year suspension of sports in the second quarter we expect most of that to reversed itself in the third quarter at the prior third quarter included the restarted the n b a season
spk_5: we now have forty seven million domestic h b o max and h b o subscribers
spk_6: and more than sixty seven million worldwide subscribers and the best a cop who is just a little less than twelve dollars or ad supported international offerings will watch too late and a quarter to have much of an impact or the second quarter results but were enthusiastic about their prospects given the initial receptivity
spk_5: as mentioned earlier we are raising our subscriber growth expectations for the year
spk_6: we're seeing good momentum especially know latin american markets we expect most of our subscriber growth for the remainder of the year to be from lower our to subscribers in that region lean into h b o max fast start in latin america we may push back our laws in some european market for until early twenty twenty two this shit is factored into or revise it for your mac subscriber guides for the year now let's shit the garden as shown that to be updated awkward followed guidance for the year let's discuss that off like ten as a reminder er guides for twenty twenty one is on a business as usual basis and include a full year contribution from directv based on the momentum we're seeing across our operations we now expect can follow revenue growth in the two to three percent range up from the initial one percent guidance we also expect wireless service rep you grow up a three percent for the year up from about two percent adjusted just a is now expected to increase in the load amid single digit range that's up from our earlier guys a stable with twenty twenty growth capital investment expectations remain in the twenty two billion dollar range and we now expect about twenty seven billion a free cash flows for the year
spk_2: also we now have better clarity on the project to close or the directv transaction we expect the transaction to close in early august
spk_6: he is expected impact from excluded five months a directv on the could start a financial guides we just played out revenues are expect to be lower by nine billion he the dot is expected below by billion free cash flow is also expected to be lower by about a billion equating to twenty six billion for the full year we expect no change to are updated a just vps guides as benefits from be counting treatment related to the nfl sunday ticket are largely expected
spk_2: the offset by certain fix cars that were previously allocated to directv capital investment guys is also expected to remain the same obviously the actual financial impact could vary depending upon directv performance the actual close eight and other considerations we recognize
spk_6: the financial structure the directv transaction is complex that is why we included some incremental details on cash dividend distribution turns not press release shortly after we closed the deal we plan provided pro forma historical financials to help your modeling going forward
spk_2: amir that's our presentation we're now ready for the cuny thank you back out operator we're ready to take the first question
spk_0: of course and our first question today cause for the line of john hunt with with you be us please go ahead
spk_7: a great take the money guys i'm hoping you could tell us about the details of the of the wholesale deal with dish you're specifically just to any thought i i noticed guy you mentioned that he would fit your needs and twenty two the just as good as expected take all of that the the traffic aren't you know it and and maybe to give us a sense and when did you start to migrate a over what timeframe you keep you'd see that and then also as part of that announcement there was there isn't some details about them to spectrum said you guys could utilize from from jersey that that is that the seven hundred mhz spectrum that you can i just didn't need to get to see details on how quickly that could be put into into it could be lit up and senate used by he did you mobility she great thanks
spk_8: oh john say first images gonna start out you step back and say you ever yeah sen that said the last couple days the mainframe one thing we have been in the wholesale business sense as long as i've been working for this company in the wholesale business has been very good dar company and it's a very important element of how we manage ah returns and a how we kind of think about it on attracting the rank had a scale on our business moving forward that boat tune the fixed and wireless business and we've been cognizant of percentages of pravykh that we haven't in various aspects of our business and always try to maintain a balance and i would say and my experience with his company and looking at the relationships with had for wholesale perspective we've always managed to strike relationships that we thank her when when relationships or the parties involved second thing i would say is i believe the dish is going to be a company that in their business model what they choose to do moving forward is going to be successful one way or the other and my point of view and it when we start thinking about a wholesale businesses when somebody is gonna be successful it's always nice for us to be successful along with them but think there's a a create a way to do that the dry drives a reasonable return back into the business and again manage the balance of that traffic in the aggregate of business and i think we've achieved that and this case and frankly a given the nature of their business and where they are and it's maturity and what our interests are and ultimately aggregating as much traffic on our networks as possible i'm i'm looking forward to demonstrating to dish that we can be a good partner and the we carry the right kind of traffic and we can do things to help them grow their and the structure overtime on parts of our network where they may not have ready access infrastructure the weekend ultimately support them worth and i think that's a good thing for eighteen t of and along all given the nature of our business and what we've done and the balance we like to keep between retail and wholesale traffic the construct around this particular agreement as you should think about it is as you know of it was set up so that as dish continues to build their own infrastructure for own and operate they need places to put traffic and so while this is a tenure agreement it's discussed i think in the disclosure he says a minimum commitment per year one should think about this is probably been something that's more front and loaded them back and loaded in terms of how that commitment retires and i think he should also think about it in terms of a dishes established with us a minimum annual commitment that's that's not the he necessarily the annual commitment or the maximum annual commitment and a lot of this will be based on our of that the performance with them and ultimately what they choose to do in the market but frankly we aspire to possibly see that you know be something greater than what those minimum levels are they didn't put in place but this was a comfortable construct that i think both parties could agree to to get started and establish all the practices and processes that are necessary to have an effect of wholesale arrangement like this and down i think that we we need to demonstrate that we can do well and ultimately see that grow and i don't want to speak on behalf of dish or charlie i'm i'm sure he well and he has a chance to comment on that but i believe in a one of the reasons they viewed as has been a good move for them and their assessment of where things were in the industry is they felt like we could be a very capable and more capable partner in their current arrangement and they have motivations her business reason the can ten you to deep in that relationship with us and i would go on to same as we think about what we do with them on this relationship going forward is there are a lot of options a week and explore of spectrum is certainly one so than we ever ride a spectrum licenses were our existing radio and the structure of can ultimately deploy and put to use some other spectrum that's been done through the pandemic of we haven't you know options to do some of that as well as we move forward and enlarger i don't think any of us know the course of a longer term relationship what's going to happen to other rags and specs on on spectrum and i think parties old keep their mind opening those evolutions occurring
spk_9: in and look for some other options to pursue the right now we know we need to do with a wholesale agreement the friendly is really no different than any other wholesale agreement that it's in the market like with maybe and does with tabler while we've done with other other entities that an elected you the final wholesale this is jeff the one i have the thing to that that them into your team did a great job on it together is or a big un gonna think he covered the broad strokes of of a just say the cadence between the two organizations and getting ready begin migrating this traffic towards you know the latter part of this year and i'm going into twenty twenty two has been a very positive think com and from the operation of them that the eighteen t and network is get the capacity and the coverage in with all of the investments that we have made over the last several years or we can actually afford to do something like this and not worry so much about our spectrum physician and our technology migration that ah
spk_10: we've got experience and in upgrading from forty to five d and making as transitions a month or something think the dish organization and looking forward to working with us on a not helping anybody around here is upset about taking you know five hundred million dollars a year out of a competitors pocket either so
spk_11: that's it and then something and thing
spk_0: i very much on operator for the murder next question
spk_12: we do have a question from the line and schon flannery with morgan stanley was gone yeah thank you very much good morning amp i'd wonderful get a quick update on the or media discovery deal any updates on timing i record tree process ah tax status it's at stratford cetera and then for jeff that you did an interesting deal arm around heikki core with microsoft azure and be great just to learn
spk_8: more about the details of that any numbers you can give us and with the opportunities that that gives him thanks
spk_12: is that a legal name change time and are you know the ha ha ha ha a magnitude out of
spk_8: i will figure that on the transcript yeah i am i think the net of where we are on the discovery process is no news is good news we're we're basically tracking to the process as we would expect the do and i think you're probably familiar enough with these things that right now it's a lot of work with the regulatory agencies and document production providing information that's responsive to their request that they can begin their of jews and all that is underway on there's nothing we see a that it's been a particularly problematic nor is it far enough along i think you can effectively say that anybody is a developed any position or point of view on something so we continue to move through and i would say internally in all the normal steps are going on to be prepared operationally for when we would expect that approval i think as i indicated when we announced the transaction simon i we expected it was going to be know the next year and know probably close to four your review to get this done and i don't have any reason to suggest it's gonna be anything other than that at this point you know we've had some interesting and pleasant surprises in some cases that and we moved into directv process a little that faster than what we had expected it it's not a complicated transaction oh that certainly supports it and of in a we were to be working on that the do that because of but in other straightforward nature the transaction will take it and will be prepared for that of that were to happen but you know this point i'm expecting it's gonna be a ball in folsom review
spk_9: and or run through the process as we normally do and get to the end of it and are probably out as we approach the latter part of that a little bit more insight for years the what's going on at a little early death and can simon on the microsoft a transaction think it's appropriate to point out that a pentium microsoft we got a very deep and wide ranging strategic relationship between the two farms in this particular deal that your reference is just another example of how we choose to partner with camp and he's like microsoft have expertise and doing things and they do this day in and day out for a living in that is scaled compute as you know last several years our labs organizations and on our network team has been hard at work or paralyzing our core ad network functions what this deal essentially does is it brings microsoft to the edge of our network and are supporting our network workloads ah at a and scale level for efficiency in you know as a partner and as our engineers in their engineers are developing a solution on a broad scale across the business across the network i mean organ enjoy some arm anchor tenant benefits from that route is closing in a specific financial d
spk_0: tells by one thing we are not doing dealing and i've read this in that and the trade and the president as were not outsourcing our core network function we are relying upon microsoft to develop a scale of compute and storage capabilities at the edge while we retain control of our network stack and the kind of services and products that were car for to the market and as a shared everlast does four quarters in our focus here is
spk_9: put our energy on the things that differentiator servants and by doing this it enables us to reallocate resources that were once attempting to build scaled network cloud computing abilities we rely on microsoft for that ah and narrows your for operators capability going forward and our product development team
spk_12: games and our engineers are really work on the surface layer and other kinds of products and services that we intend to provide with our fibrin on five june at work to consumers and to or enterprise customers
spk_9: and any color on timing ah you know we've not darwin not disclosed a product launches or capabilities
spk_13: the steel just i just got announced an ad in the process right now at the integration into to t
spk_11: google and i am more for people
spk_14: excellent
spk_15: but experiment shopper and are pretty much the next question and we have a question for the line of david barton with bank of america was glad
spk_0: hey guys thanks the much on maybe to if i could tell the first question is but think for the information about what the perspective
spk_15: impact the dtv decision might be i guess a helpful mirror image the that would be what kind of even died be cash flow of the the is baked in your current outlook on as you've laid it out here today and the second question is
spk_16: abby to new factors impacting the earning outlook one is changing real from operational but at the top are still in the better and appreciation there and then the new kind of approach toward catholic interest than having taken down interest expense could you talk about with those two factors tom are doing to inform the new earnings growth out that thing sure thing game on t p b we have not provided details guidance yet but as we said once we wouldn't transaction closes we will provide ah the details to help with the modeling in terms of rio
spk_15: you said that guy you acts about the impact of stopping the precision memorization think about it as one to two cents for the power to the year
spk_16: ah so not significant and the capitalized interest we discuss it that you saw my remarks i said that it's about two hundred and fifty billion dollars in queue to so take about that as being the designed you should not go forward thanks it's of i do that math it kind of to get that the of for the bound to the organization and deal kind more stable issue yet life and i'd read up on that fair ah dick that's fair but remember he are stepping up our investments significantly across the board in mobility fiber and h b o max so ah that it was some of this is self imposed by the investments were making and you seem the delivery of the returned to the top line over time
spk_8: the edge over time we expect to continue transformation apprehend continued revenue growth we're going to drive are operating lab which which should translate into to eat dog poop met them it and i said is my car it's we expect next quarter or a bit odd be flat the up modestly and ah
spk_0: so this is really really a good outcome to this is is arc arc were dusting pulling our businesses and were delivering returns as evidenced by the revenue growth of were optimistic better all about his got translate into profit growth a casket for
spk_17: with things i like very much they operate over committee next question
spk_18: and we do have a question for the line of fills is a republican was go ahead
spk_0: i got snakes
spk_15: first job you know their lot of questions about their attention from oh he launched last year and and it keeps running but but maybe talk about what else has changed in a wireless get a market strategy aside from their attention from us last year
spk_18: and then and the what do you see driving the industry strength of quarter as well
spk_8: and then click follow up to those lose customers will most of them need new phones to come to your network of thing me just convert them
spk_9: without anything like you the phone survey of july german ago and just at home addresses and sega was his day in day out and hey phil appreciate the question on the wireless business we've been operating in this go to mark a model for the past four orders and i gotta pay it it just continues to prove to be sustainable and why i think about it and i'd encourage you think about as three a simple elements in the first as we have simplified our offers in the market and we have remained consistent and are offer contracts over the last four quarters or despite they really are highly active than a competitive environment but the second element that i think is sometimes overlooked is are persistent focus on the customers barry and that is that his execution or crossed our sales and distribution channels our our newly formed a year ago customer advocacy games work in the grind on improving the experience of our products and our services and then our network organization it just continues to put the capital into the ground and drive up or a third year in a row the nation's best network and those two things combined have responded and continued positive responses from from the market and and customers both our existing subscriber base as i think are aware of but also those of other competitors are choosing to join a team t network and we've been able to achieve an sustain taking share in and multiple segment since across the board it's not in any one particular segment are growing and consumer were growing and small business for growing with our first mad
spk_8: position were growing and enterprise and as an afghan mentioned earlier we've sat a ten year record for net add grow here in the second quarter but we've also said l a record for our turn and the nps results that customers are giving us for our wireless products and services and so
spk_9: so in short the customers themselves are telling us that we're doing something right when you grow the top line revenue growth through the subscriber growth in remembering that we are third place the marketshare if god just a little over twenty seven half percent of the market our growth trajectory right now is roughly thirty five thirty six percent share of nat we're doing it also efficiently and fill our transformation program and are distribution optimization were able to mind dollars out of the operations to support this growth and drive either to break that record levels here in the second order your ears while sequentially and so this operating leverage that we've achieved give us confidence that this model as
spk_8: sustainable but we got a lot of work to do they mention we so i have that their play share position in the market or we haven't made our way fully through upgrading our existing customer base on unlimited plans we are still are early in the cycle of upgrading our base on not the five g a device says and so teams are doing a great job we are satisfied very i feel very strong about our position in the market but were staying focused on what customers one and as long as we're getting the positive response we're going to stick with it and own terms of your own strengthen the market fell i pay and i probably i don't think there's any one particular thing at look at it there's a number of factors one of his feet many people are flash would probably incremental guess what they might have otherwise have had for a variety of different reasons they look for things dead spend the money on and i would say that generally speaking them you know is are high value high utility services the be selling i can understand why on the margin people may make a decision around that again
spk_19: secondly the postpaid strength a you know clearly there's been some suppression on the rebate market is as i think a value and things occur in there has been some movement in that direction third ah
spk_15: the boy together with just some of numbers in the industry which you think about how many customer lines are actually you know what i would call a an economic decision of a bore vs not a for and you know that probably is having a little bit of impact on the aggregate numbers jeff i don't think there's anything else he would point to
spk_8: now when i think a cabinet okay and then on the booster conversion thanks oh yeah others obviously there and i think boost and the we've got a situation where
spk_20: this will work through whatever the arrangement as commercially with you know t mobile on as and and i think there's been some other discussion around what that entails and what's happening and we're not the middle of that debate what's occurring and i think it still had a little that path to play the as there is a segment of those customers or
spk_8: ultimately if they were to come over darnell are required to buy change out exactly what the pace of that is one that is necessary and how it occurs in the total numbers of it is yet to be played out japanese do it out on me another one hundred percent required by conversion with armored buyers and swaps and their little easier transition
spk_0: you ever did for for it
spk_14: as get like very much ah breed of pretty much the next question
spk_18: and our next question comes from the line
spk_7: of michael rollins please go ahead
spk_21: thanks the in the morning and two passions if i could have first up when you take the plan investment and five ci and fiber all together can you share that percent of homes over the next three to five years in the us were eighteen key can deliver
spk_18: i'm better than dfl performing in the home
spk_22: and secondly just going back to the did a dish
spk_18: transaction that you are describing earlier everything think that from the history of john that you're sharing when he thinks he entered into some of those larger hotel deals years ago it felt like it was more resellers in mb a knows that were complimentary to the eighteen keep focused a lot of it on prepaid before eighteenth he was a law larger provider
spk_8: in a prepaid category so when you evaluated the deal
spk_9: this time with his how did you consider whether or not dish would i be a competitor that maybe more complimentary to be addressable market that you're going after relative to a competitor that may be going directly after the steam brought to the customers in revenue the agency currently proceeds i'm i'm also a where i'm just glad to answer your question on how we think about footprint for a coverage brought down and then i'll come back and in touch and your point of view and also this am i be disclose we got investment plans over the long term to reach thirty million homes pass with fiber which is clearly an excess of speeds capable by copper cable or dsl i would point to today or five the network deliver speeds over two hundred fifty million pops covered that exceed that of dsl we have not made the choice or decision to launch wide scale of fixed wireless internet by rest assured that the strength of our wireless network
spk_8: is providing options for us as we my from of our legacy wireline dsl customers off of that technology over to a better technology served up with fiber wireless and where it doesn't make sense for us to invest in fiber for the long term and certain demographic areas or market areas we are which is to serve out with ah with wireless and will ah will leverage the five g existing network that we've got with our sub sakes spectrum strength outside of that we're not disclosing the number of homes covered by other wireless network we generally measure that in terms of pops so my god your comment i think it probably disagree the front end of your your premise i think we do things that are complementary in terms of with their creative opportunities to bring profitable traffic on the network that you know our read our portfolio owned and operated services frankly covers breath of whatever customer needs and sure there isn't really a customer base the weekly go out and cell and owned and operated service do we've been in that position for some period of time we have a very strong prepaid business which plays in the dissection we have a variety of different prepay opposite route there we have great postpaid offers a cover for gamut of think so you know yes there are other operators out there that are resale or mb no basis go on attack on the market segments been and i'd i'd like to compete for those customers on an on and operating bases as well and that's always been the case now i think we're at the us market maybe a little bit different than others there is no kind of direction toward more owned and operated a competition then you know resale and and l operation and as a result of that occurring of the number of wholesale options i would say moving forward and the future going to become a little bit more concentrated in sewage you're probably going to see where you use for that will sail traffic on your network to be fewer options to go out pursuit of elders and as a result of that if you want to continue to have a an element of a wholesale consistency to market him to just point of you have on some excess capacity that you can put to use him and you know it use it for either fix cars coverage or were driving of incremental traffic in a place where you have some valid capacity and you're gonna obviously choose to do that i think that's the case here and as i would also tell you when you think about this relationship
spk_9: a broader wholesale capability beyond just the wireless businesses that is a part of this which is really attractive death as as a as an infrastructure provider it's of something we do and our core and there are opportunities for us to think about again as we deploy is just deploys network infrastructure where they go for us to do some things that i i think are complementary and elbow those boots but businesses
spk_0: yeah i'm an hour just only and john to year earlier comment during the call that we expect dish to be successful in the market
spk_8: and so the competitive dynamics are unchanged here and rather you know
spk_0: we get to participate in their success at this point so as are we analyzed that strategically
spk_23: thanks very much mike operator begin with next question and that question constant line of doug mitchell's and please with that credit suisse was but out thanks so much of a one for each just one for and actually i'm jeff we focus so much and promotions and subscribers in revenues and in wireless did you mentioned on a few occasions
spk_9: the ability to mind for cost efficiencies the for acquisition with typically are you drop the and the cost structure how much is left there would be interesting to hear jason i know you are super excited about the latin america launch for h b o match where the learning from the launch let em so far sergeant it is denise be a substitute overt h b o math and and i pick up truck the app downloads i think it's support the second half million and then launch was my figure out how much that is new subscribers vs dot h b o fact existing customers are evident over thanks so much doug in terms of our transformation agenda i'd say were roughly about a third of the way through our we've got two thirds of okay to go on so in the early innings southern keep name's around our transformation and cost take out or things like optimizing are distribution alamos be at stores and retail locations an indirect age yeah
spk_24: as well as our digital on our online by close second area as transformation as we're now at a point in time when we're managing a higher percentage of our volume through digital than we ever had and because we perfected some of the ailments and our product experiences of the past or able to enjoy a lot more
spk_0: your self install and customer seltzer capabilities and that's required us to work through not only thereby flow experiences online but also some other platforms the technologies that are behind the scenes supporting our front line resources a third are call center operations and r i t organization of
spk_25: part of work he just getting plane and simply more you fish and per transaction and as i said i think we've got probably a two thirds of the way left to go it will take time and these initiatives are funded they're inside of our outlook and inside of our guide and sand other teams you just hard at work and the grind and a day
spk_26: how to drive it
spk_0: isn't thanks for the questions and some some mornings from lad am so far at at and it and in overall level of i'd advise you know what gone very good about the launch a bit of is only two days before the end of the quarter and so on his signature details but as call but in terms of the biggest lessons or number one is the content the stories that we have from a service
spk_11: the team been a remarkable job in terms of planning for this launch and making sure that we put our best foot forward in terms of now leave of digital new productions but also an incredible library
spk_0: and then the other three things i'd mention his distribution obviously is key
spk_21: and we certainly lined up and healthy distribution partnerships ahead throughout latin america the tech and product works and it's a modern i experienced that we're very proud of that and finally that out the value of the value proposition is a very strong one and latin america and so and the last question dug in terms of income mentality i need to be oh
spk_18: oh migrations we're seeing material incremental subscriber as additions and so again not for this call it and yup this moment but certainly or and the next one
spk_15: but people
spk_9: thanks very much dog operator of moved to the next question of course and and as question is from the line of but feldman with goldman sachs this but thanks to the don't mind know first on fiber you've had pretty consistent net add but he still under penetrated you're going to be neatly expanding the footprint got a better service you can match anybody's bundle can you help us think through whether it is not virginity or the timeline for an opportunity maybe step up that he hadn't of five burnett as mr seems like that that at an opportunity the company and then just as a follow up on the i'm were media by your six months into going and a with the theatrical play on h b o mac and in eaters i know that was a strategy at the uniqueness year but as hoping you to give us the mid day for what you've learned from that and how that might shape you feel when a more strategies to be in terms of thinking about the theatrical release released or plate going forward thank you
spk_18: yeah go ahead on a junior type of the first one yeah bread i'm so but the first two quarters of this year has essentially been built selling into our age five or footprint from the prior bill we are currently deployed some of the early stages of our next three million bill that leaves closed for this year
spk_0: as we sided earlier animals stay up the bulk of that mm tories in a come online or towards the back half of the year and so my expectations are that are net add performance
spk_27: it takes a step up and that inventory comes online having said that thing that's really strong force an exciting as one as product continues to be durable as you point out best technology it's a great price i propositions get the highest mps corps in the industry to eighty percent of our net perform
spk_26: it's here in the first half of the ears actually new relationships dating and and that's given us an opportunity doubt to move into those households where the best in class or fixed broadband service as well as ah for up some of the other products and services like wireless and so each of these execution elements we believe are gonna continue
spk_0: to perform and i continue to improve this is not a quarterly game as as a long term plan and were just building momentum quarter reporter jason you want to touch on the day and edition sure thing bread thanks for the question in terms of what we've learned was probably to think i'm highlight one is that the motion picture format absolutely matters i and it matters in number of ways but i'll i'll highlight to it matters in theaters i you know a journalist has called which we released as quarter it's sad another four hundred and sixty three and revenue at the theaters and so so clearly some pictures matter and will continue the matter when it comes with the i forgot to mention they also matter at home by and in absolutely die in terms of had responsibly gotten not just from that title but from of of again day titles little very good about the response that consumers are given it in the home
spk_8: in terms of
spk_0: you know that that the things in terms of where things go in the future i think it's fair to say that i'm in i've said this before publicly i surely don't anticipate us going back to the way the world was in twenty fifteen or sixteen or seventeen were windows were quite late the between theatrical and and home exhibition whether it was and all the card transactions or something else
spk_9: so what shorter windows for portion of our sleep or forty five days specifically on them one about as is also going to be producing of a ten motion pictures that will be a have on h b o max on day one and so eyes i think that what you're going to see is this industry continue to evolve and to continue to innovate and ways that knowledge words but consumers and fan but also works for our business partners
spk_0: thank you
spk_16: it's very much for the questions brett operator for glued to the next caller great thank you i'm many fall below that more on the consumer wireline yeah it was widely think that can really start to see the bomb system top on growth our base that mother the fibre broadband which gallon definitely on on first night where are we on penetration their eight you comment on the first that days
spk_11: and what percentage of that are have been that new customers a ti thanks a prank we have achieved revenue growth and our consumer wireline business and as pascal pointed out we expect to continue to accelerate already i'm looking at the eight nine percent and only in the broadband business and so we've got confidence we've made that pivot now arm in terms of first mad
spk_0: ah rover seventeen thousand and agencies were ahead of all of our commitments with the first that authority and all the i see a build our commitment fan and came in as a result to that and at a subscriber base has peaked over two point five million i am not going to comment on what percent of their bases incremental or nude
spk_18: a t and t i would just leave you with we are growing market share and a highly competitive wireless business and first mad as been a critical element for us to take share and on c or possibly other carriers who have long held a strong position and public safety and and as part of the community and
spk_28: so that program continues to perform a very strong and we don't see any signs of that slowing down a prank one other thing that i would add on consumer wireline as with as i said it in the first quarter of we expect profitability trump's the improved we saw we saw they prove from q want kids who are we expect that continue as
spk_18: we make our way through the back part the year and we will be similar to what we've doubled revenues we will make the pivot on profits as we get through the back after the year
spk_28: thanks very much for the questioning very much operator begin with the next the color
spk_16: and our next question cause for the line of colby send a cell with our cowan is guide
spk_10: i thank you i'm at think one of the debates for investors
spk_16: are coming off the warner media announcement on was how you actually get to that twenty billion dollars and be cast low and in two thousand twenty three are that you guided to and yet when you just run the either die on that businesses that remains you don't like if they're and i think that you that to think the you guys have outlined in number one v the pop synergies you talked about one point seven five to two billion by that time now you also mention the young and billion dollars plus in distributions from direct t v i guess to question their number one is that as relate to on just response often in response to dance question being one third through that cost transformation it that effectively one third through getting that one point seven five to two billion dollars and on any color there and and secondly on i get as relates to on the the young people to component is or anything else with flagging odd besides us getting the cost energy than that distribution that helped the kind of bridge that gap to that plus twenty billion dollars thank you
spk_29: it a couple points to keep in mind
spk_8: one when you look at our interests what what the water media transaction closes arc net debt will go down significant and be interesting for that are fairly meaningful you can do the math them to spend roughly yup forty point five billion dollars of cash coming in with and guts after our directv cash that we expect to come in beginning of august so overall it's power we expect a meaningful savings image was one too currently it in i would set this up on a number of occasions currently we are be contributions from water media are not as meaningful as you may believe right now given the step up that we are experiencing in our and sped so those two factors i think are things you have when you consider those factors routed to where we are today and the other factors you mention i think that get you to ah i would get twenty billion dollars i just read an anonymous
spk_16: i just backers wish we shared previously coli the of six billion dollar march on the car structure which has been described to you
spk_28: just correct about of their lawyer through that women reinvest in a lot of you improvements
spk_30: that we've been able to drive into the operations of the weekend accelerator malcolm momentum as we go through the back half as far to the second you know third and then the final third eye we do expect from that's going to start a in our bottom line
spk_2: we we have some of it targeted for our we want to continue to move into the market that some of it is when it is your bottom line and it's going to ultimately be a creative the what we do on fast as we move through that and that's part of our or calculus on the subject gave you a little bit of a description of them the things that will work
spk_0: you know that i would also tell you that at a major part of his efforts in some this have the comes in the bag and is restructuring parents of the fixed asset inventory of our company
spk_15: if you want to think about in terms of the geographic footprint that we cover on the products that are associated with it the operations that are necessary to keep those products up and running of these are in a pretty fundamental part of things to do they take a look at a time the business is doing them and when they're done and we move through them
spk_9: they have a meaningful impact on the cost of for is remove board as that's an element of that i you know but
spk_15: we have some market on that and and places as we just described you her comments about where we are on the consumer space in the better we made their way you like overseen and the wireless business and think we have a sustainable equation that we can take for that's going to to drive growth in those things and and that's what's going to get us out to those numbers
spk_31: yeah you remember the guy's his war two years from now that so the first full year after the one media transaction closes so ah we believe we will grow our remaining business between now and them are given the dynamics that we're seeing in the marketplace they won't put point to collect the kitchen and you were saying than that the one third i'd done that up to six billion dollar broader cost savings target
spk_9: that's right okay thanks very much for the questions coby operator we have type one last question
spk_8: and that question comes from the line of tim around with oppenheimer these guys thanks for and junk gradually on pretty radical transformation of the company and and strategy and i just on in the same vein wouldn't be possible for this the light up their fucking i'm on your path of the as well of by are not pass the bomb infrastructure wireless the the rams than and and the antennas wealth of lee quickly if they want to do stone people that meet with them
spk_11: i guess that is technically possible as john pointed out the industry during the pandemic shared and spectrum to bring it to lie to support the need for broadband and so there are certain special said that are already engineered repair antennas and are radios at are deployed today
spk_8: and with that meet the fcc requirements farm bill doubt that this have this point out the market i'm not going to come up that and then last week on the whole go to market gotta give us something to they make partner with a of us than they did the west and other hyper scales and just been a phenomenal job digitizing the customer experience on have you thought about the one thing i both will radical been stationed what you know for customers it obviously the same people every obviously and it would really reduce the need for the number stores the you have been a lot of other hospitals you have
spk_0: we we have that we have done much of the very same thing at our operation over last eighteen months back i call to a higher percentage of our volumes are flowing through digital we are getting higher grow sad that we ever have before with fewer doors as result of our operations in our transformation of or distribution channels and so a year or we get teams that the that that execute against those opportunities day in and they'll get in return i would tell you there is a fundamental you know reengineering going on right now or supply chain and how our think about the logistics around and supply chain him
spk_32: an element of at is of course we as we learned to read the pandemic
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