AT&T Inc.

Thank you for standing by. Welcome to AT&T's second quarter, 2023 earnings 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'd like to ask a question, please press one, then zero, and you will be placed in the question queue. If you are in the question queue and would like to withdraw your question, you can do so by pressing one, and then zero. And as a reminder, this conference is being recorded. I would now like to turn the conference call over to our host, Amir Rozvdavsky, Senior Vice President, Finance and Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to our second quarter call. I'm Amir Rozvdavsky, Head of Investor Relations for AT&T. Joining me on the call today are John Stanky, our CEO, and Pascal De Roche, our CFO. Before we begin, I need to call your attention to our Safe Harbor Statement. It says that some of our comments today may be forward-looking. As such, they're subject to risks and uncertainties described in AT&T's SEC filings. Results may differ materially. Additional information, including our earnings materials, are available on the Investor Relations website. With that, I'll turn the call over to John Stanky. John? Thanks, Amir, and good morning, everyone.

I appreciate you joining us. I'd like to open our discussion today by sharing that at the halfway point of the year, our performance and results are tracking entirely consistent with the guidance we've provided to you. In fact, as Pascal shares the specifics with you, I think you'll conclude that our performance continues to demonstrate our strategy is on track to achieve the objectives we outlined three years ago, to drive consistent growth, simplify the company, and reduce leverage. To that end, I'd like to spend a few moments today summarizing that progress and how we believe this positions our company for sustainable and profitable growth going forward. Let's start by looking at our wireless business. For the last three years, our teams have executed on a strategy that enabled us to go from annually losing share to now delivering the right combination of continued postpaid phone ads, low postpaid churn, growing average revenue per user, and profitability growth. Specifically, over the past three years, we've added 8.3 million postpaid phone net ads. That's up from fewer than one million in the three years prior to July 2020. During the past three years, not only do we close the gap to the industry share leader for postpaid phones by about 350 basis points, but we also improved our wireless service revenue share versus the industry leader by roughly 250 basis points. On postpaid phone churn, we drove an improvement of 28 basis points since the beginning of 2020. We also achieved our record low quarterly postpaid phone churn in two of those three years. In stark contrast, the wireless industry's leaders postpaid phone churn was relatively flat over the same time. Statistics aside, from my seat are historically low levels of churn along with improved mobility net promoter scores shows me that our customers are very happy with the investments we've made in AT&T's customer experience and network quality, and that our teams are delivering great value. Ultimately, this means our customers are more likely to stay with AT&T over the long haul. And this is confirmed by external indicators like the American Customer Satisfaction Index, which recently named AT&T as the number one in wireless customer satisfaction. So, more customers are choosing AT&T and staying with AT&T. Also, more profitable is evidenced by our increasing postpaid phone ARPU and service revenues. Over the past three years, our postpaid phone ARPU is up more than a dollar. This shows that customers are voting with their wallets. We've achieved the right balance between the cost of our services and the value we provide. Lastly, let's look at wireless revenues and profitability. From 2Q 2018 to 2Q 2020, our wireless service revenues were essentially flat, and our profitability was up modestly over that time period. However, in the past three years, we've grown quarterly wireless service revenues by about $2 billion, up roughly 15%, and we've materially increased profitability on an annual basis. I should also call out the success we're seeing in our prepaid business, where Cricket has sustained growth by continuing to add prepaid voice customers to one of the highest value subscriber bases in the sector. Now, let's turn to our fiber business. Our investment thesis for building more fiber started with our understanding that people needed better and faster broadband connectivity than what was available, that those needs would only grow exponentially. We believe that by providing the best access technology on the planet, we could transform our consumer wireline business into a fiber-fueled sustainable growth franchise. Our results have only strengthened that confidence as returns continue to exceed our initial expectations. Over the past three years, we've had more than 3.4 million AT&T FiberNet ads boosting our subscriber base by roughly 80%. Everywhere we put fiber in the ground, we feel good about our ability to win with consumers. In fact, our average penetration rate is about 38%. Over the past three years, our FiberNet additions outpaced the leading cable providers broadband net additions. This is an impressive accomplishment, given the size of their footprint. Since the second quarter of 2020, we've doubled our quarterly fiber broadband revenues, reaching more than $1.5 billion this quarter. Over the past three years, the accretive mix shift to fiber has driven our broadband ARPU up more than $10, an increase of 20%.

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again shows that customers are voting with their dollars. We also have plenty of room to run, as we're still less expensive than competitive offerings in the market. So let me summarize. Our wireless business is growing share in ARPU, low churn and improving margins. And our fiber business is accelerating new build penetration, growing share in ARPU, while lowering churn and improving margins. This is the formula for sustainable top and bottom line results. And we're confident this success will be sustainable over the next three years. Here's why. As industry convergence accelerates, our owner's economics in both fiber and wireless provide AT&T with a strategic advantage that will be hard to match. The lifetime value of our mobile customer is significantly higher than that of a cable MVNO customer. Cable's busy adding wireless customers at very low lifetime values, just to protect customers they already have. We're not only keeping our current high value customers happy, but also adding more of them. Moving to our next priority. I'm pleased with how we continue to simplify our business and improve our efficiency. Our cost savings initiative has achieved our $6 billion run rate savings target. And we believe there is significant opportunity to build on this momentum with another $2 billion plus over the next three years. After a period of reinvestment, this work has been the foundation for our recent margin improvements. It is shown in our adjusted EBITDA margin improvement this quarter of 210 basis points compared to the same quarter last year. These additional cost savings will be largely driven by the sun setting of our legacy product portfolio and supporting infrastructure. As we ramp our execution on this work, we'll begin to enjoy the benefits of our simplified focus on wireless and fiber. Turning to our final priority, we continue to allocate capital in a deliberate manner to create best in class experiences for customers, drive sustainable, profitable growth, and deliver long-term value for shareholders. Over the past three years, we've reduced our net debt by about $20 billion. We also recently transferred $8 billion of pension liabilities through the purchase of insurance annuities. As Pascal will discuss, we've addressed the number of one time and discrete items and now expect to use an increasing amount of our free cash flows after dividends to accelerate our debt reduction efforts. We remain committed to achieving the 2.5 times range for net debt to adjusted EBITDA in the first half of 2025. We feel good about our ability to accomplish this goal while providing an attractive dividend with improving credit quality as we expect to increase cash generation over time. The same time, we're investing in the future of our company and the future of our country's connectivity. Since July, 2020, our capital investment is totaled about $65 billion. As one of the largest investors in America's broadband infrastructure, we're enhancing our 5G and fiber network at a historic pace. We're focused on connecting the most people in the most places and with the best experience. Over the past three years, we've passed about 7 million new fiber locations, increasing our locations passed by about 40%. Over the same time, we've expanded our nationwide 5G network to cover approximately 290 million people and we now reach more than 175 million with mid-band 5G spectrum. While some of our peers spend time trying to convince you why their services are good enough for now, we're investing billions to provide Americans access to the best internet offering for decades to come. I'll end my remarks by reiterating that the repositioning of our business can be credited to our team's belief and our strategy and ongoing commitment to delivering real value for our customers. We're focused on ensuring AT&T is the clear choice to serve our country's connectivity needs, not only today, but well into the future. With that, I'll turn it over to Pascal. Pascal?

Thank you, John, and good morning, everyone. Let's move to our second quarter financial summary on the next slide. Consolidated revenues were up nearly 1% in the second quarter, largely driven by wireless service revenue and fiber revenues. Additionally, revenues in our Mexico operations were also higher due to increases in wholesale and equipment revenues, as well as favorable effects. These increases were partially offset by an expected decrease in low-margin mobility equipment revenues and a decline in business wireline. Adjusted EBITDAI was up 7% for the quarter with growth in mobility, consumer wireline in Mexico. This was partially offset by an expected decline in business wireline. We are on track to deliver our full-year adjusted EBITDAI guidance. Given our momentum to date, we are confident in delivering adjusted EBITDAI growth of better than 3%. Adjusted EPS was 63 cents compared to 65 cents in the year-ago quarter. This includes about 7 cents of non-cash aggregated EPS headwinds from lower pension credits, lower capitalized interest, lower direct TV equity income, all of which we expected. Cash from operating activities was 9.9 billion versus 7.7 billion last year and was up 3.2 billion sequentially. The main factors driving this -over-year increase were higher receipts driven by earnings growth, higher securitizations, and lower device and interest payments. Capital investment was 5.9 billion in the quarter and 12.4 billion -to-date. This reflects continued historically high levels of investment in 5G and fiber. We expect to move past peak capital investment levels as we exit the year. We feel really good about free cash flow of 4.2 billion in the quarter. For the first half of 2023 compared to the first half of 2022, free cash flow was up about a billion dollars and we expect our cash generation to accelerate from here. We delivered this -over-year growth in the first half despite about 800 million lower direct TV cash distributions and roughly 700 million in lower net impact of sales of receivables. We expect free cash flow of about $11 billion for the remainder of 2023, weighted towards the fourth quarter. Here are the factors driving this acceleration of free cash flow relative to the first half performance. One, we expect capital investments to be about $1 billion lower in the second half of the year after peaking in the first half. Two, we anticipate device payments to be about 4.5 billion lower than the first half of the year. Three, the first half of the year included more than $1 billion of annual incentive compensation payments that won't repeat in the second half. Four, and as I mentioned earlier, we expect full year adjusted EBITDA growth of more than 3%. And lastly, we expect other working capital improvements of roughly $1 billion in the second half of the year relative to the first half of the year, including higher non-cash amortization of deferred acquisition costs. These improvements are expected to be partially offset by lower cash distributions from DirecTV of about $500 million in the second half of the year relative to the first half, and cash taxes about $1 billion higher in the second half of the year versus the first half of the year. As a result, we're on track to achieve full year free cash flow of $16 billion or better. Now, let's turn to our mobility results on the next slide. Looking at our mobility results, postpaid phone net ads were $326,000. Total revenues and profits of our largest business unit are at an all-time second quarter highs. Revenues were up 2% and service revenues were up 4.9%. These gains were driven by subscriber growth and higher ARPU. Mobility EBITDA was up .3% in the quarter. Mobility postpaid phone ARPU was $55.63, up .5% year over year. The primary drivers of ARPU growth are higher ARPU on legacy plans from last year's pricing actions, a continued mixed shift to higher value rate plans with higher margins, and continued improvements in consumer international roaming trends. Postpaid phone churn remains low at .79% for the quarter. In prepaid, we had 123,000 phone net additions with total churn of 2.5%, primarily driven by cricket. Let's move to the next slide and our wireline results. Our fiber investment is driving consumer wireline growth and strong returns. We added 251,000 fiber customers. This is strong growth against an industry that slowed in recent quarters due to significantly lower move activity. Strong fiber revenue growth of 28% drove broadband revenues up by 7% year over year. Our fiber revenues are outpacing our legacy revenues and this separation will continue to grow over time. Fiber ARPU was $66.70, up 8%. Customers are increasingly choosing faster speed tiers, which is also supporting ARPU growth. Consumer wireline EBITDA grew 10.2%. This reflects fiber revenue growth and about $35 million of discrete comparison items that helped EBITDA growth rates. Turning to business wireline, EBITDA was down about 75 million year over year. This quarter included about 75 million in discrete comparison item, including a one-time access cost benefit. Ultimately, we still see the same underlying trends that went into our guidance and our full year expectations are unchanged. Our business solutions wireless service revenues grew 9.1%. FirstNet continues to be a driver of this growth. Connections grew by about 350,000 sequentially with a little more than one third of this growth from postpaid phones. What we've accomplished with FirstNet is truly remarkable. Not long ago, this was an under-penetrated segment of our customer base, but by committing to delivering a -in-class network and tailored solutions for first responders, we've become the unquestioned industry leader by exclusively serving the public safety community with 5 million FirstNet connections in just five years. We believe there is runway to continue this growth. Now, I'd like to close by taking a moment to provide an update on our capital allocation on the next slide. We wanted to provide some added information around our expectations for reducing net debt. Our plan to reduce net debt and reach the two and a half times range in the first half of 2025 remains on track. Over the course of the past 12 months, we generated 15.2 billion of free cashflow and paid out total dividends and other distributions of 9.3 billion. This left us with 5.9 billion of remaining cash. So why didn't net debt decline by a proportionate amount? The short answer is that we had approximately $4 billion of one-time items and discrete obligations to pay off. These included our WarnerMedia post-closing adjustment payment, our final NFL Sunday ticket payment, and redeeming in full the $8 billion preferred interest in our Mobility to Subsidiary. We partly funded this with 7 billion of issuances for other preferred subsidiary shares. Additionally, net debt reflects about $1.5 billion of -to-market impacts from foreign exchange. Keep in mind that our foreign-denominated debt is fully hedged, so economically, we have an offsetting foreign currency gain in derivatives. Looking forward, in the fourth quarter, we expect to make final clearing payment of about $2 billion tied to our 2021 spectrum acquisitions. After this payment, we will be in a position in which we've satisfied all non-recurring near-term financial obligations, the majority of our debt is fixed at very low rates, and we've refinanced or pre-funded some of our near-term debt maturities at really attractive rates. At the same time, capital investment will be coming down from all-time peak levels. This will increase cash conversion and give us more cash to reduce net debt. So going forward, from now until the first half of 2025, we expect to increasingly use our free cash flows after dividend to reduce debt and at a faster pace. By the end of this year, we expect to reduce net debt by around $4 billion, excluding any potential FX impacts, which will put us at about the three times range for net debt to adjusted EBITDA. This puts us on our trajectory to achieve the targeted two and a half times range in the first half of 2025. In summary, we feel good about our plans to deliver and about our Q2 results, which demonstrate our ability to sustainably grow subscribers, service revenues, and profits. Let me turn it back to John to close out our remarks.

Before we open it up for Q&A, I'd like to briefly comment on the telecommunication industry's handling of lead-clad cables in our networks. As background, it's well understood that lead-clad cables are used broadly in our nation's infrastructure today. From power cables to telecommunication cables, lead's been used to protect interior wires from exposure to the elements because lead is very stable and it doesn't rust. The practice has long been known and its risks of exposure to those in close contact to it has been regulated by federal and state authorities for decades. Generally, the telecommunications industry began to phase out placement of new lead-clad telecom cables in the 1950s. However, lead-clad cables are so durable that they continue to be used in our power grid, in our railway systems, and in our industry. And some of these cables still provide important customer voice and data services, including connecting 911 service, fire alarms, and other central monitoring stations. We take the concerns raised very seriously as there is no higher priority than the health and safety of our employees and the communities where we live and work, period. We believe that a deliberate review in collaboration with the EPA and our industry partners with reliable science at the forefront is the responsible way to evaluate this issue. Independent experts, longstanding science have given us no reason to believe these cables pose a public health risk. And our own prior testing, which we shared publicly, confirms the established science. Still, to be responsive to any concerns raised by recent reporting, we're doing additional testing at selected sites, and we're working cooperatively with the Environmental Protection Agency to provide them the information needed to conduct a thorough assessment of the issue using the most -to-date reliable science. We're very proud of our track record, along with our union partners, in addressing employee safety for those who perform maintenance and repair work on these cables. We fully comply with the established regulatory standards and science related to potential lead exposure for workers, and meet or exceed state and federal OSHA requirements for our employees who work with lead. In the abundance of caution, one extra measure we've taken is to expand our existing practice of providing testing for employees involved in cable removal, and have added a voluntary testing program for any employee who works with or has worked with lead-clad cables. We're offering the testing on company time and at company expense. Rest assured that if there's new and reliable information for us to consider, we will constructively work with others in our industry, scientific experts, and government agencies to do what we always endeavor to do, which is act responsibly. I hope the information that we've been providing, including that lead-clad cables make up a small part of our network, with the majority underground, encased in protective conduit, serves as helpful background on the topic. We've always done the right thing related to lead cables. We're doing the right thing today, based on current science and protocols, and we'll do the right thing should current scientific techniques develop new and reliable evidence that warrants a change in approach. With that said, we're now ready for questions. Amir?

Thank you, John and Pascal. Operator, we're ready to take the first question.

Once again, if you'd like to ask a question, please press one and then zero, and you will be placed in the question queue. If you are in the question queue and would like to withdraw your question, you can do so by pressing one and then zero. Our first question will come from the line of Brett Feldman of Goldman Sachs. Please go ahead.

Thanks for making the question. You had given us some visibility into the NetAd trends you expected in your wireless business during the quarter. That was very helpful. I was hoping you could share with us what degree of visibility you have into the second half of the year. So for example, are there any unique headwinds that you have to manage through? More broadly, what type of market environment are you managing the business around? And are things changing enough at a market level that you're beginning to tweak how you go to market relative to the simplified approach you've been using for a number of years now? Thank you.

Hi, Brett, good morning. Look, I would tell you I feel really comfortable with where things are to kind of tick through your questions given the second quarter issue we had with one account. I don't have another one of those sitting in front of us that I'm aware of or concerned about. I would say more broadly, the market demonstrates a bit more resiliency than probably what I would have expected in the fourth quarter of say last year. We're certainly not seeing the kind of frothiness that was around in 20 and 21. But volumes and activity in the market is good. We do our own adjustments for some of the reported numbers. I don't know that every net ad in the market is equivalent to the others, so we kind of look at the ones that are economic valuable. But even when we make those adjustments, I think demand has been pretty solid in the market. To your point, there were a lot of structural changes in people's offers in the second quarter. They came roughly at about the same time. When new messaging gets put into the market, we saw what we typically saw, which is a little bit of a freezing that occurs as consumers process what new offers are out there. And of course, like you, we sat and watched and wanted to know what the ultimate reaction was going to be. And I would tell you, we've kind of moved through that freezing period, and I see a situation where we exited the quarter in a very, very good place, a place that's consistent with what we would have expected given the value propositions and offers we've had in the markets over the past couple of years. So I feel fine about where things are going. I think the consumer continues to show signs that they're pretty healthy right now. I don't see anything that gives me near-term concern about demand. Don't know what happens down the road. It's anybody's guess what the economy does. I've had a fairly conservative bent on that. I think it's served us well. I'll keep that conservative bent as we manage the business going through the balance of the year, but the market is certainly supporting, I think, healthy growth, and the industry is, I think, even better news, responding well to that growth. I see players investing, and I see them making moves to make sure that they can recover returns on those investments. And that's good for all of us, and I think it's good for the industry overall, and it's good for consumers and the services that they're getting.

Thank you. Our next question will come from the line of John Hudlick of UBS. Please go ahead.

Great, thank you. Maybe a follow-up to Brett's question. John, on wireless competition. It looks like gross ads are down sort of mid-teens, and I realize you said that a lot of the change in the sub-grows is due to customer loss you have in the second quarter, but do you feel you need to respond from either a promotional standpoint to sort of drive gross ads back up, and sort of anything you can point to for sort of why you're losing share in terms of those gross ads? And then along with that, a number of your competitors, or both your competitors have announced recent price increases. If you could just comment on the sort of broader pricing environment in wireless, and do you believe that you have room to take similar pricing action as we move through the year?

So John, good morning. I don't see a need for us to, if it wasn't clear from my last comment, there was a little bit of shift that occurred in the second quarter. Part of it was the account, part of it was new offers in the market. We've seen a normalization, and we think what we have out in the market is performing very well. I go back to comments I've made repetitively in previous quarters. We've been very focused segment-wise around where we're choosing to get our activity. And I don't know that broad promotions has necessarily been the primary, or by any means, the exclusive means of us getting customers. We've been really deliberate. You look at some of our business results we just shared with you, some of our first net growth. We know the channels in the consumer market that we can go to to intercept the right kind of traffic. And we've seen really good results as we've kind of gotten into the early part of the second quarter relative to that. So I feel like the market's healthy. I feel like our tactics continue to be durable, and they're performing well. We have been very focused on ensuring that we're getting the right kind of growth. I don't want empty calorie growth. We want customers that come in and pay good recurring rates that are gonna stay with us a long period of time. We have opportunities where we can co-market multiple products into a customer, which makes them even stickier and drives up lifetime values. Those are all very right places for us to go spend time and energy, and we feel very comfortable about that. So I don't feel a need, when you say a need to respond, you're not going to see some dramatic shift in our approach or what we're messaging or how we're going about things. On the pricing side, I think as you know, I've been very deliberate. We don't pre-announce any pricing, and we don't really talk publicly about changes. But there have been, as I said earlier, I think a lot of efforts in the industry by everybody to ensure that they're getting returns on the level of investments that they're making back into their networks and their business. And you're well aware of what we've done in the past, and we've been really successful and really deliberate and really calculated in how we've done that, and that's how we've managed to keep our churn at the levels that we have while at the same time continuing to get some ARPU accretion in our business. I think you should expect that we're capable in managing the large subscriber base that we have, and we look for opportunities to alter that value equation back to the customer where they perceive that they're getting a better value and better service and something more, and it accretes into the business in terms of us being able to grow ARPUs. And we certainly have places we'll do that. We do that as a normal course. Sometimes those moves are a little bit more obvious to you. Sometimes they're a little less, but we'll continue to manage the business effectively moving forward and feel really comfortable about our growth characterizations we've given you in our guidance and what we're going to see in accretion and service revenues. And as you can see, our profitability numbers have been really, really strong, and that all comes from managing the complete equation, and I think we're doing a pretty good job of that.

Great, thanks

John.

Our next question will come from the line of Simon Flannery of Morgan Stanley. Please go ahead.

Good morning. I wanted to focus on CapEx if I could. I think Pascal, you said it would be about a billion lower in the second half. I just want to make sure I had that. I think you previously said 24 billion. CapEx capital invested was 12.3, I think, in the first half. So it looks like you might come in the 23, 23 and a half range. Is that right? And then 24 would be lower than that number. Just want to get those in line. And just be interesting just getting your update on where you are on the wireless network. You talked about getting to 200 million mid-bad pops. What's the plan after that? What's the plan on getting to 250 and beyond? And maybe any update on putting 3.45 into use and how the internet air fixed wireless product is going. Thanks.

Hey, Simon, how are you? Good morning. Good morning. Yeah, as we said, we gave pretty clear guidance that we would be around the same levels as we were last year. In the first half of the year, we spent 12.3, 12.4 billion dollars. And by definition, that is, we're more than halfway through a roughly $24 billion spend. So the guidance hasn't changed. And importantly, as we think about how efficient our deployment of spectrum has been, that's been one of the things that when we came into the year, we understood that the spectrum that we had acquired was deploying and propagating much more efficiently. And that was in the estimates that we provided. And we're seeing that continue and all of our plans for the year, whether it be the level of coverage or the level of homes passed in fiber, all those remain on track. So we feel really good about the progress.

On internet air, Simon, look, it's performing well. It's got, as you know, in our view, certain segments that are most attractive to that. I like the product of the business segment, and we're certainly having some success with that. It's going to be key for us in certain parts of our consumer segment. As we move through the next phase of our cost reduction efforts, it is a means for us to begin finding a good catch to shut down other infrastructure and still serve customers. So we will use it surgically and selectively that will help us both on the cost side as well as retaining valuable customers where we think we can have the right kind of network capacity that will support the product going forward. We still have a little bit of scaling to do. I'm not quite satisfied with the self-install rates yet on it, but that's not problematic stuff. That's typical when we're kind of scaling the product and putting it out there in the first way, and we will work through those things as we always do. So the foundation is there to use it the right way. I'm excited about having that tool. It's certainly going to help us in managing some of our install base and in particular help us kind of make the transition out of some of our legacy infrastructure that we'll need over time. And

any thoughts on 2024 in terms of pop coverage and overall capex levels?

We'll give you guidance on 2024 as we typically do latter part of this year, and we'll detail all that out. But as you can see, from all the progress we've made and what's going on right now, we're really satisfied that we've got the right kind of machine to build the way we want to build and the network's performing in a great way and all of our indicators back from our customers are there very satisfied with the level experience they have. So everything I think feels pretty good about that right now.

Yeah, it does, Simon. And just to be clear, I said it in my commentary, we are past peak investment as we exit this year. And we'll give our guidance at the same timeframe we usually do, but clearly we don't expect to be at the levels of capital you have seen us invest in 2022 and 2023.

Thanks a

lot.

Our next question will come from the line of Phil Cusick of JPMorgan, please go ahead.

Hi, thank you. First, just a little more direct, one assignment's questions. Where are you on the deployment of three gigahertz spectrum for 5G across your south sites? And then a bigger question, can you talk about the 2Q seasonality in the fiber business? Is this more gross ad or churn driven and do you now expect positive seasonality in the third quarter? Thank you.

Phil, good morning. Through the end of the second quarter, we are at around 175 million pops covered, well on track to deliver on the 200 million we had guided to earlier in the year.

And look, I don't think I've characterized second quarter seasonality per se. I think I've been pretty clear, Phil, on one, we had a significant account migration issue, two, both of our significant competitors rejiggered their offers in the market, which drove some shift in share. And I expect we'll probably see more normalized things now. As you know, there's device introductions that occur in a lot of part of the year that certainly drives the seasonality of the upgrade cycle. And typically in 3Q, there's always that question of exactly what month that happens in. Does it happen in the end of 3Q or does it get pushed into 4Q? And we'll all probably find out about the same time on that as to what happens in this year cycle. That sometimes can move some numbers in 3Q and 4Q, but those are usually directly tailorable to the offer that's in the market. And on a year over year basis, that could impact things if there's a difference of what happens in 23 versus 24, as well as how different the devices are that are offered if that spikes a little bit of activity.

Sorry, John, I wasn't clear. I was asking about the fiber, a little bit softer in the second quarter. Oh, I'm sorry, Bill. Seasonally stronger.

Yeah, so yeah, there is that seasonal movement in fiber and broadband, and I apologize for misunderstanding your question. There's probably two things driving it. One is, as you've probably heard from others in the industry, there is less move activity going on in general, and that has had a degree of impact. There is the seasonal dynamic that occurs in some of the out for college and university work as well. I expect that things are probably gonna continue to be a bit softer in the market, because I don't expect that we're gonna see housing movement necessarily recover. I think it's a artifact of mortgage rates and people's ability to make those discretionary moves, but look, I feel really comfortable about our ability to continue to add along the clip that we're adding right now, because we're more dependent on share take than we are on mover activity, and that's a little bit different for us than maybe others in the market that don't necessarily have the share take opportunity that we have. So I don't think you're gonna see further slowing on what we've kind of witnessed in the second quarter, and I think you will see a little bit of a seasonality uptick that's gonna come with what typically happens in third quarter, but it'll be a bit muted, because I expect that there's gonna be a little bit less movement activity in the housing market.