AT&T Inc.

Thank you for standing by. Welcome to AT&T's third 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 and then zero, and you will be placed in the question queue. If you're in the question queue and would like to withdraw your question, you can do so by pressing 1 and then 0. And as a reminder, this conference is being recorded. I would like to turn the conference call over to our host, Mr. Amir Rozwedowski, Senior Vice President of Finance and Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Welcome to our third quarter call. I'm Amir Rozwedowski, 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. At the start of this year, we articulated a plan in which our deliberate investment in 5G and fiber would help grow our customer base in a profitable manner. Strong results we share today represent the latest proof that our strategy is working and sets us up for continued sustainable and profitable growth. We're meeting rising data demand with best in class 5G and fiber solutions. This is not only expanding our durable customer base but also delivering attractive returns. The results we're seeing only strengthen our conviction in continuing to invest to bring these next generation technologies to even more Americans. We're tracking in line to meet or beat our consolidated financial targets and we're raising our full year adjusted EBITDA and free cash flow guidance today. Our goal? has been to invest and grow the business in a manner that progressively differentiates the AT&T asset base in our industry. And we're doing exactly that. In wireless, our consistent go-to-market approach continues to expand our base of high value subscribers. Our results show that our best deal for everyone approach continues to resonate with customers. For example, in September, We saw the strongest iPhone pre-orders we've had in many years, despite competing promotions with higher subsidies allowing lower-value device trade-ins. This is a testament to both the simplicity of our offers and the strength of our consistent and straightforward value proposition, as well as the quality of our network. The tail of the tape is clear. Customers are staying with us longer and spending more with us. Just take a look at our consistent low churn, increasing ARPUs and improving returns. Why? Because we're providing more value to customers. For example, the vast majority of people taking our iPhone promotions are signing up for our highest value plans, even though it's not a promo requirement. In fact, our highest value unlimited plan is our fastest growing plan. In addition, Our network has never been better in terms of its size and quality as we continue to enhance the largest wireless network in North America and expand the nation's most reliable 5G network. It's no surprise that when you combine our high-value customer growth and rising revenues per user, we continue to grow profits in our wireless business as evidenced by our highest ever EBITDA on record. Turning to fiber, the story remains the same. Where we build fiber, we win. We win by delivering the undisputed best broadband solution on the planet, improving our brand position, gaining broadband share, and by improving our mobile share. Our strategy is working. We just delivered nearly 300,000 high-quality net ads this quarter against a muted backdrop of household move activity. In addition, the returns on our fiber investment continue to improve from our initial assumptions. We're exceeding our expectations for penetration in new markets. Additionally, the accretive mix shift to higher value fiber plans has driven our fiber ARPU up nearly 9% year over year. Look no further than how fiber is fueling a surge in broadband revenue growth. Consumer Wireline has transformed from a declining business to one that is delivering strong, consistent growth. We offer a superior product that has room to improve on all the levers that drive margin performance as we scale. No matter where we put fiber, we're the preferred broadband provider. In August, we selectively launched AT&T Internet Air, our fixed wireless product. We view this service as yet another tool in our connectivity toolbox. While it will primarily act as a targeted catch product, we've been pleased with the positive early reception and have already added about 25,000 subscribers, pushing us back into positive territory for overall net broadband growth of 15,000 subscribers in the quarter. Meanwhile, we're only in the very early stages of reaping the long-term benefits from the inevitable convergence of 5G and fiber. Where we've deployed fiber, we're seeing an uptick in mobility growth. Additionally, AT&T customers with fiber and wireless service have our lowest churn and the highest lifetime values to match. As the one player scaling both wireless and fiber networks, we're well positioned to be the provider of choice for the ubiquitous connectivity that consumers want. And importantly, we're positioned to do this at the lowest unit economic costs, establishing a long runway for sustainable returns. That's our network capabilities. We're powering experiences built for the high speed connected everywhere world we now live in. One example is our work with Cisco to deliver the next evolution and collaboration for those working on the go. By tapping into the fast speeds and low latency of 5G, we've seamlessly extended Webex calling capabilities to mobile phones, simplifying connectivity for a mobile workforce. We feel strongly that this is just the beginning of what's possible. At the same time that we're reinvigorating customer growth, we are also operating more efficiently across our business. This is the core component of the 120 basis point margin improvement we saw in adjusted EBITDA compared to the third quarter of 2022. You can also see the benefits of our $1.5 billion of incremental cash from operations over the first three quarters compared to the same period a year ago. We're off to a strong start as we execute on our plan to generate $2 billion plus of incremental cost savings within the next three years and we're confident in our ability to achieve this goal. We're executing our legacy wireline transformation as we scale our 5G and fiber networks. Over time, we expect this evolution to drive significant operating efficiencies as we sunset legacy infrastructure that no longer meets our customers' needs. We're also aligning our operating footprint and work environment to mirror our streamlined focus on 5G and fiber. These steps are important enablers to further improve our collaboration, eliminate organizational redundancies, and fully utilize the innovative technologies that improve how we work. And while we're still in the very early stages of generative AI, we're already seeing tangible AI-driven improvements in productivity and cost savings. Measurable progress has been made with lowering customer support costs, unlocking software development efficiencies, and improving our network design effectiveness. We expect these capabilities to play a key role in our continued efforts to achieve our future cost savings objectives. This takes us to the final priority, and that's how we're putting our improving operating leverage to work. In the third quarter, we reduced our net debt by more than $3 billion and are on track to achieve our two and a half times net debt to adjusted EBITDA target by the first half of 2025. Less net debt allows us to continue investing in AT&T's durable connectivity businesses and enhance our ability to deliver additional shareholder returns once we reach our long-term target. Our focus remains steady on allocating capital to create best-in-class experiences for customers drive sustainable, profitable growth, and deliver long-term value for shareholders. Over the last few years, our investment-led strategy has delivered tangible benefits to and financial returns from our growing and high-value customer pool in both mobility and broadband. We've expanded our nationwide 5G network and are on track to reach 200 million people or more with mid-band 5G spectrum by the end of the year. We're also on track to pass 30 million plus fiber locations by the end of 2025. We now have about 24 million fiber locations that we're able to serve on our network with additional opportunities to provide service through our gigapower joint venture with BlackRock or bead funding opportunities. Given the returns we're seeing, We continue to believe leaning into attractive return profile of 5G in the fiber business make good strategic and economic sense. At the same time, we remain committed to our dividend payout level and expect its credit quality to consistently improve. In fact, we've already generated more than enough cash to meet our annualized dividend even before the fourth quarter which is generally our highest cash generation quarter. Demand for better and faster broadband connectivity is growing exponentially. With the largest wireless network in North America and as the nation's largest fiber internet provider, we're providing best in class 5G and fiber services to meet that demand. It's clear the fundamentals of our business have never been stronger. They'll only grow stronger as we continue to scale our networks, simplify our customers' connected lives, and deepen our engagement with them. With that, I'll turn it over to Pascal. Pascal?