AT&T CEO John Stankey Talks Earnings

**SPEAKER_1** (0:02)
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**Jonathan Ferro** (0:07)
We begin this hour with stocks inching lower as earnings season enters full swing. AT&T shares gaining after crushing estimates on mobile subscriber gains. Joining us now to discuss the man himself, the boss, the AT&T CEO, John Stankey. John, welcome to the program, sir. I wanna talk about execution. There's so many issues to talk about with your company, but just execution. These numbers this morning, John, the street's looking for like 325,000, and you deliver 432,000 monthly wireless phone subscribers in two queue. What went right, John? What was the strategy behind again that big?

**John Stankey** (0:41)
Well, I think going into the break, Jonathan, you referred to the results as fantastic, and I would agree with you, and I think the team did an excellent job executing, as you said, and it's not just in our wireless business. It was nearly 370,000 fibernet ads.
That's a record for us in this quarter. Look, what went right is what we told people was going to happen this year, as we gave guidance for the next three years. We said because of the investments we've been making in this business over the last five years, at a sustained and targeted level, and the M&A work that we had done acquiring more spectrum and picking up some additional footprint from Lumen, that you should see a step up in growth as a result of those things. The team had the asset base it needed to execute and drive growth at a faster level. You saw the manifestation of that starting to happen here in this quarter. It's showing up in an accelerated service revenue growth. It's showing up in accelerated EBITDA growth. I would even go into our business segment and point out that we had growth in our strategic services for business for the first time in a very, very long time. As a result of that, we expect that that's going to sustain itself through 28
We're executing well. We're hitting on all the cylinders and the engine. And when that happens, the business can deliver the kind of results you're seeing and I'm pretty confident we can keep that moving going forward.

**Jonathan Ferro** (2:04)
John, there's a number that jumped off the page for me this morning as well. It's 42.5.
42.5 percent of households that purchase the broadband service from you also buy mobile phone service too. How important is that convergent model being just behind the success you're having and how important will it be for the remainder of the year?

**John Stankey** (2:21)
It's extremely important. It's actually, that number is 45 percent. If you were to normalize it for the Lumen footprint that we just recently brought in, that's diluting the number a little bit. And as you see in our report, that's been ticking up steadily and it's important because one, those customers are more lucrative customers when they buy multiple products and services from us. Two, churn goes down and that's one reason why you're starting to see our churn numbers improve this quarter because we're starting to get that benefit that base that is buying both together from us.
And three, brand affinity, the customer's happiness with AT&T and their impression of the brand is much higher as a result of that because the products are better together. So it's really important we continue down that path. And it's frankly, one of the most important things is you think about our competitive positioning moving forward. Because we can provide world-class networks in both wireless and fixed, that tackle 98% of what a customer needs to do on the Internet. Occasionally, they walk off one of our networks. And as you look at our partnerships that we're working with the satellite industry, by this time next year, we'll be able to solve that problem. And so we're the natural place for people to come and meet their needs on the Internet and do it easily on one bill with one set of services and one support infrastructure. We think we're in a great position as a result of that.

**Lisa Abramowicz** (3:46)
And John, this is a reason why there has been really a price war between different providers simply because everybody wants that package, right? They want to get everybody. How has the competitive landscape changed, though, over the past couple of years with the introduction of satellite services, of what we're seeing with Starlink, of what we're seeing elsewhere?

**John Stankey** (4:05)
You know, I don't characterize it as a price war. I think there's been a stratification of pricing for customers depending on what kind of services they want to buy. There's the segment of the market that needs high-performing, symmetrical gigabit services, very robust wireless plans. That segment of the market is willing to pay for that, and they pay a premium as a result of that exceptional value that they get back. We've played very, very well in that space given our asset base, but there's also a segment of the market that's more value-oriented. And I would say choices have come into the market because of good regulatory posture that have allowed investment that weren't there before. And those choices are putting more value-oriented products and services at more attractive price points, but the product and service maybe isn't as robust.