AT&T (T) Head Of Investor Relations On Earnings

Well, first of all, thanks for having me. Really appreciate the chance to speak with you again. And yes, I think it's the same story. And I apologize because I may sound a little bit repetitive. You know, we've been investing in this transformation of our company. We are growing our revenues, we are growing our profits, and we're growing our cash flow, and customers are voting with their dollars more and more when it comes to the average prices that they're paying us for the services. And I think it's really a reflection of not just the healthy demand that the industry is seeing for broadband connectivity, both mobile and for fiber, but also when it comes to the execution that the team at AT&T has been doing in making sure that we're meeting customers where they need us to meet them.

We would want to spend more money and that was 5G and fiber. And so we've made significant investments in both our network and the customer experience in our distribution channels and really listening to how customers want their services deployed. And really, for example, we've got great best deals for everyone when it comes to our handset product and postpaid phone offering in the marketplace where we treat both new and existing customers the same. And so what they've rewarded us with is very significant growth in our customer base in mobile. They are staying longer and you can see that when it comes to the low churn, when it comes to our postpaid phone subscribers. And both at businesses and at their homes, best in class broadband. And what are those customers doing? They're trading up to higher broadband capabilities at higher price points. And, you know, we've talked about this through the time we were going through with the pandemic. Broadband is a really critical need when it comes to consumers and businesses right now. And they're voting with their dollars. They want fiber in their homes. So really, where AT&T has been investing is meeting customers where they need right now in terms of broadband access.

We're doing that while still meeting all of our financial obligations, whether it's the dividend we're continuing to pay down the debt on our balance sheet. And yet despite all of these obligations that we're meeting, we're still raising our guidance. So I think the takeaway for us is that we feel really good about our ability to generate that cash. But more importantly is what we're doing with that cash. We plan to continue to pay down debt on our balance sheet, which is a good thing given some of the commentary that you just had with your prior guest on what's going on in the interest rate environment. But at the same time, we're still investing at a very healthy level. And what that means right now is you're seeing the benefits of that investing today when it comes to our customer growth. Such as artificial intelligence and so forth. So we want to provide that digital backbone to this country. And so investing at the levels that we're doing right now is generating a great return for us right now. But really where we see that going forward is really going to be supporting a very sustainable growth vector for our business and profit growth vector for our business.

Sure. So let me take both parts of that question. First and foremost, as you can imagine, Apple is a fantastic partner for us and a fantastic partner for the industry. And so it's difficult for me to talk specifically about their products. But I would say this, that these devices are the devices that you wake up with, that you use every day, that you go to bed with, and you're continuing to grow that bandwidth and that capability. So as a partnership between us and Apple, we feel very good about that partnership and the innovation that they've created from an industry perspective. And certainly we plan on continuing that partnership going forward. And when you think about the competitive landscape, you know, I do want to take a step back because, of course, it's always fun for competitors to talk about one another. And what continues to grow based on everything that we do. I mean, our lives are lived in a connected world and we're only finding new and exciting ways to utilize connectivity going forward. So as an industry, I think we're doing a lot of great work. Now from AT&T perspective, look, we fine-tuned our go-to-market strategy a number of years ago in meeting customers where they want, as I mentioned before, and we're the only really large scale 5G player that is also going to be a scaled fiber provider. And that's the differentiation by which we're attacking the market opportunity. Different folks have different strategies in how they're leaning in, but really...

We generated $10.4 billion of free cash for the first three quarters of the year. And we have an annual dividend commitment of $8 billion, and that's before our fourth quarter of free cash flow generation, which is typically our strongest quarter of free cash flow generation. So we feel really good about meeting that dividend obligation. And I would say that as we expect to continue to grow free cash flow, the credit quality of that dividend will continue to grow and improve. So we feel very good about that opportunity. But the bigger picture here is we're investing in growth in our company. So certainly you get high credit quality dividend while you're an investor with us. But at the same time, we've got these secular trends that are still on a multiyear basis that we're focused on meeting our dividend commitments and growing the business and paying down debt. That's the primary focus of our cash generation.