WEBVTT - AT&T CEO John Stankey Talks Earnings

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Welcome to our Bloomberg TV and radio audiences worldwide. We

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<v Speaker 2>bring in AT and T CEO John Stanky, the company

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<v Speaker 2>reporting results this morning that showed higher than expected subscriber growth,

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<v Speaker 2>though some analysts noting customer churn and average revenue per

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<v Speaker 2>user showing signs of strain. John, It's great to have

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<v Speaker 2>you back with us, you know.

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<v Speaker 3>With your story.

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<v Speaker 1>Thanks for having me.

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<v Speaker 3>You're welcome. It's like a simple story. You know.

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<v Speaker 2>The data from the quarter is very clear there was

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<v Speaker 2>an element of promotion and marketing and deals that drove it.

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<v Speaker 3>But how would you summarize it.

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<v Speaker 1>Look, we had really strong growth, as you indicated, and

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<v Speaker 1>we're really comfortable with our growth. As I think you're

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<v Speaker 1>probably aware, we've been focusing on customers that want to

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<v Speaker 1>buy both wireless and broadband from us and what we

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<v Speaker 1>can do that and if it's promotional, that's a good

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<v Speaker 1>customer to pick up because they have great lifetime values

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<v Speaker 1>and over time they'll churn us and they'll address that

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<v Speaker 1>very issue that you alluded to, which is the increasing

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<v Speaker 1>churn in the industry. And we kind of anticipate as

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<v Speaker 1>we acquire these customers, we're going to see a little

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<v Speaker 1>bit of hardpoop pressure, partly because we obviously give them

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<v Speaker 1>a better price for their loyalty, and over time we

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<v Speaker 1>move them up on the continuum services we sell. So

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<v Speaker 1>excuse me, buy and large. We feel really good about it.

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<v Speaker 2>Oh, John, I don't know if you have some water

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<v Speaker 2>there with you, Let me give you a second, just

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<v Speaker 2>to take a quick drink if you need it. Of course,

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<v Speaker 2>in the quarter, and we've discussed this with a number

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<v Speaker 2>of the carriers, it was iPhone seventeen. You know, I

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<v Speaker 2>was there at Kubatino Apple Park on the day of

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<v Speaker 2>its release. Can you give us a real term sense,

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<v Speaker 2>even if it's from the promotion perspective, of how big

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<v Speaker 2>a fact of the iPhone seventeen was for you?

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<v Speaker 1>Well, I think it's it's not a huge factor, but

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<v Speaker 1>clearly there was a little bit of suppressed activity after

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<v Speaker 1>the last iPhone cycle a year ago. Maybe some folks

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<v Speaker 1>anticipated it was going to be a little bit larger

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<v Speaker 1>customers were seeing if it was really frame breaking and

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<v Speaker 1>change and concluded possibly that it wasn't and delayed waiting

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<v Speaker 1>for the next cycle. And I think you can only

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<v Speaker 1>suppress that activity for so long, and now the new

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<v Speaker 1>device comes out, people see what it is. So there

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<v Speaker 1>has been an increase over last year and maybe some

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<v Speaker 1>other previous years. It's not a record breaking cycle, but

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<v Speaker 1>it's strong and we're seeing that as a result. But

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<v Speaker 1>I don't think it's anything dramatically out of pattern, given

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<v Speaker 1>the suppression we've seen in the market, and we were

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<v Speaker 1>very effective at working through at four hundred thousand over

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<v Speaker 1>four hundred thousand postpaid vone netads. It shows we can

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<v Speaker 1>compete in that space and do well with it.

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<v Speaker 2>If you're joining us on Bloomberg Television and Radio. We're

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<v Speaker 2>speaking to AT and tco John Stanky final on the

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<v Speaker 2>iPhone seventeen. Will it be more of a factor in

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<v Speaker 2>the three month period that ends in December?

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<v Speaker 1>The holidays, Well, the holiday season moving through the fourth

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<v Speaker 1>quarter is always a peak season for everybody in the industry.

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<v Speaker 1>I expect that's going to continue to be the case

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<v Speaker 1>this year. I don't see anything what we've had over

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<v Speaker 1>the first couple of weeks of the introduction to suggest

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<v Speaker 1>we're going to see a step function change from current

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<v Speaker 1>rate and pace. So all of our forward guidance that

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<v Speaker 1>we've given expects that it's going to be competitive, that

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<v Speaker 1>we're going to compete and continue to earn our fair

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<v Speaker 1>share of service revenues on those converged customers I talked about,

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<v Speaker 1>and I expect that it'll be as rambunctious in the

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<v Speaker 1>industry as it has been and we'll do just fine.

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<v Speaker 3>John.

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<v Speaker 2>If I turn on my television and watch a show

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<v Speaker 2>that has adds or a scroll on any given social

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<v Speaker 2>media timeline, I keep seeing AT and T talking about

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<v Speaker 2>itself as a home internet provider.

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<v Speaker 3>I know that's been a priority.

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<v Speaker 2>Have you any evidence that that push has been a

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<v Speaker 2>success and that you have positioned AT and T in

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<v Speaker 2>that domain.

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<v Speaker 1>Well, I'm glad you're seeing those means we must be

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<v Speaker 1>getting our right market and targets out there, and I

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<v Speaker 1>think this quarter was an excellent example of it. We

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<v Speaker 1>had our best broadband gain on our strategic products and

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<v Speaker 1>services fixed, wireless and fiber that we've had in eight years,

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<v Speaker 1>and so over five hundred and fifty thousand ADS on

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<v Speaker 1>those strategic products and a net gain of over two

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<v Speaker 1>hundred and thirty thousand of broadband total. It's the best

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<v Speaker 1>we've done in eight years. I think that's a good

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<v Speaker 1>strong indication that it's working, especially when you consider the

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<v Speaker 1>industry has been rife with examples of our competitors adjusting

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<v Speaker 1>their offers, trying to do different things to stem the

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<v Speaker 1>momentum we've had. So I feel really good about where

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<v Speaker 1>we're going on that front, and to the effect we

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<v Speaker 1>can add that with wireless subscribers, which we're showing that

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<v Speaker 1>we can do over fifty percent of the time when

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<v Speaker 1>somebody buys our fixed wireless product and we're over forty

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<v Speaker 1>one percent penetrated on our fiber base, that's a winning

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<v Speaker 1>combination economically and what kind of differentiates us from everybody

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<v Speaker 1>else in the industry.

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<v Speaker 2>Okay, shares a down a touch more than one percent,

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<v Speaker 2>which in the grand scheme of today is modest, is

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<v Speaker 2>a decline. The back and forth you had with the

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<v Speaker 2>analyst was, yes, churn is up and arpus are down,

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<v Speaker 2>but you seem not to be concerned about that. Why

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<v Speaker 2>Why is that not the metrics by which we should

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<v Speaker 2>should look to progress.

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<v Speaker 1>Yeah, it's part of it, I think ed as well

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<v Speaker 1>as we've got a little bit of churn going on

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<v Speaker 1>in the industry from CEO changeouts, and there's a little

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<v Speaker 1>uncertainty around what the competitive posture is going to be.

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<v Speaker 1>And then you look at the data points you just

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<v Speaker 1>reference and we're the first to report, and people are asking,

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<v Speaker 1>you know, what's going to happen when we hear from

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<v Speaker 1>everybody else, And my answering your question is, we're going

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<v Speaker 1>to talk about the fact that we're focused on putting

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<v Speaker 1>customers together with wireless and broadband, and part of that

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<v Speaker 1>dynamic is go penetrate segments that we've not been successful

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<v Speaker 1>at penetrating or as successful. So when we go to

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<v Speaker 1>value segments that were maybe a little under shared in

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<v Speaker 1>you're going to naturally have a little bit less urpoo

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<v Speaker 1>or average revenue per user when you pick that customer up.

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<v Speaker 1>And when you combine wireless and broadband together, you may

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<v Speaker 1>be giving initially a little bit better deal to do that,

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<v Speaker 1>but that's designed into the plan. We want to grow

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<v Speaker 1>and aggregate service revenues, which we've demonstrated that we can

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<v Speaker 1>do that. We indicated we're going to see some strengthening

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<v Speaker 1>of that as we move through the year from where

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<v Speaker 1>we were this quarter. And I'm okay with a little

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<v Speaker 1>bit lower urpoo if we actually execute on this consolidated

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<v Speaker 1>customer strategy or more successful at penetrating some of these

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<v Speaker 1>segments that we haven't been as active in.

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<v Speaker 2>John Stanky at and TCO, it's great to have you

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<v Speaker 2>back here on Bloomberg Tech.

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<v Speaker 3>Thank you very much,