Ladies and gentlemen, thank you for standing by. Welcome to the AT&T First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. [Operator Instructions] I’d also like to remind you that this conference is being recorded. I would now like to turn the conference over to your host, Michael Viola, Senior Vice President, Investor Relations. Please go ahead, sir.

Okay. Thanks, Greg. Good morning, everyone, and welcome to the first quarter conference call. As Greg said, I'm Mike Viola, I’m Head of Investor Relations here at AT&T. Joining me on the call today is Rand Stephenson, AT&T's Chairman and CEO; and John Stephens, AT&T's Chief Financial Officer. Rand is going to provide an update of the key 2019 initiatives, then John is going to cover our operating results. Then, of course, we will follow that with a Q&A. 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, results may differ materially and additional information is available on the Investor Relations website. I also need to remind you that we're in a quiet period for the FCC spectrum auctions, spectrum auctions 101 and 102, so we can't address any questions about that today. And as always, our earnings materials are available on the IR page of the AT&T website, and that includes the news release, investor briefing, 8-K, associated schedules, etcetera. And so now, I'd like to now turn the call over to Randall Stephenson.

Okay. Thanks, Mike. And we do appreciate you joining us this morning. I came to you back in January and I outlined six priorities for 2019, and we have those again listed on the third slide. But if I could quickly summarize, what I would tell you is in all six of these areas we're either on track or well ahead of schedule. And the first one, as you remember, I told you that paying down the $40 billion in debt that we took on to acquire Time Warner that that would be our top priority, and we are on target to retire 75% of that by year-end. This quarter, we generated free cash flow of $5.9 billion and brought our net debt down by $2.3 billion. And that puts us well on track for generating at least $26 billion of free cash flow for the full-year. And then already here in the second quarter, we’ve sold our stakes in Hulu and Hudson Yards. That generated an additional $3.6 billion of cash. And then John Stephens’ team is doing their typical great job. They’re driving down working capital and restructuring some collateral arrangements, and this is also adding significant cash flow and it’s giving us very clear line of sight to reaching our target of $6 billion to $8 billion from asset monetizations, so bottom line, we committed to driving our net debt to EBITDA ratio to around 2.5x by year-end, and we are right on track for achieving that. Second priority was mobility, and we had another really strong quarter, and it continues to grow and build momentum with customers. Our wireless service revenues increased by 2.9%. EBITDA grew and that’s even with some significant accounting pressures. Our postpaid and prepaid phones grew very nicely and churn remains low…

Thanks, Randall, good morning, everyone. Again, thanks for being on the call today. Let me begin with our financial summary on Slide 5. Adjusted EPS was $0.86 in the quarter. WarnerMedia continues to be accretive. Mobility is adding customers and we saw EBITDA growth in our Entertainment group. Offsetting these positive signs was about $400 million non-cash impact from the reversal of rev rec and fulfillment deferrals. We expect those headwinds to continue throughout the year and we’ve included all those in our guidance. Adjusted earnings included a higher interest expense from the Time Warner acquisition and the non-cash impact of lower capitalized interest as we continue to put additional spectrum into service in our mobility business. During the quarter, we also had a mark-to-market adjustment to our pension plan based on our expected distributions for the coming year. The $0.05 impact reflects lower interest rate even though we significantly exceeded our returns on plant asset assumptions. Consolidated revenues came in at $44.8 billion, up 18%. Thanks mostly to the acquisition of Time Warner. The gains in mobility service revenues, WarnerMedia and broadband were offset by a foreign exchange impact of approximately $550 million and lower U.S wireless equipment sales of about $175 million as well as a little bit of ongoing legacy product pressure. When you look at our pro forma basis, revenues were down slightly due entirely to the impact of foreign exchange and lighter equipment revenues. Without those impacts, revenues were up. Operating income showed solid growth and adjusted consolidated operating margins were 21.4% or up a 170 basis points with strong growth in the WarnerMedia and mobility and significant improvement in our Entertainment group. EG's first quarter EBITDA puts us in solid shape to meet or be our full-year EBITDA target for EG. Our cash flows…

Okay. Thanks, John. Greg, we will start with the Q&A and we will take our first question please.

Thank you. [Operator Instructions] Your first question comes from the line of John Hodulik from UBS. Please go ahead.

Okay, great. Thanks, guys. Maybe a couple of questions on EG. First, maybe for John, the 5% growth, the adjusted growth on EBITDA was quite a bit better than we thought, and we were led to believe given the price changes that you would actually see improving trends later as the year progressed versus the first year. So, would it make sense? I know you didn’t really change guidance, you said there could be some upside, but how should we think of the cadence of that as some of these price increases work through the system there. And then, maybe drilling down on the traditional sub losses. I guess, we get some -- we understand how NOW is going to continue to moderate given what’s going on with Game of Thrones in HBO. But on the traditional side, we’re using 661 for losses this quarter, given the $117,000 sub adjustment. First of all, is that the way to look at that? And then Randall, in your remarks, you said things would improve in the second half. And John, during your remarks you said that you'd still expect to see challenges. What is the cadence of that? Should we be using the 661 this quarter as the base of losses going forward? And the 1.6 million still on promo, what’s the cadence of those guys coming off and adding to churn? Just how should we think of that line going forward? Thanks.

Yes. So, John, let me try this. Let Randall kind of clear up what maybe I don’t make clear. First, on EBITDA, it was really great growth. We did have -- as we mentioned, one-time adjustment was about $40 million, but the EBITDA growth was close to $200 million. So, it was only a small part of it. So it was really good. What -- that growth, and we're pleased and have confidence that we’re going to meet our goal of stability. We are not raising our guidance, but as Randall said and I repeated, it's clear that we're on line of sight to not only meet but exceed that target, so we are just being careful with our representations going out.

Got it.

We will continue to balance things and continue to measure costs, and go after high value customers, so we are leaving ourselves that flexibility, but we are clearly on track. I wouldn't suggest to you that you can draw a straight line out, but I feel really good about where we’re on EBITDA growth. So, that’s my best attempt to make a direct answer. We feel very good about it. We continue to expect to meet our guidance. At this stage, I understand why you would think we're going to exceed it, we'll let that happen. We are going to stick with our guidance as it is today with the understanding that we're outperforming on many respects. With regard to the sub losses, I think of it as a -- the 544 is the right number. I understand we pointed out the change in the billing [ph], but remember that's just an item that continually gets refreshed and it’s always out there. So it's not a loss each quarter or an adjustment each quarter. In the second quarter, it just refreshes itself. So, it's kind of just the timing item on a one-time basis. Secondly, we did price increases on an annual basis in January. So that affected. All the customers got some price increase, that affected the linear. And we had about 700,000 customers impacted by the 2-year price lock. As we go through the year, we won't have another annual price increase per se. So that will have a -- that impact on customer accounts won't necessarily be there in that light. And then, secondly, as we get through now down to about 1.6 million at the beginning of the year 2.4 million on the price locks, as we get through the rest of those, we'll see less and less impact from those just because we get through the process. We expect that process to continue through November, which is the 2-year anniversary the last time we had an offer on this, but we'll see a lot of that activity going through in the second quarter. That's the difference between the first quarter and the rest of the year in the sense of the annual price increase as well as the largest group of the 700,000 customers hitting by the 2-year price lock. Randall, what would you want to add?

Yes, on the subscriber losses, I’ve said particularly on DIRECTV NOW, our streaming product, that we’ve put the price increases and we’ve seen the effect of that in the fourth quarter and the first quarter. Second quarter, you'll see that moderate, and I actually believe second half of the year based on what we're seeing in terms of uptake in the market on the new platform and the new product, and we should have a decent second half of the year on DIRECTV NOW. On the traditional premium product DIRECTV, I said you should expect continue to see losses as we move through this year, but we will be launching second half of the year the thin client, which think of that is our satellite replacement product. And why this is so important? It allows us to get into the market at a lower price point. When you look at the DIRECTV churn, it's interesting. What you see is not people at the high end in terms of ARPUs that are churning. It's disproportionally at the low end and where we don't have broadband. And so this thin client gives us an opportunity to meet that low end with a better price point and this should start to moderate the subscriber losses. And particularly as we get into 2020, we think this product is going to have a really good appeal for people down market in terms of their expectations of video pricing.

Okay. Thanks, guys.

Greg, we will take the next question please.

Your next question comes from the line of David Barden from Bank of America. Please go ahead.

Hey, guys. Thanks for taking the questions. I guess, first kind of a bigger picture question with respect to the DTC strategy, Randall, or John Stankey, if he's on. A couple of weeks ago we saw Disney launch a DTC product or announce a launch with lower-than-expected pricing, bigger than expected losses. Numbers came down and the stock jumped 10% because people were looking at this as kind of a standalone Netflix being incubated inside Disney. And I was wondering if you guys could kind of address how you guys think about how the market would react to a similar announcement at AT&T? And if you could at this stage kind of dissect a little bit about what you think is good and strong about the Disney platform announcement and what maybe vulnerable about their approach and opportunities you see for yourself to come into that market. I guess, kind of on a related topic, could you talk a little bit about what if anything the Hulu sale might mean to the financials of the business. My guess is that you'll kind of see less losses from that flowing through to the earnings statement? And if you could kind of size that, that will be helpful for us. Thanks so much.

David, this is Randall. On Hulu, fewer losses and less capital requirements. So -- but we received $1.4 billion in cash and we're no longer in it, and so the capital goals go away, obviously. So on the Disney launch, yes I was impressed by what Disney did. I was -- also I thought the market reaction was an indication that people look at what Disney would be able to bring to market in terms of original content, library of content, deep strong brand content and new and original content and talking about the licensing that they would be pulling back in and I think what it did is gave the market an appreciation that this is a viable direct-to-consumer product, that will have good appeal for a broad number of customers, not just in the U.S., but around the world. And so I thought it was very instructive from that standpoint. From our standpoint, you'd be able to formulate your own opinion in September, October about what will be bringing to bear. But in terms of premium content, think about the HBO brand. In terms of breadth of content, consider the Warner Bros. library and the depth of that library, the new original content creation machine at Warner Bros., which is really an impressive scale machine in terms of producing theatrical as well as TV productions. And we're actually quite optimistic that we have something from both a magnitude of content, breadth of content, depth of content, new and original generation creation capabilities that we believe we can bring to market and will have significant customer uptake. And we will lay out for you those details in terms of what we think that looks like, what our expectations are for this product, including pricing and so forth. We are not ready to fully disclose all that yet. There's a lot of work being done. Bob Greenblatt is just getting his hands into this and working at aggressively. But I will tell you we're very, very optimistic and the Disney announcement gave us nothing, but more optimism in terms of what we think we will be able to bring to market.

Thanks, Randall.

Thank you, David.

Okay. Greg, we will take the next question. Thanks.

Your next question comes from the line of Simon Flannery from Morgan Stanley. Please go ahead.

Great. Thank you very much. I wonder if you could turn to wireless. Perhaps you could just update us on the outlook on the wireless service revenues for the rest of the year, another good performance and the ads turning around despite churn continuing to be a little bit higher year-over-year. So talk us through the network improvements how you’re going to market to take advantage of that, and how that should shape during the year-end? Any updated color on the 5G rollout? We haven't really seen a lot on the commercial site. So when do we see more kind of opportunities in terms of pricing plans and so forth? Is that when the sub 6 gigahertz chipsets come out? Thanks.

Sure, Simon. Let me take a run at it and ask Randall back me up. But first on the wireless revenue outlook continued to be positive. I stand by our guidance, and expect new service revenues. We had a great growth almost 3%, 2.9% in the first quarter. I will point out that last -- second quarter is when we saw some service revenue growth. So our compares get a little tougher in the second quarter and then a little bit more tough in the third quarter next year because of the growth we’ve last year, but that’s how I will still expect to grow it. It just has little tough compares, that's one. Two, why do we expect to grow? Because we do expect customer net adds. This first quarter was the first time in, I think, five years we had positive postpaid phone growth and solid prepaid phone growth. I think probably close to 170,000 or so voice that adds in the first quarter. In total, it's really great number for us and a game changer shows the impact we’re having in the marketplace. So we feel good about the momentum coming out of that and that opportunity going forward. I will give you a sidebar. Our reseller losses were small as they’ve been in the years -- in quarters, I should say, excuse me. So that’s even showing an impact on that revenue -- that service revenue item. From a network improvements perspective, Randall mentioned the multiple awards that we're getting. Anybody's heard Mike and I do presentations know that we test the speeds walking down the hallways before our presentations and it's working. We get emails from investors and so forth. So it's having a real impact that we believe is impacting our ability to gain…

I would -- Simon, I would add that this is the wireless piece. The network quality piece is probably the area within our business where I take more satisfaction than just about anywhere else. And this has been a long time coming, we’ve been investing billions. As you know, we’ve invested tens of billions of dollars in building the spectrum portfolio, and so bringing on FirstNet and having the opportunity to begin turning up all that spectrum is we're going across the country and turning up FirstNet is having exactly the impact that we hoped it would have and it is changing the value proposition for our customers. The value proposition is now one of quality and speed and delivery of video and we're not going out doing a lot of aggressive promotions and we're not doing pricing to try to get customers to stay and come on to the network. It is happening just organically and by virtue of the strategy that we implemented. The 5G evolution of product that we have out there as we turn all this spectrum up and put the new technology on MIMO and so forth, our competitors hate it, but it is having exactly the effect that you wanted to have. Our customers see this tag and they go do a speed check and they’re seeing 80, 90, 100, 150 meg speeds depending on where they are. It is truly a step change difference in product capability. And that its having exactly the effect that we had hoped. And so all the areas that I look at right now and say I am pleased with this is the number one area that I’m most pleased with. Obviously, second would be getting the Entertainment Group EBITDA stabilized and actually growing and we’re feeling really good about that as well. But this is really, really an important accomplishment for us.

Great. Thank you.

Thanks, Simon. Greg, ready for the next question.

Your next question comes from the line of Philip Cusick from JPMorgan. Please go ahead.

Hey, guys. Thanks.

Hi, Phil.

Can you -- two follow-ups. Can you dig first into the wireless growth and help us quantify what FirstNet is doing for the subline? And then, second, a follow-up on the video side. Can you expand on your relationship with the NFL, and particular on the exclusivity of Sunday ticket? Thank you.

Sure. Wireless growth, we -- we're having a lot of success with FirstNet even with only 50% of the nation now completed in terms of the network build. And you heard 570,000 subscribers and John articulated that we’ve hit a threshold where more and more those are coming new on to the network, they’re not just migrations on to our network. And what we are finding is the FirstNet community. We put some very attractive offers out there for their families. And so every FirstNet subscriber that comes on to the network, I think the latest number John is we’re getting two …

Yes.

… family members with it. And so, this is driving a not inconsequential impact on subscriber gains. The network quality being the best and FirstNet being a main driver of it. So FirstNet is going to be a very important strategic element for us for a number of years to come and we are -- we continue to be more enthused about it than when we want to bid and won the deal. In terms of the NFL, I think we're not allowed to discuss much, but the exclusivity should remain as we go forward on DIRECTV. You probably saw news that the NFL network was taken down on our U-verse network. And look, we're heavily invested in the NFL on DIRECTV, but we're limited to carrying the Sunday ticket just on DIRECTV. And so our customers that have a high affinity to the NFL, we tend to have them overall on DIRECTV. When you look at the NFL network, there's some costs attached to that. And when you consider the games on the NFL network or the NFL Draft, our customers can watch the NFL Draft on ABC, they can watch the Thursday night games on Fox, and so it's all stuff we carry and so the NFL network was for a product U-verse that was not allowed to carry the Sunday ticket. It just didn’t really make sense to continue carrying it over there. So it will save some content cost and we will give our customers access to the NFL through other mediums. If they really are a NFL centric customer, we will move them to DIRECTV.

Got it. Thank you. And at one point you had talked about bending the content cost curve on DIRECTV. You re-signed Viacom. Is there something coming that you think might bend that curve, or we should be looking at it sort of linear from here?

So we’ve nondisclosures generally on these deals, but what I would tell you is that the content cost or the content deals that we’ve negotiated over the last few months have all been curve benders. And we are -- we feel good about where we are coming in and I think the margins on Entertainment Group are reflecting that. So bottom line, I am satisfied with the progress that John Donovan and his team are making on the content deals are coming up and getting them re-crafted to make sure we can distribute them to all of our various platforms and controlling the cost curve.

Remember Phil, the ability to work with them on -- that’s not at all. The content distributors have more advertising minutes than we as the distributor do. So if we can use our advertising resources to increase our ARPUs and our advertising dollars, like you’ve seen with Xandr's growth, and then we can offer that to the content guys. There is a different -- there is a solution to the situation where they can gain advertising revenues and not have that the content cost, but still the revenues for them, and both of us benefit as do the customers. And quite frankly, we are really excited about Viacom. As we said we're working at Xandr with Viacom on things just like that. So those solutions here that are to be mutually beneficial, all three of the parties, the distributors, the content providers and the advertisers. So, it's a lot of work we’re doing and the team is doing a great job, but we believe that there are solutions here that makes sense for everybody.

Thanks, Phil. Greg, we will take the next question, please.

Your next question comes from the line of Brett Feldman from Goldman Sachs. Please go ahead.

Thanks for taking the question. On the slide where you show your fiber broadband net adds, what we can see is that there's been gradual improvement in that performance which makes sense because you’ve been building out the fiber network. I was hoping you could give us just a little bit more insight into what’s driving that? For example, to what extent has the mix of that then shifting from upgrades to maybe winning new customers. How do you see that trending as you complete the fiber build out? And if you can give us any insight into the success you've had at bundling that fiber with some of your other products, that will be really helpful. Thank you.

Yes. So, Brett, let me take a shot at it. And I appreciate you bringing this up, because I should dovetail this in -- for our prior question. When you look at the Entertainment Group margins in total, broadband is really a driver. Broadband is really a grower. If you remember my comments, broadband growth this year-over-year quarter exceeded the challenges, the headwinds we faced from the local voice of the other equipment revenue. So that's actually -- when you put broadband there, broadband's growth exceeded that. So broadband, specifically fiber derivative is doing well. And it is -- and it itself is helping drive EBITDA margin improvement at Entertainment Group. That's one. Two, we will continue to see some revenue growth on broadband throughout the year, just like wireless compares get a little bit more challenging in the second and third quarters, but we still -- we still expect to see ARPU growth and revenue growth. So feel really good about that. Yes, you're right we’ve kept that about 25% of the available fiber out there. We’ve been pretty consistent and no matter how much more we put out a 1 million or 1.5 million a quarter, we continue to immediately utilize 25% of that, because we've continue to add capacity and we will finish off adding that capacity at least from the FCC requirements we have in July. We will then start to further penetrate that market. So we feel like we will be able to grow it. If you think about the timeframe, keeping up at a 25% is a pretty good penetration rate when you continue to add as much fiber as we’ve had. We see it in areas where we have the video, the wireless, the fiber together bundling is going well. It continues to give us an opportunity to participate and take market share in the broadband space. You are right, we continue to see on the early stages migrations of existing customers. But once again, as we get passed that that initial stage, we get in to be able to attract more and take share, which we’ve said in the past and we will continue to see going forward. So with that being said, I expect we will get to around 14 million or maybe just under that range by the end of June and to July kind of the timeframe to fulfill our FCC requirement. That will give us 22 million customer locations in total. But that 14 million we'd expect to continue to see that 25% penetration very quickly and move up from there and get into a on par market share with our competitors as we take share or convert more customers. Let me stop at that and see Randall, if there's anything you want to add or anything I forgot?

No, I think you covered it well. This is probably one of the more exciting areas of the business in terms of where we have invested heavily and now we are seeing the fruits of the investment and getting to 25% penetration, that's almost mechanical. To be candid with you, whenever we go into a neighborhood and turn up fiber, 25% comes fast and 50% is eminently achievable. And we actually think we can hopefully get beyond 50% as we continue to get this build completed. And I’m telling you where we get AT&T fiber, a video product and a mobile product, churn rates just drop. And the value effect of that is really, really powerful. Customers will love it and the services were all premium services and so this is going to be a really important element of us as we go through the rest of this year in 2020 in terms of keeping the Entertainment Group EBITDA stable.

Thank you.

Thanks, Brett.

Your next question comes from the line of Mike McCormick from Guggenheim Partners. Please go ahead.

Hi, guys. Thanks. Maybe just a quick comment on the wireless business. It sounds like you guys grew -- you are fairly aggressive in 1Q on the buy one get one offers. Clearly FirstNet is having a positive impact, but how should we think about on a going forward basis through 2019 the appetite for that trade-off between promotional activity margin and phone net adds? And then, secondly on the broadband side, the active broadband side, could you give us a sense -- I know you’re going to be laughing that allocation -- the revenue allocation change, how should we think about the spot pricing in broadband sort of today versus, say a year-ago.? Thanks.

Let me take the first one. On the mobility margins and the perception of BOGOs and so forth, remember our equipment revenues are really down. So in -- so that may have an effect depending upon on how any of our promotions are done on the BOGO stuff, but let me say it this way. If you look at our results and you say service revenues were up about $375 million, $400 million, and our -- about $375 million and our EBITDA was about $130 million, $350 million. And then you say I had noncash accounting rev rec commission and amortization in the rev rec and so forth of about $200 million. Effectively, of that $375 million service revenue, $350 million -- or almost $350 million of it fell to the bottom line from making that accounting adjustments. So from that perspective, it won't be really effective at controlling cost, controlling promos, being prudent with advertising and promotional expense. So we feel good about the quality of our customer count net adds and the ability to do that. I mean, I understand your question, but I don't want to leave you with the impression that somehow -- this was a very thoughtful process and focused on value of customers. And we -- I believe we are really successful. So I would tell you that the value of FirstNet, the quality experience of the market and the opportunity it provides and further geographic coverage, and quite frankly we’re putting more distribution points out there with opening new stores. But that's part of our investment that we're making that sometimes shows up in the expense line as opposed in the CapEx line. But we're expanding our stores in places where we have stores before. So all of that based on FirstNet, based on the solid very, very solid first quarter results, based on this expanded, if you will, geographic footprint and distribution footprint, we feel really good about wireless going forward.

That’s the point John just made. As we build out FirstNet into these rural communities, as we deploy, we're turning up new distribution in these rural communities and these tend to be communities that have had one option for the last number of years. And we're having a lot of success as we move into the smaller communities, set up new distribution and taking market share. So that’s just another side benefit of the FirstNet build.

With regard to the IP broadband side, I just refer you to the kind of the ARPUs, I think that we got published out there with regard to this quarter being at about 50 -- little over 50 bucks on the broadband ARPU, it's about 8% growth. But if you compare it to next quarter you will see next quarter year-over-year -- we jump from first quarter to second quarter last year. And so that's all we’re trying to tell you about. It's not a sensitivity at all about the success of the project. We feel really good about it and we do feel like as we get more of the fiber put in service. We have the opportunity to -- our customers will want higher-speed, and they will be willing to pay a fair price for those higher-speeds. So we are optimistic about it. We are just being careful from a numerical comparison perspective. If you look at the first quarter last year, both on wireless and on broadband to second quarter you saw a step up in those ARPU numbers, and we just want to make sure the compare is right.

Very good. And Randall, can you maybe just comment, we’re seeing a lot of price increases across the board and over the top streaming video products. How does DIRECTV now sort of set up against that and in this landscape how do you view price elasticity for your customer?

Yes, Mike, we made our move on OTT pricing and rationalizing the whole content lineup for our OTT product in the fourth quarter. And you've now seen most of the other players that have a streaming product out there follow. And I think we're getting to a place where the product, we all look at. So, okay, this is a sustainable place if you can get the advertising revenues to where we think we can get them. This was probably a sustainable level. It is as you're seeing highly price-sensitive. This is a segment of the market that had by and large left the linear product market, because of pricing. And so as we came in with a $40 product, you saw a significant uptake and it was largely people who had left the market. And as you begin to move the pricing and try to get the profit equation right, you saw some fallout, but now we're in the market at this $50 price point and we’re early on in terms of getting the new platform out there. It came out I think very end of March, but we're seeing good uptake on the new platform, the new pricing. As I said during the second quarter, you may still see the OTT product to be negative in terms of subscribers, as we continue to experience price increases on the base. But what we're seeing on the uptake of the new product with a new price point is giving us confidence. So we get to the second half of the year, this thing ought to do decent growth. And so we're actually optimistic, but it is a very price-sensitive product, Mike. Make no mistake about it.

Thanks, Mike. Greg, we will take one last question.

Okay. That question comes from the line of Michael Rollins from Citi. Please go ahead.

Hi. Thanks and good morning. Two, if I could. First, as you look at the performance of full fiber subscribers when you made the upgrade relative to the implied decline of customers with DSL and fiber-to-the-node, how are you thinking about what portion of your homes ultimately need to get the full fiber capability and how quickly you want to get there. And then, secondly, you described the growth in fixed broadband ARPU as customers are buying up the higher-speed packages. Do you see a multiyear opportunity in the wireless segment to change the pricing model and charge higher prices for higher bit -- higher bit rate, especially as you introduce 5GE and then eventually full 5G?

Yes. On the 5G piece, Mike, I will be very surprised. If as we move into wireless, the pricing regime and wireless doesn’t look something like the pricing regime you see in fixed line. If you can offer a gig speed, there are some customers that are willing to pay a premium for 500 meg to a gig speed and so forth. So I expect that to be the case. We are two or three years away from seeing that play out. Right now from a 5G standpoint, what we're seeing in terms of adoption tends to be business. In fact it's exclusively business for us right now. Its serving as a land replacement product and we're having really impressive demand where we turn up the 5G service from businesses basically saying, we want to put a router in, and it becomes their LAN replacement. And so now as you begin to think about equipment, whether it be handsets or tablets or laptops that have 5G modems within them, which that will happen starting this year and it really pick up over the next year, then that truly does become a LAN replacement. You don't even need the router at that stage. And so, the idea that just like business customers pay more for more speed in a fixed line environment, we expect that there is going to be demand and that there will be price differentiation for speed as you move into a 5G environment. In terms of fiber upgrades, we have as you know, over the last 3, plus 4 years have the most aggressive fiber deployment program probably in the United States. And so we've been going at a really hot rate in putting fiber out. As I mentioned earlier, I think it was to Mike McCormick's question, the adoption on fiber deployment in terms of taking market share and customer upgrades is fairly mechanical. It doesn't take a rocket science to figure out what this looks like as you deploy fiber. And so while we're going to kind of finish off this first phase of our fiber deployment between 5G and FirstNet and just our natural desire and preference for fiber on new builds, you’re going to see fiber continue to be pushed into this network. And as business locations demand fiber, you’re just going to see a capillary of fiber deployment continue over the next 4 or 5 years. And it's not going to go at the same pace you’ve been seeing for last four, but it's going to continue. And I don't see that stopping. So I see our fiber opportunity just continuing to grow as we move 2020 through 2025. Thanks for the questions, Mike.

Thank you.

Okay. Well, listen, I appreciate everybody joining us. And once again, punchline to this quarter is we have basically done exactly what we told you we would do at the Analyst Day and then again our January guidance. Debt reduction is right on track. Asset sales and asset monetizations are right on track. Our free cash flow forecast is actually ahead of schedule and Entertainment Group is on track and actually ahead of schedule as well. So stay tuned. We will be getting more details to you in terms of our WarnerMedia Day to come in September, October timeframe. And I appreciate your time and look forward to talking to you again. Thank you.

Thanks.

Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.