Ladies and gentlemen, thank you for standing by. Welcome to the AT&T 4Q 2020 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Following the presentation, the call will be open for questions. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Amir Rozwadowski, Senior Vice President, Finance and Investor Relations. Please go ahead.

Thank you. Good morning, everyone. Welcome to our fourth quarter call. I’m Amir Rozwadowski, Head of Investor Relations for AT&T. Joining me on the call today are John Stankey, our CEO; and John Stephens, our Chief Financial Officer. Before we begin, I need to call your attention to our Safe Harbor statement, which says that some of our comments today may be forward-looking. As such, they are subject to risks and uncertainties. Results may differ materially. And additional information is available on the Investor Relations website. And as always, our earnings materials are on our website. I also want to remind you that we continue to be in the quiet period for the FCC Spectrum Auction 107. So, unfortunately, we can’t answer your questions about that today. With that, I’ll turn the call over to John Stankey. John?

Good morning, everyone. Happy New Year to all of you, and I hope this moment finds you all in good health. With that, let’s go ahead and get started on slide 3. There are a lot of words to describe 2020, most of which wouldn’t be nice to say in public, but when I look at how we executed on our priorities in the midst of this pandemic, I keep coming back to one word, and that’s resilient. We added 1.5 million postpaid phones during the year, our most net adds in a decade and our highest value subscribers. We reduced churn, streamlined operations and have the nation’s fastest wireless network. For the second year in a row, we added more than 1 million fiber subscribers as customers moved to our higher speed services. And perhaps most remarkable during this pandemic, we launched HBO Max. And about seven months later, we have more than 41 million HBO Max and HBO domestic subscribers, two years ahead of the plan we shared with you in October of 2019. Our resilient portfolio of subscription businesses continued to generate strong cash flows, more than $27 billion, to support our ability to invest in our growth areas and sustain the dividend. In fact, we finished the year with our total dividend payout ratio at a very comfortable level. And on debt management, we made material progress in 2020 by reducing debt maturities over the next five years by about 50% and lowering our weighted average interest rate on debt to about 4%. We continue to transform the business to drive efficiencies. Our cost cutting initiatives generated about $2 billion in savings in 2020, dollars we invested back into the business to drive subscriber growth and move our transformation initiatives forward. In mobility, we streamlined distribution,…

Thanks, John. Good morning, everyone. Let me start on slide six with a quick look at our fourth quarter subscriber metrics. Wireless subscriber growth was the best it’s been in years. We had 1.2 million postpaid net adds, including 800,000 postpaid phones. Postpaid phone churn was the second-lowest quarter on record, coming in at 0.76%. Our fiber momentum also continues. We added more than 270,000 fiber subscribers in the quarter. HBO Max subscriber growth continues to outpace original estimates. We added nearly 7 million total subscribers for HBO Max and HBO in 2020 alone. The trend of premium video declines continues to improve. If you exclude the impact of Keep America Connected on third quarter net adds, our premium video net adds improved sequentially for the fifth quarter in a row. Let’s now look at our consolidated and segment results, starting with our financial summary on slide 7. Adjusted EPS for the quarter was $0.75. That included COVID impacts to revenues from lower television licensing and production, changes to the theatrical release slate and lower international roaming. Combined, COVID had an estimated $0.08 of EPS impact to fourth quarter, which we did include in our adjusted results. We’ve made the decision to operate our broadband and legacy voice operations separate from our video business unit and have recast our Entertainment Group results accordingly. In conjunction with this change in operations, we have reassessed the book values of our video assets, including goodwill and other long-lived assets. As a result, we recorded a pretax noncash impairment of $15.5 billion. Additionally, we adjusted for an actuary loss to our benefit plans and a write-off of production and other content inventory at WarnerMedia, stemming from the continued shutdown of theaters and film releases going on HBO Max. We’ll provide more information in our…

Operator, we’re ready to take the first question.

Thank you. [Operator Instructions] Your first question comes from the line of Simon Flannery from Morgan Stanley. Please go ahead.

Okay. Thank you very much. Good morning. So, looking forward to the Analyst Day. Perhaps you could start with the macro environment. What are you assuming in terms of the backdrop is? Are you really assuming things continue to be much as they are, or do you have a pickup in the second half on things like roaming and advertising? Any comments just about trends with what CIOs are seeing, et cetera, that underscores that? And then, within the CapEx budget, are there any material changes within your priorities there, for example, your fiber build-out? I know that’s a big priority. Is there an opportunity to ramp that up or additional spend on 5G rollout? Any color there would be great. Thank you.

So, Simon, this is John. Let me take that. On the macro side, the one thing we saw at the end of last year was customers’ willingness to pay. Our bad debts were really quite solid, quite positive trends, both on the consumer and the corporate side. So, while we’re not getting overly excited, it was a positive sense. What we have built into our plans are, if you will, more of the kind of current environment for the next six months with some second half and really close to the fourth quarter pickup in pandemic relief activities. So, we’ll see more theatergoing probably in the fourth quarter than we did this year. We’ll see some more travel, but in no way did we envision a hockey stick or any kind of dramatic increase. It’s really much more of a general staying the course. There is some slight improvement but staying the course. Secondly, with -- the one thing I’d add though is, the cash collections have been strong and have been resilient, feel really good about that. So, that gives us some comfort. Secondly, with regard to the CapEx, I’d say, it this way. As you look at the kind of the gross capital being put in the ground, it’s up $1 billion. There’ll be some changes in what we spent last year, i.e., I continue to expect the -- a little bit lighter on the video satellite type side of the business, because of the success of AT&T TV and our focus on churn reduction as opposed to gross adds. There’ll be some more money there. I think, you’ll see us -- we’ve continued to spend money on wireless, but we’re well into and well completed with the FirstNet build. So, we’ll have some ability to manage there. The next piece though is, we will see an increase in the fiber build and the opportunity to add some more sales opportunities to that inventory. I don’t know, John, did I miss anything from your perspective?

Yes. I’ll be more precise than John. We’ll be building somewhere around 2 million fiber residential locations in that neighborhood. That’s kind of what we’ve got the team tasked to do to give you a sense of what that increase will be. And I think the only other thing I would comment on relative to the wireless spend overall, the shift that’s occurring, we put a tremendous amount of capacity out over the last several years in combination with a lot of the work we spoke to you about with FirstNet upgrades. And there is a kind of a shift in mix going on within the wireless building. We’re now moving away from what I would call capacity that’s on existing spectrum bands and starting to see ourselves prefer possibly using other spectrum that may come into service at some point in time, et cetera. So, we got a little bit of a dynamic going on in the shift that’s in the overall wireless program.

Thanks for your question, Simon.

Okay. CapEx -- okay. Is CapEx second half loaded then?

We don’t have anything that I would tell you is any different than what you’ve seen. We’re actually -- we started doing engineering -- if you’re worried about fiber, Simon, we started doing engineering on the fiber build this year. I told you we were getting ready to go, and it was my intent to get going. And the teams are already out turning things up. We had the conversation last quarter. I don’t want to repeat myself, but we shared with you that this build is a little bit different than when we initially started because we have wire centers that are already fiber capable. The infrastructure is in place. We’re going back in and picking up the next adjacent neighborhood or the next successive area. And as a result of that, the speed to get up and moving is not the lift that it was the first time we started ramping up on this. So, we’ve got a little bit smoother dynamic around it than what you might think, because of the increase in the fiber dynamic.

Your next question comes from the line of John Hodulik from UBS.

First, a related question. What’s driving the 22% decline in the broadband segment? Were there additional costs associated with splitting it out from video? And sort of how do you expect that to progress through the year, especially with the increased fiber build you expect as we go on? And then, secondly, any update on the timing of the AVOD launch or anything you can tell us on new content or reliance on sports and news?

John, let me take the first one with regard to the broadband piece. Quite frankly, it’s really the efforts we’ve had to increase our sales capabilities, add new customers, the amounts that we built out in the prior years. It also has to do with the recognition that we are providing HBO Max for all of our gig customers. And so, there’s an intercompany charge there. It’s within the umbrella of AT&T and the economics are there. So, we feel good about it. But, that’s also in there. I would tell you, as you all know, the network infrastructure customer service like fiber is a long-term game, and we’ve gone through the process many times, feel very good about the long-term returns and the efforts. But yes, we’re going to be spending some money, as we did last year, to invest in that customer growth. You saw the 600,000 plus -- 650,000 or so net adds last six months. And we feel very good about that, particularly when we look at the churn numbers, particularly when we look at the customer satisfaction, the NPS scores. So, completely -- or completely support the fact. But yes, there is some investment there. With regard to the AVOD, we are expecting to launch our international version of the HBO Max later this year as well as the AVOD. I’m not ready to give any dates. John, I don’t know if you want to say anything more.

We’re still shooting for second quarter launch on AVOD. And I think, I would point out equally as important is the Latin America launch of HBO Max that we’ve been working really hard on and be an important driver for us on future growth and getting ourselves embedded into the international front on a unified platform and approach to things. So, you should expect, as we get into the second quarter, there is going to be a lot of activity and change going on here. One of the reasons we’re kind of trying to pinpoint the exact date on it is, as you know, we’ve been working through pandemic-related production issues, and ramping that back up has been a pretty significant path. The team has done a remarkable job getting ourselves back into that business and working through the dynamics safely. It puts a little bit of overhead on things in terms of speed of production and what we’re able to do. And there’s a bit of rework that goes on with trying to work around the limitations of a pandemic-based environment. As a result of that, we’re still fighting through getting the pipeline dropping the content at the right rate and pace that we wanted to. And the first quarter this year continues to be a bit of a stretch in that regard as we cycled back into production. Our expectations are that we start to hit our stride as we get into the second quarter. And it’s really important as we put these new iterations to the product. We know that we have ourselves in a good position in terms of the content inventory. And so, as we’re kind of going hand-to-mouth on these right now, John, we’ll be a little bit more discrete on when we announce what’s coming out and exactly what month simply because it’s just that tough, and that much of a battle literally show by show to get this stuff done and get it into the funnel, and we’re working hard to do that. And we hope we’re past any of the unexpected dynamics like the California closures that went on over the last several weeks that put a couple of twists and turns in the road, and we’ve got the worst behind us. But, I’m a little chased right now with everything on the pandemic. So, I don’t want to overpromise anything.

Your next question comes from the line of Phil Cusick from JP Morgan. Please go ahead.

Hey guys. So much to ask. Thank you. So, in wireless, John, you talked about growing customer relationships overall as a priority for the Company. Should we assume that means the current level of promotion and upgrades that effort continues? And then, second, to follow up for John Stephens. Just really quick. You mentioned an updated leverage target that you had talked about in an Analyst Day. I know you can’t really talk about where leverage goes around an auction. But, do you anticipate changing the target from the current 2.5 turns? Thanks very much.

So Phil, the -- look, we’re in a dynamic market. Things change all the time. We’re going to look at our promotion strategies and adjust them accordingly, and determine what we need to do to continue to be in a position to maintain and grow share. And it’s -- I think, it’s really important that we continue to have a growing business. The management team is focused on two things. We like the momentum. I think, we’d like to be a little bit more efficient with the momentum. We’ve done some really good stuff and had some really good progress on self-funding a lot of what we’ve been doing in the market. But, we’re not self-funding all of it yet. And so, our continued work on trying to manage the efficiency and effectiveness of this business, so that we can be in a more aggressive posture in the market is something that this team is working on every quarter. And we’ve tried to be diligent and reasonable in our guidance to you and make sure that we have high confidence in what we share. But, what I’m turning back to the management team is a task that I’d say is more aggressive. And to the extent that this management team delivers, and they have been doing a remarkable job of doing that over the last several quarters. Does that mean that, that’s going to give us more room to do more in the market and continue to maintain a posture that I think is totally appropriate, bringing in high-value customers, the right kind of customers we want, going down the swim lanes that we set up for ourselves that we think we have a unique place to be, which is winning in the public sector with our FirstNet abilities, using our deep enterprise customer relationships to go deeper into the customer base with affinity programs, ensuring that we’re getting the mass market with attractive offers like HBO Max and what’s associated with that, that is -- it brought in a really attractive gross add pool and treating our embedded base well, that is the strategy. And we’re going to continue to do that. I think you’re seeing it, to be the industry leader in churn this quarter, I think we called it right. We said that we don’t have customers that are upset about our network. They like it. We don’t have customers that are upset about our service. They’re satisfied with our service. We had customers who are interested in finding new devices. We shared with you that we had a little bit more agent population on device longevity than the rest of the industry. We’ve been targeting how we do that. I think getting the new 30-year lease on life, the 30-month lease on life with these customers, I wish it was 30 years -- it’s in a very appropriate exchange for the franchise right now, given everything we have in front of us.

Phil, with regard to the update at the analyst conference. First and foremost, what we’ve said and we’ll continue to say is free cash flow in excess of dividends is going to go to pay down debt. Proceeds from the sale of assets is going to pay down debt. The reality of it is we would prefer to be able to give you more information about a leverage target. We can’t do that at this time because of the status of the C-band auction and our inability to comment on. That’s all we’re trying to tell you is that we understand that we would normally give it to you that would be appropriate. But because the FCC rules, we can’t. So, we will commit that we will update it when it’s possible. That’s the story. I think, the one thing that I’d repeat though is $27.5 billion last year, $26 billion, we’re guiding for next year, $15 billion dividend, lot of money they’re used to pay down debt. That’s what the message we want to give you, and the proceeds from things like Crunchyroll going to use to pay down debt. So, we feel good about what we’ve done over the last three years with regard to managing the debt, and we feel really good about our ability going forward. But, the comment about leverage is just, we feel it’s appropriate for us to give to, we can’t because of the rules around the C-band auction.

Okay. So, that’s a maybe this year leverage target, not a permanent changing the 2.5 leverage target?

As I said, we’ll give you all that at the analyst conference when we can talk about it, quite frankly. I just got to be really careful. We’ll go from there and move forward. But, our guidance on this, the real piece is cash flow in excess of dividends and proceeds from asset sales go to pay down debt. And if you look at our net debt at the end of the year, I think, we’ve shown a -- we’ve got a good record to prove that we’re doing what we said we’re going to do.

Your next question comes from the line of Michael Rollins from Citi. Please go ahead.

I just wanted to follow up on the wireless business, just with a couple of questions. So, with the guidance to grow service revenues at about 2%, can you frame the opportunity to improve ARPU for your wireless customers over the next 12 to 24 months? And then also with that target and given where the fourth quarter service revenue growth was, does that mean that AT&T may be exiting the fourth quarter of ‘21 with service revenue growth above that 2% for the whole year and relative to maybe where you’re starting earlier in the year from?

Michael, let me take a quick -- just a math point out, I think you’re aware. But, the first quarter of 2021, this quarter, we’re now -- last year, we still had international roaming. And so, that compare is going to be compared to, if you will, 2.5 months of international roaming. So, that will be one set. The next three quarters will presumably be without the international roaming. So, the numbers will be different. That’s one. And I’d just say that to you, so I don’t want to get into quarterly analysis because I just don’t want to confuse things we talked about the full year. Secondly, the real story on the service revenue is customer growth. And quite frankly, we talk about the 1.2 million of postpaid net adds, 1.5 million of -- 1.2 million postpaid net adds last quarter, 1.5 million of voice net adds, mostly in the last six months, all of that. But the reality is too, we have close to 16 million total wireless connection net adds during the quarter -- during the year, when you include all connections. And, we’re seeing -- and we believe that our strategies, the ones John just talked about with treating our best customers with the best offers and things like that have the opportunity to win for us the best network and so forth. And so, we’re optimistic about the ability to continue to grow that customer base. That’s what’s driving the service revenues. With regard to the ARPU growth, the continued opportunities go into the upscaling of these packages with a great opportunity to offer HBO Max, which has certainly got tailwinds behind it and the success of it. You saw the 7 million HBO adds, best we’ve had in not only 10 years, but the best in the total 10 years, better than the total last 10 years. That is going to -- we believe that that kind of packaging with wireless is going to help and such that we’re going to be able to grow it and then grow the ARPU from, getting people to buy up just from the mobile share plans and to unlimited, but the buy up for the basic unlimited all the way up to the elite. That’s the story. We’re not giving specific percentages, dollars, but that’s what builds that confidence in wireless service revenue growth, which really drives the overall growth of the Company’s 1% guidance on revenue growth. That and some tailwinds from the comeback of WarnerMedia.

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

Hey guys. Thanks for taking the questions. And John, I guess, this is going to be your last quarterly conference call. So, we’ll see you at the Analyst Day, but congrats on everything you’ve gotten done.

Thanks, David.

I just wanted to -- two questions. One is, separating out the video business, taking the $15.5 billion write-down is going to fan the flames of the conversation around divesting that satellite business. Could you kind of -- either John or John, could you elaborate a little bit on kind of what that might look like and what in the $26 billion of free cash flow guidance is coming from the satellite video business today? And then, the second conversation, we’ve just finished the first month of the HBO Max experience with Wonder Woman commensurate with the theatrical release. And this is obviously going to happen like 11 more times over the course of 2021 as you kind of do the day date thing with the movie slate. If we multiply what happened with Wonder Woman times 11 over the course of 2021, what does that look like for Warner Bros. from a revenue and profit standpoint relative to what maybe 2019 would have looked like in a more normal year? Thank you.

So, let me try to deal with the front end of that, David, and then, John can give you a little bit of context on the cash flow. Obviously, what I’ll say on that is we assume that we’re running the business as we portrayed it to you. And we have been debating how we wanted to set up our operations for video for some time. And I think, part of this, when we step back and think about why we made this change is we figure we’re at a life cycle change in these products, that getting management teams focused in this way will be the best way to maximize value in the discrete product lines. And so, in the video case, we’ve seen a pretty dramatic change in what’s occurring in the market. And there is a variety of things driving it. You all know about the declines in the pay TV life cycle. But, we also have the dynamic that’s starting to occur, which I think is a really important one to understand where we’re starting to see pay TV disconnect a little bit from broadband as virtual MVPDs start up. Our own product itself, in many respects, has a virtual characteristic to it. And, it’s a fairly mature offering. And so, getting the management team really focused on what to do in the latter stages of the life cycle of a mature product and ensuring that we manage it effectively, I think, is a wise thing to do for that product on a standalone basis. And that’s one driver behind why we made that decision. The second driver behind why we made this decision is, I believe we’re at the front end of a dynamic of customers wanting to ensure that they have connectivity and broadband…

Yes. Both the asset of video and both the asset of broadband is so critical going forward.

Let me just quickly touch on the HBO Max and theatrical piece, if I could. So, I think, where we are is that there is a difference between what I’ll call a tentpole release and a non-tentpole release. And Wonder Woman and the nature of that production value and what occurs that is different than the balance of many of the other movies in our slate. We have other tentpole releases that occur throughout the 2021 release schedule. They are going to be equally as buzzworthy as Wonder Woman. And we have in between those other high quality offerings that fill that in that cater to maybe sometimes a less broad audience. And that’s the power of doing what we did in bringing the entire slate out to our end user base. So, we’re going to see a little bit of spikiness in what occurs. And I don’t think it’s fair to say if we’re going to put, call it, 17, 18, whatever movies we ultimately settle on in the release structure for the year. We’re not going to see the kind of subscriber spikes that maybe we saw in December and early January every time we put a movie out, but that really isn’t the design intent of the plan. We have -- but we do have an opportunity to build marketing and promotion opportunities around those bigger releases that have broader buzz and broader application across the customer base. And we’re going to take every advantage of doing that. And we’re going to work filling in the niche between it. I think, I want to stress, this is a unique year, and we did this as a unique year. And probably appropriate to make a comment that in some cases, I’ll say maybe the dynamic of the media…

Yes, and say a couple of things. One, I’d point out first, almost from my perspective, 7 million net adds is pretty stout, and strategy worked. And secondly, it’s still early. We’re 31 days out from Wonder Woman’s release I think. And so we’ll continue to file it. More importantly, for everybody on the call, I think at the Analyst Day, we’ll get the team. Jason and his team will get the opportunity to talk to you about some of the further plans and go through that. Dave, your other question, I think, was with regard to the planning process. The guidance we’ve given here today, but for the exclusion of any commentary on C-band, is what we have as assets in our portfolio as of January 1st and owning them for the full year, other than Crunchyroll, other than the already held for sale termination of Crunchyroll. And so, yes, there is free cash flow in here from the video business. I won’t give you a specific number on that, Dave. But, you can assume based on the results of the business last year, it’s probably going to be a lower number, inclusive next year than it is this year for the changes in customer base and so forth. But, it is a business as usual, what I would call kind of business planning approach. All that being said, feel really good about the free cash flow position. And particularly, as I mentioned in an earlier question, cash came in strong at the end of the year with regard to the fourth quarter, with regard to customer activity, both on the corporate business side as well as the consumer side. And you guys can see it in our bad debts, which are remarkably low. Team did a really great job of weeding out fraud and weeding out -- and focusing on the best customers, and it’s showing up in our numbers. So, I think, hopefully, that answers your question, David. Thanks for the earlier comment about my retirement. It will be a change, but it will be interesting.

Good luck.

Thank you.

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

Yes. Thank you for taking the question. And if you don’t mind, I’d like to follow up on some of the fiber commentary. It’s obviously encouraging to see that you’re going to be picking up the pace of the build-out this year. But, even after building out 2 million additional homes passed, that would still be a small subset of the number of customer locations in your total wireline footprint. How do you think about what portion of that footprint, which I think has 60 million households in it, is potentially attractive in terms of being a great demo and having economics to reach them that generate a compelling return for you? In other words, for how long can you keep adding 2 million homes a year to your footprint? And am I even asking this question correctly? Because as you build out your 5G footprint, which is really a national 5G network using layers of spectrum across multiple bands, it would seem like wireless will increasingly be a viable technology for reaching households beyond your traditional footprint. How do you think about the fixed wireless opportunity? And maybe how do you just think about the ability to be a provider of high-speed residential broadband across the country? Thanks.

So, Brett, I’m going to sound like a broken record, but it’s really important on these long-lived investments that we be pretty consistent internally, so that the management team can get to a consistent level of execution year-over-year. If I think, about what has traditionally happened in outside plant access technology upgrades, I’ve been through a series of them over my career. And I don’t think this one is going to be a whole lot different. There is always the first third of the customer base that’s kind of the low-hanging fruit slam dunk that is the part of the customer base that you cut your teeth on, get your processes squared away on, get the vendor community up the first part of the cost curve. And it’s like the no-brainer economically, and you kind of make your decision that that’s where you’re going to start. And I would say, we went through that largely through that first third in the investment we’ve made over the last several years. Then what happens is as you get your -- up the learning curve, and the vendors start to scale and you start to get confidence in your economics and your business processes start to improve, and you start to see the marginal economics improve on the subscriber, which is what you’re going to start to see happen on some of those broadband numbers on the fiber base that we’ve broken out for you as we move forward here over time, the next third becomes the opportunity. And we’re into that segment -- the middle innings of the game, if you want. It’s the next 30% to 60% of the customer base that we can work our way through, and you look at the economics around it that makes sense. Then you…

John, the only thing I’d add in your putting a fence around this issue, John made this comment earlier and it’s really important. We have fiber-to-the-neighborhood in many, many locations, and taking fiber-to-the-home is the second step. We haven’t done that yet. So, if you think about our VDSL, if you think about our new greenfield builds, if you think about the neighborhoods next to the VDSL, there was next to where we’ve got fiber-to-the-prem, those are the opportunities. And that VDSL footprint is 35 million. And when you add the fiber to it, it’s greater than that. That will give you kind of a framework for something that we could efficiently do just what John said about building out the 2 million this year. That’s where a lot of the focus is going to be. So, I think of that as the way to think about the opportunity for us. And yes, we have that ability. We need to continue the sales momentum. That’s going to be really critically important to make it work. But in line with that that’s I think a focus of easy capability for us.

Your next question comes from the line of Frank Louthan from Raymond James. Please go ahead.

Great. Thank you. Can you comment on any potential regulatory changes with Title II potentially coming back over the next 12 months? And can you give us a little bit more detail on -- as far as the fiber-to-the-home? You say you’re doing another 2 million homes this year. To what extent can we expect that to continue at that sort of pace, or is that just sort of a year-by-year kind of a decision?

So, I said in the neighborhood of 2 million homes. I would tell you that, as I just said, Frank, I want to be able to demonstrate to you that that 2 million pace is a no-brainer and a slam dunk and a great value driver for our business and a great subscriber count driver for our business. And I think, this business can build more than 2 million in a year in a very profitable fashion. But, we’re going to demonstrate to you we can do that and then we’ll come back to you and tell you about what that rate is. So if we execute well, when the management team execute well, do I expect that I’ll be back talking to you about a 22 build that maybe lean in heavily to that? That’s what I’d like to see the management team step up to and be able to work its way through. Where I think -- I’m sorry, the first part of your question…?

Title II.

Oh! Title II. How can I forget? Look, I think, it’s inevitable that we’re now back into the wood-saw approach of the new administration and a new belief that despite four years of not a single data point to suggest that we have a problem to solve, nobody blocking anybody, nobody throttling anybody, nobody bought -- doing anything inappropriate in terms of use of service and disclosing how they’re offering services to customers, we’re going to go through another regulatory bloodletting over this. I expect it to happen. And we’re going to watch the cycle repeat itself. And, one would hope at some point that there’s a recent discussion around a policy that gets us away from this web sign and allows everybody to kind of have a more consistent and stable approach. I don’t know that that’s going to happen, but we’re certainly going to try and push and discuss it. Where I think the third rail is on this issue is the dynamic around what happens to the freedom of people who invest in competitive markets to price their products and services appropriately. And if we stay away from that third rail, if the kind of latitude is in there to be able to price and do the right things in the market where competitive markets exist, then I think everything will probably, at the end of the day, be okay. But, if for some reason, policy goes down a path if that isn’t the case, it hasn’t in the past, even when Title II is in place, we have the latitude to do what I felt like we needed to do. But if, for some reason, policy went further to try to solve a problem that doesn’t exist, I have to step back and ask ourselves how we’re allocating capital around that and evaluate where that comes out and ask if it’s the right place for us to go for our shareholders, based on that dynamic and that very important lever for us being taken away. So variable, I’d say, in the market, not lever. So that’s how I think about it right now. I actually step back and from a policy perspective, ironically, think about what’s happened over the course of the last year or two, and the dynamics that are going on right now where the issue is looking at metering and monitoring speech and what’s occurring for people’s access to platforms, that -- there are more real and significant data points and how that’s affecting society than anything to do with how internet service providers are delivering bandwidth in the homes. But, I’ll leave it to smarter people to meet and figure that one out.

Frank, I think we’re -- the industry is real proud of what’s happening in the course of the pandemic and the way we’ve allowed people to continue to work from home. I’m sure many of you are taking this call from home. And the industry, the investments they’ve made under the prior union regime is working. We’re as a company more focused on broadband, not just the availability because it’s out there, but people’s actually taking advantage of it for the home work situation for others. And we’re working on those aspects, as well as following all the other aspects of a infrastructure bill, another stimulus bill, tax legislation. We’re following all those things, right? So, we’ll continue to follow as closely, as you can imagine. Amir, can we take one more question?

Yes. We’ve got time for one last question, operator.

Okay. That question comes from the line of Tim Horan from Oppenheimer. Please go ahead.

Thanks, guys. John, I know you said the move to virtualization of content is kind of accelerating, and that seems to be happening with gaming, compute, even communications with Microsoft Teams and Zoom. How are you positioned to take advantage of that? Are you better positioned as a company that owns the pipes and some of the content, or do you think it makes more sense to separate these assets, or you’re in a really unique seat? I mean, how do you really take advantage of this accelerating move at this point?

Tim, our biggest and single most important bet in that regard is HBO Max. And I think about that broadly is, while today, we talk about it as an SVOD evolving to an AVOD offer. I’ve mentioned this before. I view it as a really important foundation for broader customer relationships. I mean, this is the first big foray of maybe legacy AT&T thinking about having broader relationships with the customer base at a relatively low price point SKU that isn’t exclusively dependent on infrastructure. And to the extent we are successful at having that relationship with most U.S. households, if we don’t use that as an opportunity as a springboard for us to start thinking about how we extend those customer relationships across other opportunities, either to own and operate content or engagement with a customer or to use the platform as a means for others to distribute, we’d be losing a huge opportunity. And so, I think there is all kinds of things we want to do around the edge and making sure that we work with the right hyperscalers to virtualize and give our customers the opportunity to gain access into infrastructure, so that they can run their compute environments and their application environments effectively. That’s all important and that’s all meat and potato stuff we need to do on a network. But, I think about owning some degree of engagement with the customer, a relationship, a means to build with them, having them interact with your service so that you have insights as to who they are, what they like, what they do, what their proclivities are, being able to emotionally attach with them, having a software platform that allows you to build the next building block of a product that extends into engagement, that talks about dynamics of changing consumption in social and interactive, I think this is a really important dynamic for the health of our business. And I know, it’s longer term in nature, and I’m well aware of the folks who have maybe a tighter orientation to financial return, question, why would you be pushing as hard as you are in this area? It’s because I feel pretty strongly about that. And I think building large subscription basis of customers that pay us every month for something has been kind of the hallmark of this business. We have a really attractive dynamic in that in our overall revenues and profitability today. We need to evolve that into what the next step is. And this is just one of those steps in making that happen.

Thanks very much, Tim. That’s all the time for questions that we have. And with that, I want to turn it over to John Stankey for final comments.

So, I have one last order of business before I let you go, and Dave kind of hinted at it with his complement to John. I do want to point out that it’s with very mixed emotions that we recognize that this is I believe John’s 40th and last earnings call that he’ll be doing with all of us. And he’s been a very-valued and long-time coworker of mine. I think, if you think about the fact that he sat in this role as CFO of this Company for nine years, that speaks volumes in and of itself about his character and abilities. That’s a tremendous level of longevity for somebody who occupies a role as significant, as pressured and as dynamic as the one that he’s had. I’ve worked with John for 23 years of his career, which has been a long time, and it’s been a pleasure all along the way. I could say a lot of things. Obviously, high integrity, high impact, high functioning and incredibly high regard as a person. We’re going to miss him at AT&T. I know you’re going to miss him in support of all of you, but we’re delighted about what lies ahead for him and his family and Michelle on his next chapter. And as you would expect, the professionalism and navigating the handoff to what’s going to be a very capable successor. I’m just delighted to have Pascal coming in, and look forward to all of you getting to know him. It’s gone incredibly smoothly. It’s been first rate. And I think as we join you a quarter from now and Pascal takes the reins, you’ll see what a nice, smooth and even keel transition that’s been when we reconvene. So, I hope you join me in giving best wishes to John in his next chapter and thank him for everything you’ve done for us. Thank you, John.

Thanks, John, and thanks for the kind words. Thanks to all the other members of the management team here who’ve been a family for me. Specifically, thanks to my team, the finance team, just remarkable people across the board. Pascal is going to do a great job, and you guys are going to be thrilled we’re upgrading. And I would tell you, I just want to wish everybody on the call good luck, Godspeed, stay safe. And remember, don’t text and drive. Thank you all.

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