Free Cash Flow Outlook
Q: How will free cash flow components change next year?
A: AT&T expects to achieve sustainable growth in both earnings and cash in 2024. The growth drivers include continued strong performance in Mobility and fiber broadband, cost takeout efforts creating an efficient cost structure, EBITDA growth, and a reduction in CapEx from elevated levels in 2022 and 2023. Offsetting factors include anticipated declines in DIRECTV contributions and higher tax payments due to the phase-out of 2017 tax incentives like bonus depreciation.

Capital Expenditure Guidance
Q: Should we expect CapEx to be lower in Q4 and next year?
A: AT&T reiterated that its CapEx for the year will mirror what was spent last year. They plan to deliver a fourth quarter CapEx that reflects similar levels to the prior year. The company is working towards a more ratable spend pattern and smoothing out seasonality in CapEx.

Wireless Pricing Strategy
Q: How do you see pricing affecting growth given cable competition?
A: AT&T believes that with significant industry investments, it's rational for pricing to adjust to ensure returns on these investments. They see opportunities to adjust pricing strategically, focusing on accretive, profitable growth and targeting the right customers for the long term. They acknowledge cable's strategy of targeting a particular market segment but maintain confidence in their approach to value and pricing.

Fiber ARPU Growth Potential
Q: Can fiber ARPU growth continue at current rates?
A: The ARPU growth in fiber is driven by customers migrating to higher speed plans and managing the base with pricing adjustments. AT&T sees significant room for continued growth as they offer higher-speed products like 5-gig networks. They believe there's a long runway for customers to upgrade, and they plan to leverage this opportunity for margin accretion through both ARPU growth and cost efficiencies as they scale.

Cost-Cutting Targets
Q: What's the status of cost-cutting targets and future savings?
A: AT&T has achieved $6 billion in cost savings over the past three years in an inflationary environment. They have targeted an additional $2 billion in savings over the next three years. The recent accrual taken this quarter is indicative of planned cost reductions over the next 12 months, and they feel confident about achieving the $2 billion target through ongoing efficiency efforts.

Impact of BEAD Program
Q: How will the BEAD program affect fiber build plans?
A: The BEAD process is progressing slowly, and AT&T doesn't expect BEAD-supported infrastructure builds to impact their 2024 financial plan. They see this as a 2025 and beyond initiative. The company anticipates that in some cases, BEAD-funded builds might substitute planned fiber builds in certain states, while in other cases, they could be incremental. However, any impact won't be seen over the next 18 months regarding investment levels or subscriber counts.

Device Upgrade Rates and Margins
Q: What factors are affecting slowing device upgrade rates?
A: The slowdown in device upgrade rates is attributed to less dramatic changes between device generations, better care and protection of devices by consumers, and higher device costs leading consumers to keep their phones longer. AT&T doesn't expect significant further declines, and this trend is not expected to materially alter their financial outlook or margins.

Wireless Churn and Competition
Q: What are the trends in wireless churn and competition?
A: AT&T's wireless churn remains stable and strong, even amidst competition from cable MVNOs. The company has returned to a normalized performance, focusing on gaining a fair share of accretive, profitable customers and growing revenue share. They are optimistic about the fourth quarter, expecting a strong seasonal performance with solid customer retention.

Regulatory Environment Concerns
Q: What is AT&T's view on the new net neutrality proposals?
A: AT&T argues that the U.S. broadband infrastructure performed exceptionally during the pandemic, indicating that current policies are effective. They see no evidence of ISP discrimination that would warrant new net neutrality regulations. AT&T believes that regulatory focus should instead be on issues like spectrum policy and universal service reforms. They plan to participate constructively in the regulatory process but will advocate for policies based on market realities.

Business Segment Declines
Q: What is driving declines in the business segment?
A: The most significant impact on the fixed wireline business is the secular shift toward software-defined networking (SDN), leading to a reduction in managed complex networking revenues. Additionally, AT&T is exiting certain low-margin product sets. The decline is not primarily due to weaker business demand. When combining wireless and fixed business performance, the overall dynamic is relatively flat, and AT&T sees growth opportunities emerging in wireless services for enterprise customers.