Operator: Our last question will come from the line of Tim Horan of Oppenheimer. Please go ahead, sir. Mr. Horan, your line is open.
Tim Horan: Sorry about that. Can you talk about the longer term capital intensity, what you’re kind of thinking currently? And I guess there’s a lot of moving parts with free cash flow. Maybe a sense, can you grow free cash flow off of this year? It seems like you can and it seems like your capital intensity is still relatively high versus your peers. Just some color around longer term free cash flow growth. Thanks.
John Stankey: Yeah. Let me — going back on the capital allocation issues, Tim, I obviously believe that we should not be at the sustained levels of investment that we’re at right now for ever. Our point of view is, we’re building infrastructure that’s sustainable infrastructure that will build a franchise that will last for many years to come. The fiber investment is a hard one to do at the front end, but it’s an incredibly durable investment. The depreciation levels on this go out a long time for a reason. And the beauty of the technology is, improving capacity on it is a relatively light lift incrementally once you got the glass in the ground. So you’ve heard me talk about we should be at mid-teens as a percent of revenue in a steady state as we kind of get through the front end of this investment cycle.
As long as we continue to perform in the market the way we’ve been performing on this elevated level of investment, I am comfortable that we should continue to do that, but we’ve got to continue to perform and make sure we deliver the right kind of results on that. So we’ve probably come through the worst of it at this juncture. We will get through kind of what we need to do on fiber before we’re into another air interface investment. And as I mentioned in some of my public remarks that I made in December, the fact that we’re moving to ORAN will give us another way to kind of manage some of our capital intensity moving forward. The way I wish to describe that is it’s not going to get us to different levels of historic investment, but it will be one of the tools that we do to manage our portfolio of capital investment between fixed and mobile services to drive the kind of returns we need to drive.
We’re going to get more tools out of our ORAN investment to do that and still meet the needs of our capacity growth in a more efficient fashion in our wireless network moving forward that gives us the room to do some of the things that we want to do on the fixed side. So I feel pretty good about where we are. I think we’re through the worst of it. We’ll see it continue to get more efficient as we move forward. We’ll be selective of where we can get those kind of returns based on our market performance, and overall, I think we’re in good shape. Pascal, do you want to add anything on that?
Pascal Desroches: No. Look, the investments we’ve been making obviously are working, and as I look forward, we’ve said it, we expect to operate at mid-teens capital intensity long term, and we’re committed to that. We’re also committed to having a capital allocation plan that also looks for other ways to deliver value to shareholders.
Amir Rozwadowski: Thanks very much, Tim. Turn over to John for final comments.
A – John Stankey: Well, thanks. Appreciate everybody sticking with us, and I apologize about some of the longer prepared remarks at the front end, but that’s not atypical as we try to give you some guidance and visibility into the business, and appreciate you enduring that. I would just reiterate what I said in my opening remarks that I thought 2023 was an incredibly solid year for us from an execution perspective at AT&T. I’m incredibly proud across the board of what we’ve done and the formula in optimizing the various parts of the business as we move through it. It’s as solid, a fundamental year at AT&T as I can remember in recent history, certainly in a very long time. If I think about those fundamentals, you see them manifested all the way through the balance sheet and our cash flow statement.
And I think that’s the most important thing to kind of step back from and realize this business enters 2024 in a very, very strong and healthy position. I’m excited about where we enter 2024. We’ve taken great steps to simplify our business. We still have some more work to do in that regard, but we are entirely focused on the future right now, and it’s a future that I believe lines up incredibly well for the asset base of AT&T as consumer tastes are changing, as we’re seeing the move to convergence, as we see the growth that’s occurring and the importance of high performance networking that I believe AT&T has the asset base and the positioning to move with where this future is going. And that’s why I’m so optimistic about what we have in front of us.
And I think we’re going to get to a very exciting place to start a 2025 where we have the choices in front of us that we would like to have and we’ve worked so hard to get. I’ll give you one final housekeeping thing before we separate. This is Amir’s last call with us. We’ve worked him hard the last three years, and I guess like any thoroughbred that we work hard, we need to send him on to his next chapter, and we’re excited about what he’s going to be able to do for us as we give him a new opportunity to show what he’s been able to do and learn about the business. And as a result of that, I hope you join me in welcoming Brett Feldman to AT&T. A couple of you might know Brett. He’s been around a little bit. We’re delighted to add Brett, and as good a job as Amir has done, and it’s really hard to fill those Air Jordans, I’m sure Brett will do an exceptional job of that.
We think it’ll be a great addition to the management team and we’ll continue to work hard to keep you in the loop moving forward. So thank you all very much for your time this morning, and we’ll see you in 90 days.
Operator: Ladies and gentlemen, that does conclude today’s AT&T’s earning call. We’d like to thank you for your participation and thank you for using our service. Have a wonderful day. You may now disconnect.
