Hans Vestberg : Thank you, David. First of all, our team is very focused to continue to get a little bit more of volume in the consumer side. Remember, on the business side, we’re already in there. We are taking customers every quarter. We have done it for not sure how many quarters. So it’s a little bit different dynamic on the service — on the consumer side, we actually had a little bit more challenge in 2022. I think since second quarter 2023 with our myPlan and offerings, you see a constant improvement how we are actually addressing our customers. So I’m really pleased with that. But we have said, or Sampath has said on the consumer side, he want to have more on the volume side than only on the value side from customers.
But that doesn’t mean we will continue to get more value with our customers and what we’re doing. On the second line, the only thing I want to say there, first of all, the innovation the team is doing right now is based on our strategy. We build a network once and we want as many profitable connections on the network in order to have the lowest return or the best return on invested capital in the industry. It’s just playing straight into that narrative and this, of course, is accretive and we would take the second-line any given time. So again, you show the innovation and I’m prepared to see or I’m ready to see even more innovation from my team going forward. Tony.
Tony Skiadas: Yes, so Dave, on the second number, it is included in the line counts. I mean, the one thing we would say is it gives customers flexibility. They can add and remove it as desired. The adoption so far has been good, just a few points on that. It was very low single digit percentage of phone gross adds in the quarter for consumer. And we believe there’s a limited market for this. As Hans said, it’s ARPA and revenue accretive and it’s high margin business. There’s no incremental device. There’s no incremental data usage and the results in the quarter reflect the strength of our core business. So we — as Hans said, we would take this profitable connection any day of the week.
Hans Vestberg : And it goes back to the things — the three things that I talked about that we are measured on from our shareholders, from our board and how I measure my management team. It’s a service revenue growth, it’s EBITDA and cash flow expansion. That’s what we’re measuring. Then it’s 100 different measurements inside there. But those three are what we’re incentivized on, and that’s how we run our business.
David Barden: Got it. And just to be totally clear, Tony, so of the five-point something gross add growth year-over-year in the quarter, maybe 1% or 2% of that was the second number add-ons, which might not continue because there’s a finite market for that.
Tony Skiadas : We said it was a very low single digit percentage of phone gross adds, yes.
David Barden: Perfect. Okay, thank you.
Brady Connor: All right, Brad, we’re ready for the next question.
Operator: The next question comes from Sebastiano Petti of J.P. Morgan. Your line is open, sir.
Sebastiano Petti: Hi, thanks for taking the question. Just wanted to see if you could give us an update on what you’re seeing in the overall consumer broadband and particularly within consumer fixed wireless. Net adds did — slow a little bit sequentially year-on-year. Obviously, the backdrops you called out the move environment remains a little bit challenged. Are you seeing incremental competition as AT&T Internet Air perhaps ramps up, even though maybe T-Mo is talking about a little bit of a slowdown there. That would be helpful. And then also touching upon, Hans, thinking about your thoughts on 5G use cases. I think you emphasized private networks a few times within the prepared remarks. How are you thinking about the development of the revenue opportunity here, maybe relative to how you’re thinking about [MEC] (ph) as well, you kind of touched on that — how AI plays into it. Thank you.
Hans Vestberg : Thank you Sebastiano. Yeah, when we talk about the broadband, first of all I think Fios continue to be the stellar product, best fiber product in the market, both for businesses and for consumer. You see us continue — it’s a little bit up and down depending on mover markets and all of that, but we are very consistent on growth in that area, very pleased with that product. On the fixed wireless access, we continue to see very, very good net promoter score, the easiness of installing it, the greatness of the product, the quality of the product, all that plays in. So I just see that when we roll out our C-band we get new opportunities. On the consumer side, that we saw of course as an obvious use case. On the business side, we’re seeing new use cases that we didn’t see before.
I mean, all the way from coffee shops replacing cable with fixed wireless access to large enterprises actually replacing with fixed wireless access as well for different use cases. So we had a super quarter in fixed wireless access in the business side this quarter. But again, we are dimensioning ourselves to be around 400 net adds quarter-by-quarter. That’s how Joe, our Head of Network, is deploying the capital, the resources so we can handle it. So we’re again pleased with that. We said it also was a little bit slower broadband market in the beginning of the year. The exit rates were better at the end of the quarter. So all-in-all good. On the 5G use cases, yeah, now we start talking more and more about private networks because the number of them are many — then the value of them are still fairly small.
But you know, when we build that base of private network, managed spectrum for enterprises, that’s over time is going to be a great opportunity for our enterprise sales force to add in, do the mobile edge compute. And as I said, AI is like, that’s how we built our mobile edge compute network. And we already have mobile edge compute in many of our sites across the country in order to be able to meet that compute and storage. So over time, long-term, and we are a long term company. We’re going to be around for many, many years being telecoms. This is absolutely the right investment. Nobody else has built a network as we have done when it comes to AI network compute storage at the edge on the wireless network.
Brady Connor: Thanks, Sebastiano. Brad we are ready for the next question.
Operator: The next question comes from Tim Horan of Oppenheimer. Your line is open.
Timothy Horan: Thanks, guys. Tony, how sustainable do you think the 4% ARPA growth is? It seems like you have a lot of — lot of levers to pull here, and it sounds like you’re feeling a little bit more optimistic about that metric longer-term. And can you be just a little bit more specific in, you know, how much debt you kind of plan on paying down per year, maybe second half of this year or next year? Thank you.
Tony Skiadas : Sure. So on the ARPA growth, again you see the progress on gross adds and you saw the 5% growth on gross adds. You see the progress with myPlan and the continued premium mix has been very, very strong on myPlan, and that’s continued. We see a further runway for growth, and you saw it in the first quarter. And as we said in the prepared remarks, we’ll see a full quarter’s effect of the pricing changes that we announced in the consumer business. And that launched in March. You’ll see a full quarter’s effect in the second quarter. So we feel very good about the progress on ARPA and that the team is making. And then on your second question, I’m sorry?
Timothy Horan: How much debt do you think you can pay down per year? And just on ARPA, I guess the question is — is this sustainable over a multi-year period? Thanks.
Tony Skiadas : Yeah, we’re not going to give multiyear targets here, but we like the shape of the growth right now. We said we’re on track with our service revenue growth through the year and the team is very focused on us. We said we were going to be phone net add positive in consumer and that’s on track as well. And on the debt, so look, we’re not going to give any targets on paying down debt. Our focus is on continuing to generate strong free cash flow to pay down debt in a meaningful way. In the second half of the year, we’re on track to do that. We have 3.6 billion of unsecured maturities due this year. About half of that was addressed in the first quarter. And you should expect us to be opportunistic as the year goes on.
Brady Connor: Yeah, thanks, Tim. Brad, We’re ready for the next question.
Operator: The next question comes from Craig Moffett of MoffettNathanson. Your line is open.
Craig Moffett: Hi, good morning. Thank you. Let’s talk about something a little longer-term, which is spectrum and capacity. Your CapEx has been now trending down as you’ve largely gotten through the 5G build. I’m just wondering how we should think about your spectrum needs going forward and what your appetite would be for additional spectrum if some were to come available from DISH Network or, if you think about US Cellular, and how you think about that in the context of the spectrum screens at the FCC, which don’t really leave much room for incumbent players to add. Do you think that those are a real impediment or do you think that those would likely be adjusted when the time comes?
Hans Vestberg : Thank you Craig. Great question. First of all, as we all know, right now the FCC doesn’t have any spectrum to auction out them — and they don’t even have an approval to do it. So that’s sort of constrained. Then it could, of course be secondhand market spectrum. We feel good about — we have only deployed a piece of our C-band so far. So we have quite a lot left in — our many of the sites have 60 megahertz or maybe at best 80. We have 161 megahertz nationwide. So we have quite a lot left of spectrum. And remember, That was the decision I, together with the board, took. We bought spectrum for decades, not for the next two quarters or something like that. So we feel really good about it. Then any opportunistic spectrum coming up, it’s hard to predict.
And even on whatever regulation is going to be around screens and that. I don’t know. The only thing I know, I’ve sit here on a better position ever say, with my millimeter way, my C-band, my low-band, and how I build a network. And sometimes it’s opportunistic spectrum is going to cost me a lot both for my customer interaction because some spectrum is not in the devices. I need new radios, new software. So you need to think when you re-engineer the network to see that you have the right spectrum all the way up to the customer. And I think that no one is even close to our team or radio planning doing that. But all-in-all, we feel good about where we are today. Let’s see what’s going to happen in the market of spectrum.
Craig Moffett : Hans, You’ve [seesawed] (ph) back over time between a preference between network densification or more spectrum. Is there a sort of house view at the moment for where you think it’s most attractive to add capacity? Would it now be through network densification rather than Spectrum or vice versa?
Hans Vestberg : A little bit early to say, and ultimately it’s actually a call or return on investment that we do daily here. Should we put up a new tower? Should we densify? Should we put up new elements? Or should we add more spectrum? That’s a regional, almost on ZIP code level that the team is going through this. So every time you see spectrum coming out in the secondhand market historically, you make a calculation. We feel good about the position we have again here with all the spectrum we have to make those choices internally rather than betting on external assets coming in. We don’t need that. We have everything in-house right now for quite a while.
