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AT & T CEO John Stanky faces the most difficult times of his career

EEven iconic companies can withstand a tough identity crisis. AT&Thas long been one of the most respected names in American companies. Many Fortune 100 companies rely on telecommunications giants for their critical communications infrastructure and are the leading providers of radiotelephone services for consumers, including 5G. This is a fast-growing broadband player with high quality fiber products. According to company sources, it is one of the most important annual capital investors in the United States, investing more than $ 135 billion in networks and spectrum over the last five years.

But for the past six years, AT&T has continued to make costly and distracting expansion into the media business, acquiring DirectTV and Time Warner in a major acquisition. .. The company is now back in its core business of interconnecting businesses and consumers. The consensus view on Wall Street is that AT&T has spent the last two years reversing what it did in the previous six years. We spun off DirectTV and WarnerMedia to refocus on building the telecom infrastructure, which is the backbone of many of the modern connected economies.

Leading this effort is John Stanky, CEO since 2020 and a 37-year career at the company. For the 60-year-old Stanky, it was a rewarding and sometimes emotional process. In a recent interview, Stanky claimed a streamlined AT&T and discussed what he said was the most difficult business environment in his career. Stanky spoke to TIME on June 1st from a conference room outside the Dallas office. There, he was testing a new, slow-moving Microsoft video conference camera to focus on the person speaking. "I call us Microsoft's biggest beta tester."

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This interview has been summarized and edited for clarity.

When was the last time you used your real landline?

I'm probably a bit outlier. There is still one in the house, and my mother-in-law calls the landline first. My wife and mother-in-law are actively using it. I have to pick it up from time to time.

The number of customers who still have landlines.

This is a very small number, less than 20% of the peak.

My landline is $ 10 or $ 12 per month. Are you losing money in the landline business?

$ 10 does not cover landline costs. The cost of landlines is rising as they shrink in size and the fixed cost structure remains almost unchanged. When I talk about business transformation and cost structure changes, most of that work is to get rid of all the cost structures associated with good, good products over the decades that we are currently running the course. That is. All its cost structures are now being redesigned from the business. And our hope is that over the next four or five years we will then free ourselves.

Why did the acquisition of an entertainment company prove to be such a minefield for external companies?

Every industry has its own characteristics. I think some of the unique characteristics of the media business are incentive structures that are quite different from many listed businesses. The incentive structure is built around an individual or individual contribution, as opposed to the inherent value that a company owns or builds.

Do you mention stars and directors taking huge cuts in movies and hit shows?

It's not just stars and directors. It is people who write and showrunner. It's the executive producer who connects the package with the talent. Everyone has different dynamics in terms of how they sell, which is very different from many other businesses and industries. I'm not talking about cuts in a nutshell, but I'm suggesting that companies with management expertise in their current business are motivating people in the media industry. It means that you may have a little trouble when giving incentives. It's completely different, very unique and customized for a particular individual or the abilities of a particular individual.

I visited HBO headquarters in New York shortly after the deal was announced. The meeting was leaked to the press and you were presented in the light of flattery as a kind of ignorant telephone company guy who didn't really get a creative business. Is the entertainment industry more like a serpentine hole than the telecommunications industry?

I think it's just a different motive. It's natural for me to step into a group of 200 people in the telecommunications business and talk about what needs to be done to provide perfect broadband to millions of people. It certainly isn't the approach that works in the media. It's all unique, special and different, and your own intellectual property. I don't think it's a snake hole. I have found it to be a different creative process with people with different incentives and motivations.

We laid out for HBO that day, and many of the things that got a lot of feedback, such as increased volume and production, were rewarded. HBO added 3 million customers in the previous quarter.

If I was criticized for what I did that day, it was that I told the truth. For the first time in more than 10 years, HBO will increase subscribers, deepen relationships, increase the number of hours people watch the service, and never lose their creativity. I think that's pretty good.

And now there are ads on HBO. (AndNetflix recently confirmed tothat they are working on adding ad support options to their streaming services.)

Ads and ads are lightly loaded, which is probably I think it's a good thing. That's because not everyone is wealthy and white-collar upper middle class, and sometimes they want to make it a little cheaper.

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Macro-based, how about current consumer health Are you reading? Is it still your view that people are flashing a bit?

People's bank accounts still have a great deal of money left over from what I think has changed people's cash positions as part of government-sponsored distributions. I think consumers are still relatively healthy, but only two-quarters of 8% of inflation ... [to eat these cushions]. People will not have discretionary money, and its softening will probably slow the economy. You will probably see things normalize in terms of work and employment.

What are your operational assumptions about future inflation?

6% of this year's balance, by this time next year, the Fed could succeed in halving current inflation rates

AT&T buy lots Things. Where have you been hit hardest by supply chain problems and shortages?

A chip is included.

What else is there?

Since we are expanding the cell site of the backup generator, the cell site remains on even if the power is turned off. The manufacturer we worked for ran out of small plastic silicon parts. It cost about $ 1. There's everything else: an engine, a transfer switch, and one here, holding a $ 30,000 generator because one little plastic $ 1 product isn't available.

Have you readjusted wages in this tight employment market?

This year's annual salary increase is a level I haven't seen in most of the decade. Some technical areas have made fairly large double-digit basic adjustments to address market dynamics.

Do you think the current restrictive immigration policy contributes to the labor crisis?

Do you think more informed immigration policy is good for the United States? Yes, it is. The pandemic has taught us that there is so much work that can be done from anywhere that companies are learning to perform much more decentralized operations. If so, it wouldn't really be healthy for the United States if we couldn't take the workers to us [high-paying jobs prefer to be in the United States and to overseas remote workers who may contribute. Because I'm going]

With inflation, labor, supply chains, and many other challenges, can you remember the more difficult environment for a business to run in its career?

No. My timing was perfect. I started this job with a pandemic and a high degree of social unrest. You forgot it on your list. With regard to social issues, a more polarized society continues than ever before. A supply chain that is more fragile and broken than ever before. A policy that promoted record levels of inflation. The strangest job market I've ever seen regarding people's motivation. I have never worked in this dynamic environment. And now we have thrown a war on it.

How is your fiber business competing with cables?

I used to go to cocktail parties and the question was, "Why can't I get a better wireless service at home?" Now the question is, "When can I get fiber at home?"I heard it's really good. We are building as soon as possible. The question is how quickly you can build to meet an incredibly acceptable market.

This period is called the golden age of connections, and we are investing heavily in networks. We expect the amount of data on the network to increase fivefold over the next five years. What drives it?

This is a very conservative view of what is likely to happen. A good example: The day after you get your 5G phone, you will use nearly 40% more data than the day before. why. It's faster, so you'll have less time to wait and more surfing. It wasn't the killer application that drove it. What if Mark Zuckerberg succeeds in building the Metaverse? What if a self-driving car window appears and you need to pull down data to truly become a self-driving shared car? These kinds of things can only affect that prediction upwards. What happens when a remote medical image takes off? Now all of this is working.

Of the services that consumers pay in 5 years, the services that they are not currently paying.

Well, that's a difficult question. The list can be very long if the regulations change where the consumer is not the product. I believe Europe will probably do some things that prioritize privacy. I think there are some structural changes in the way people ultimately price products and services. In a market with a little more privacy, you may have to pay 30 cents a month for your email account.

What is the most difficult technical problem your company is trying to solve in the short term?

As a company, we must be really good at writing software that allows our network to do better for you.

You recently got a new look, a new hairstyle. Please tell me about it.

I previously bet on the company. If they submitted a financial plan for the year, I would shave my head. They had a great fiscal year and I shaved my head in January and was a chrome dome for a while. The temperature here in Dallas has returned to over 90 degrees Celsius. I'm thinking of taking it off again this weekend.

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