John Stephens, chief financial officer of AT&T (NYSE:T), spoke today at the Deutsche Bank Media, Internet and Telecom Conference. He discussed AT&T’s 2019 guidance and priorities, which were consistent with previous remarks he made on February 27 at the Morgan Stanley Technology, Media and Telecom Conference. AT&T’s guidance, announced in January 2019, is unchanged; however, Stephens reiterated that EPS on a quarter-by-quarter basis may vary from historical trends given the inclusion of results from WarnerMedia, which AT&T acquired in June 2018.

Also, Stephens provided some context around AT&T’s first quarter 2019 performance. Wireless customers are continuing to hold onto their devices for longer periods of time. As a result, through February, 2018 equipment revenues exceeded 2019 levels by about $100 million year over year, but this is not expected to affect wireless profitability. The company expects to continue to see wireless service revenue growth. And a strengthening U.S. dollar will affect reported revenues from foreign operations in WarnerMedia, DIRECTV Latin America and business wireline services, but the revenue impacts are generally expected to be mostly offset by similar impacts on expense from these foreign operations.

Stephens said that AT&T has maintained its guidance for full-year adjusted EPS growth but that quarterly EPS may vary from historical trends. First-quarter wireless service margins and adjusted EPS will be impacted by a $200 million to $300 million increase in amortization of prior-year commissions. However, Stephens noted that the company expects WarnerMedia results to be stronger in the second half of the year with higher sports programming costs in the first six months of the year.

Stephens noted that WarnerMedia has a talented leadership team and is now organized to more effectively produce and distribute great content and drive additional revenue opportunities.

Stephens said that beyond current guidance, the company has opportunities to continue to generate strong free cash flow in the longer term. This will be driven by improved capital intensity from network virtualization, efficient 5G deployment, the completion of capital programs, such as its fiber deployment to 14 million customer locations by mid-2019, and growth in Mobility, WarnerMedia, Mexico and Xandr.

AT&T reports first-quarter 2019 results on Wednesday, April 24, 2019 before the market opens.