Okay. So, everybody can please go ahead and take their seats. We are going to get started with our day three keynote. We’re very pleased to be joined again by AT&T’s Chief Financial Officer John Stephens. John, welcome back.

Thank you. Thanks for having us. Glad to be here.

Thank you. So, John, a lot is going on with AT&T. Maybe just to start from a high level, can you talk about your top priorities for the business in 2017?

Sure, Matt. And once again, thanks for having me here, thanks for everyone being here in the room and on the web. First of all, some of the topics we talk about today may be forward-looking. They are subject to risk; actual results may vary. So, we’d advise you to look at our SEC filings and the information on our website, and now, taken care of the safe harbor statement. With regard to 2017, it’s a really exciting year, great year for AT&T. You think about the priorities, it’s going to be Time Warner merger deal completed, very optimistic, continue remain optimistic, particularly after the recent developments. Secondly, it’s to continue to move forward with DIRECTV merger and integration savings. We hit our mark last year on our targeted savings run rate, and we expect to grow those over the next few years. So, we’ve got to continue to do that. Third, we’re very excited about our overall ability to improve our speed, scale and capacity of our wireless network. And that involves not only our 5G initiatives, but quite frankly, we’re very optimistic about our first net initiative and the opportunity to combine those to really take our networks into the next generation far ahead of capacity, speed and capabilities than anyone else. And then, lastly, we need to continue to do two things. One on the product side continue to innovate with our bundling and bringing our unique assets together to the benefit of customers; and then two, continue our focus on modernization of our Company for cost savings initiatives whether that’s soft verification of our network, whether that is virtualizing our network functions or just streamlining our customer and operational issues. So in a brief nutshell, that’s our goals for 2017; that’s where we are focused on.

And if we think about 2017 and the guidance you’ve put out there, you’ve talked about low single digit revenue growth, mid singles EPS growth this year. Can you give us a little bit more color on the components driving the growth, whether it’s more top-line driven or efficiency driven? And maybe if you could just give us a little bit of an outlook for the different segments between growth and profitability, and how are you looking at the businesses?

Yes. So, I’ll take the profitability first. And if you look at the 2016 results, you can see, we made significant investments in Latin America and specifically in Mexico. And we expect those to start to pay off this year. And so with that, if you will, investment cycle beginning to turn into operational pay-off cycle will significantly help our profitability. If you think about the continued cost efficiencies on things like the DTV merger synergies or the network function virtualization and the fact that now over a third of our network functions are virtualized and moving towards 55% by the end of this year. You can see that all of our efforts here are going to increase profitability, in large part by a focus on expense controls and modernization of our operation activities. On the revenue side, Mexico is growing great; DTV Latin America has improved, we’ll see revenues down -- we’ll see revenue improvement there, you can see in the customer counts. Our video products continue to increase revenues, our broadband continues to grow, strategic services continue to grow. But we’ll face the headwinds as we have for the number of years on a legacy services. Two wild cards, so to speak or two items that are out there with regard today are our equipment revenues. We expect that equipment revenues for the year and giving our guidance in the low single digits, we expect those equipment revenues to grow. I’ll tell you, year-to-date equipment revenues have not done that. Equipment sales are very slow on the handset side. Now they have some equal offset in expense, but those equipment revenues, those handset sales have slowed on a year-over-year basis. And then, we would expect wireless service revenues to stabilize this year as we had gotten through our program with regard to mobile share value plans and the conversions, but quite frankly with the initiation by the marketplace have been limited and our move done whether this week, we’re going to have to wait and see what that impact has on our service revenues. With all that being said, we are staying with our guidance for the year. We really feel comfortable about our ability to grow profits and grow cash flow to continue to perform for our shareholders.

So, wireless is an interesting topic, it’s been really topical. And there is a lot to hit on, but you mentioned wireless. So, we’ll jump right into it. We’ve seen AT&T really focus on profitability; I think maybe standing out above the fray. You recently I guess responded to what you’d seen in the marketplace with newer unlimited plans. What’s the strategy for AT&T and wireless this year? Are you still going to really focus on profitability in postpaid, more growth in prepaid or has that changed at all with an evolving competitive dynamic?

Yes. We’ve always -- we’ll continue to focus on generating value for our shareholders for the long term. So, the fits and starts of the marketplace cause a lot of coverage and discussions and cause us to move in different directions with product offers. So, let’s be clear, for the long-term, we’re here to create value for the shareholders; that’s what our responsibilities are. Secondly, with regard to that long term, we feel like we are in a unique position with our capacity capabilities. If you look at our current holdings of spectrums and 40 megahertz, about 40 megahertz of underutilized or unused spectrum from WCS and AWS-3, and quite frankly, a little bit of remaining 2G that we haven’t refarmed yet, we have a unique ability to put a whole lot more capacity out there. When you think about the great work our networks team is doing with whether you call it 5G, the things like carrier aggregation, MIMO, whether it’s putting a whole host of different services in place and capabilities in place, we feel like that is going to be a really strong unique advantage. If we’re fortunate enough to win the FirstNet contract which we are optimistic about, you will add another 20 megahertz of 700 megahertz spectrum in the 700 band 14; that puts us with 60 megahertz. That’s a dramatic advantage. So, as we get into these, if you will, competitions that are focused on capacity and quality, we’re going to have a clear advantage; we’re going to have a clear advantage. So, that’s how we’re focused on it. I will say one last thing. There is uniqueness to the FirstNet contract. It not only allows you to build a ubiquitous nationwide network on a new band, but it also gives you the funding to do that. And as we put the 700 megahertz band into service, we can put into service the remainder of our spectrum inventory. That’s a dramatic efficiency, a dramatic effectiveness, and will provide all of our customers, particularly our new FirstNet customers, but all of our customers a dramatic advantage. When you have that, we then have a national platform for our Internet of Things, our smart cities initiatives, our monitoring initiatives, anything with regard to first responders. So, this really is a very important bid and opportunity for us. And we’re anxious to get a decision made and are optimistic that we will be part of that decision.

So, if we think about robustness of the network, lots of spectrum, lots of capacity; on the flipside, more near-term smartphone, LTE penetration generally maturing more competitive space. You kind of alluded to this upfront, but I just wanted to go back to see service revenues and where you sort of see I guess maybe long-term the opportunities for growth in wireless in a maturing competitive market and maybe more near-term how that dynamic is maybe weighing on the business more than you would have expected?

So, I think a couple of things. As we put out this new capacity, these new layers of network, these new speeds, new products and services will be out there. So, for example, whether it’d be the Internet of Things platform, not just connecting the cars but connecting the drivers, whether it’s the new monitoring capabilities, the new FirstNet, smart cities, all of that is all new revenue sources. So, we’ve been building that out; we’ve been getting ready for that; you can see our connected devices [ph] are in the tens of millions. So, we have those opportunities and we have been working hard towards those for a number of years, so that will be a next segment. Secondly, when you bundle these things with things like DTV Now and other over the top services and the potential of bundling in the future with other really high-quality over the top services, we are going to be in a unique position to differentiate our services from anybody else. And so, when you can do that, you can not only gain customers and grow revenues but you can have a real quality experience for your existing loyal customers and make sure you treat them well. So, all of that bids well for our future opportunities for revenue growth, and quite frankly continued quality margins and profit expansion.

On margins, it’s interesting because you guys have done a lot in recent years to improve efficiencies in wireless. How do we think about the margin trajectory this year? And I guess what I wanted to dig into a little more is incremental opportunities for cost savings, whether it’s 2G shutdown; saving on tower lease costs? And then, maybe one last, I’ll follow up on iPhone 8 but we can get to that a little later.

So, I can probably take more time than we have left in the presentation to go through the laundry list or complete list of cost savings ideas. I’ll give you a couple of points. Think about what the network team’s doing for our Company and the IT team. When you virtualize network functions, we had about 5% at the end of 2016 and we’re just under 35% at the end of 2017 -- or excuse me, at the end of 2015, and at the end of 2016 we’re just under 35%. If you look at the phones, which many of you’re looking at right now and you think about how that phone includes the virtualized flashlight, radio, camera, map and all the things that are in that phone that have virtualized, and the efficiency of caring that device as opposed to caring all of those devices in your pocket; same thing is going on with our network. And just like that phone as expensive as it maybe, it’s cheaper than buying the 47 different separate functions and pieces of equipment that are shown on your icons, that’s exactly what’s happening with our network. So, as we get momentum, further momentum, increased momentum, because I want to make sure we recognize how much they’ve already done, you can see the cost savings capabilities that are there. It’s just remarkable. And then, quite frankly, as you see the ability to put so much more spectrum in the service and get our efficiency of cost per megabit down to very, very low levels, you can see that we can then grow revenues and grow customer base while having the capacity to do it. Those two things together will drive the efficiency, drive the cost savings. The last thing I will tell you is we are 60% of way there on our DTV merger synergies and we hit the mark just like we said we were, we’ve got another 40% to go over the next two years or another $1 billion, and I’m confident we’ll get those.

So, also touch on entertainment, and we’ll get to that in a sec. Just one more question I have on wireless and the competitive landscape…

Yes, it is.

No shortage of news flow, no shortage of announcements in terms of intra-industry activity. How would you classify the current competitive landscape, and can you talk to any sort of impact you’ve seen to the business thus far with what’s going on in the marketplace?

So, a lot of different things, if you want to talk about it. As I mentioned, the equipment sales did slow down based on the changes we made to the equipment installment plans and that’s played out. If you look at the product offerings that are out there, they are getting more and more towards some form of unlimited. But if you look at the practical side of what we’ve done with regard to different characteristics and the ability to manage the utilization and manage the speed, and manage the quality of the product, while the unlimited is a -- is not necessarily the first step that any offering would go to in marketplace where the other three players have gone doing; our match is something that we can live with and we can manage too. But overall, the market’s moved towards this unlimited style, which leads you then to say who’s going to have the network capacity in long run, who’s going to have the capability to serve those, who is in the best position to deal with that, if you will, increased demand for capacity. And as I have already said, we are hopeful -- we have 40 and we are hopeful to have 60 megahertz of service and a source to help supplement the cost to implement and put those into service. So, we feel very comfortable with the competitive environment with regard to a capacity based competition. It’s not the one we chose but if we’re going to go there, we feel like we are best positioned, significantly differentiated with the others with our current inventory spectrum and our current inventory of a capacity. So, we feel very good about it.

Time Warner, you mentioned that upfront as a top priority this year. Any updates you can share around the deal in terms of the approval process, and any sort of upcoming next steps or milestones we should be looking for?

Yes. As you saw in the Time Warner’s filings prior to the shareholder vote, one, that they are not expecting to transact any licenses to us, so without any FCC license being transacted, the review would be limited to the DOJ. Secondly, you saw that their vote was overwhelmingly in support of the merger and it was well over 95% in favor. So that’s been great. We continue to work with the DOJ in a normal course and we’ll continue to move that forward. At the same time, we’ve got international approval processes going on in Europe, in Latin America, and in Asia. And those are proceeding as you would expect, continue the work on those and we continue to expect to close this deal in 2017 and certainly working to close it sooner rather than later, but we’ll let the process play out. Quite frankly one of the reasons why we’re so confident is when you look at the DOJ rules and you look at the history of the DOJ, these vertical integration deals get done. They make a lot of sense, they don’t eliminate competitor and quite frankly in this case, bringing these two companies together is really going to accelerate innovation that will benefit customers. So, we’re really optimistic about it.

Some of that innovation I wanted to talk about. Maybe if you could talk from a high level, whether the new regulatory backdrop changes in any way, how you think about the potential merits of this deal?

Well, I think we’re very positively encouraged about the new regulatory backdrop, particularly with the FCC. The new chairman has a record, he’s been on the commission for five years, and has a record in a number of opinions including dissents from his prior experience. So, I think we had a good insight into what his beliefs are. Hi early moves support for an investment based philosophy and support for mobile broadband. Some of the things have come out with regard to whether it be set-top box, it’s business data service, some of the developments on using two sets of privacy rules that we are following. A lot of that activity is already starting to show a real focus on streamlining and what is -- and a real focus on what’s best for consumers. So quite frankly, we’re very encouraged and look forward to that.

Does that impact in any way how you think about investment priorities? And whether it’s the increasing deregulatory bends at the FCC or -- corporate tax reform is another topic I want to get into, but how do those two impact the way you think about investment priorities?

Well, I think a couple of things. I mean, certainly, they should feel very good about the future of the industry, future of the business, future of the integrated carrier who operates across that industry. So from that standpoint, yes, we’re very optimistic from that perspective. And it is a change that is viewed positively. With regard to indicating any specific changes, any dollar amounts or any activities with regard to our CapEx, I won’t do, I would just say, our focus has remained the same, as I talked about before. We’ve got to get the Time Warner deal done, we’ve got to get the DTV synergy savings, we’ve got a get our capacity, win FirstNet, get our wireless capacity, our 5G strategy in place. Those things will remain. They are reinforced by this good news and it’s good improving situation from a regulatory front. But I don’t want to imply any significant changes one way or the other.

And while we are on the topic of regulatory in DC, another tailwind that’s often come up is the potential for corporate tax reform. When do you expect to see that enacted, and can you talk to sort of the multiple benefits you anticipate that generating for your business?

So, when you just look at the U.S. economy for the last decade, one thing has been woefully absent and that’s significant business fixed investment, significant investment in the U.S. economy by businesses. And one of the reasons is, you can put it somewhere else and pay 20% taxes or you can put in the United States and pay 40% when you take into account, most of our state tax rates. And that differential makes us non-competitive. So, bring tax rates down to 20%, the most important thing for our business is that it will create an environment where everybody else invests in the United States. And being a U.S. centric provider of services, those factories, those workers, those -- whether it’s call center, it’s service centers and professional centers, they are all going to need our products and services. They are going to need big pipes and Ethernet and VPN connections, they are going to need NetBond, they are going to be cell phones, they are going to entertainment services, they are going to need everything that we have to offer. So, the biggest impact is getting business fixed investment up in the United States, drive the demand for our services and for us that drives revenues. And that’s a great way to grow your business. So, that’s why it’s so important for the country, for the citizens, and quite frankly for our Company. Secondly, with that it’s just some mathematics you go through. We’re a company that is a tax payer; we do pay our international cash taxes; we do have large amounts of deferred taxes. So, when you go through, if you will, a rate change from a 35 to say a 20, you can so to speak, go through and calculate what it might do lowering…

Can you talk about some of the benefits and the potential benefits to cash flow? One of the big merits I think of a pro forma AT&T Time Warner is not only the diversification and lot of the innovation that’s possible but also cash flow that comes as a result of combined entity...

We do like cash.

Yes, I can tell. And so, it’s a good segue into the next question is how are you thinking about priorities in terms of uses of cash flow post dividend, pro forma for the Company. And in line with that, can you talk about the path to deleveraging?

Sure. Post Time Warner, we’re going to have a company that has EBITDA in the near $60 billion a year range. So, we will have in all aspects big numbers, our balance sheet, revenues, net income and our borrowing levels, all of those will be big numbers. We’re going to have a significant amount of EBITDA. We will continue and stay focused on our tradition of paying a good solid dividend to our shareholders. That continues to remain very important to us. We’ll continue to invest in our networks, in our products and services, and we will take the focus of the remaining cash, which there will be some and of a measurable level, and we’ll use that to delever. We’re going to delever in two ways, taking the excess cash and paying down debt as quickly as reasonably possible, and by growing that EBITDA even more. So, when you do that over the course of four-year period after the deal, you can see where you can get into that kind of traditional 1.8 range. I will tell you with regard to tax reform and other things, there is moving parts out there but that aspect of our commitment hasn’t changed. We feel really good about that. So, you know the drill, Matt. I mean, right now, the capital intensity of Time Warner is probably in the 2% range, our capital intensity is 15% range, this is going to give us a real opportunity to delever. It’s a great business; they continue to have great quarterly results. We feel very good and I feel better about the transaction today than I did the day we announced it and I felt good about it then. So, we feel really good about our opportunities to combine and generate a really strong cash generation machine that will keep this company healthy for a long-time to come.

5G is another very, very topical area, especially coming out of Mobile World Congress last week. AT&T recently laid out an outlook with 5G evolution. Can you give us an update on what you are seeing in your trials today?

Sure. Our trials and us, we are showing some really good results with regard to -- if you go through the aspects of 5G, fiber’s a big part of 5G in a sense of backhaul and sense of capabilities, and sense of speed of delivery on direct fiber services. We have one of the -- we have the largest I think footprint in the United States of fiber when you take into account all assets. That’s been proven. We continue to add to that with our fiber to the prem. If you go to the Austin millimeter-wave test, we’ve seen great speeds in our test, utilizing small cells or utilizing fiber to the kind of fixed wireless capabilities. We’re seeing great speeds and testing on our LTE and using LTE-A advanced, and other technologies of carrier aggregation, the MIMOs and all kinds of different technologies to get great speeds. So, if you think the fiber’s working great, the LTE, the millimeter wave is proven well. Our fourth one is what we call a G pod -- fast, which is a technology to use capital pairing and the things like multiple dwelling units to provide kind of gigabit speeds. And we continue to test that. And then we’ve got our AirGig, which is our ability to provide broadband speeds at potentially gig capability using power lines and having our broadband signals ride around those power lines, and we are testing those. So, all aspects of a very complete and thorough 5G plan and moving forward as well as working with the international standard setting community to set standards, so that we not only can get millimeter-wave and this new level of technology in place, but do it efficiently on a worldwide standard. So, we feel really good about our overall 5G efforts. It’s not just one item, it’s not just one product; we are covering the landscape and we are clearly leading the effort on those -- on that initiative and feel really good about it.

And just in terms of your expectations for standards, timing and then use cases whether it’s fixed or mobile, when we may actually see those put into commercial use nationally?

Yes. I think, I’ll leave that to the technology guys to step for. I will tell you that things like getting the LTE speeds up dramatically by doing carrier aggregation and MIMO and all those things, we are doing those things now. Those things will get a different level of attention or a different level of start after -- I expect, after the first net decision is made. So, those things are going on now. With regard to getting more handsets into the space and giving more equipment in, and I think that could be depending upon, which piece of equipment you’re talking, some new devices are coming for carrier aggregation, potentially later this year on the 5G millimeter-wave devices, I thinking we’re talking in the ‘18 to ‘19 category when we talk about 5G and the macro and network capabilities. You are probably talking Matt, after the standards are set and the manufacturers have a chance. So, those will be moving targets. I think the real answer is from my perspective is as I look at what our network and our IT teams are doing, we are leading the charge on these efforts and getting the standard set in making real tests, real time activities on this and developing a strategy that says we are going to be able to do all of these things and we are going to have the benefit of being able to make the decision on which is best, specifically because of our integrated carrier model and because of our existing footprint that is so much more extensive than anybody else in the industry.

You mentioned network, it’s a good segue into fiber, another big buzz that comes up very often. Can you talk about where you’re? You’ve committed to deploying; I think it’s about 12.5 million homes with fiber by 2019. Where are you there, what milestones are you hoping to achieve this year, and I guess broadly speaking, how does this fit into the 5G strategy?

So, couple of things. Complementary to the 5G strategy is one way you get really, really high speed into the homes and quality service, but it’s also a way to use it for backhaul and other things. But specifically, we had about 4 million homes with fiber to the prem by the end of last year. That is well ahead of our commitment. Our commitment was close to 2.6 million to the FCC based on the DIRECTV deal. There is a couple of things to point out. The total commitment to the FFC is 12.5. Depending upon how much we can count of our Greenfield build, how much we count of our overbuild, over our You-verse footprint and a number of other specifics, not every one of those 4 million count towards our FCC build. So, what we expected all long, what we understood all along. What I’m trying to get to is we are well ahead of the FCC commitment on the 12.5. And by the time we complete that which was a four-year commitment, by the time we complete it and we can very well complete it, very early. But by the time we complete it, we will have more than 12.5, clearly more. And I would expect in the 13 to 14 million range because of the way the accounting works. We’ve understood this the whole time; this is not a surprise; this is what we’ve expected. But I just want to say that we’re going to have a lot more in service and people may -- they’ve utilized that 12.5 million number which is the right number from the FCC perspective. So it’s going really well, the ones we have rolled out, the take rates and the speed take rates are really good. We believe we’re going to take market share in that space and we’re most excited about the ability and what we’re seeing with the ability to bundle video and wireless with that fiber. So, it’s going well; we’ve got a ways to go. We have 4 million builds and we’re headed towards some number that’s going to be 3 or 3.5 times that. So, we’ve got a lot of work left to do. But the build is going well and it’s been ahead of schedule.

And is that the reason for optimism? I mean, it maybe most of these but cost of deployment, is that lower -- is it multiple use cases, has it been the uptake and the sort of the lift you’re seeing…

Uptake, the ability to bundle and yes the -- I’ll say it this way, the cost has been within or better than our expectations.

Okay, great. Staying on this entertainment group, DIRECTV; that’s huge deal. I think sometimes it gets overshadowed with everything else going on, but you talked about having achieved 1.5 billion in synergies, roadmap to 2.5 billion by the end of 2018. Where does the incremental synergy benefit come from?

Yes. So, it’s more content costs come because not all of the -- it’s been a year and half, little over a year and half since the merger. And so, not all of the content contracts come up within that year and a half, some of them are longer term, three or four or five whatever the case maybe. So, there is some more of those content costs. Secondly, there is some more of those headquarter, some systems costs, sometimes it takes a while to fully get systems whether it’s getting everybody on the same payroll system for example, which happened in December and this is January, just happened. And getting people on the same payable systems, getting the same -- whether it be financial systems, whether it be truck roll systems or ordering processes whatever the case may be, integrated customer care of functions, all of those things take time. And so, those will be the next round. Not that the team hasn’t been working on. In fact, we have been working on and we’ve been investing time and money and efforts to get them ready. But you’ll start seeing some of things roll out. And so, that will be more of those things roll out, so that will be the source of the additional cost savings.

And where are these savings? Are you reinvesting these savings into other -- because I would assume DIRECTV Now, mobile content cost, I mean where else, where are these synergies being redeployed into this?

So, certainly, we made some investment decisions with regard to DIRECTV Now, invested money to develop the platform, to test the platform and then to update the platform as we went through our initial launch. And so, our customers experienced this and found location -- they found items where we can improve it. So, certainly in that activity and we’ll continue to invest in that. We continue to invest in things like Otter Media and our other regional sports networks, those other pieces, smaller pieces of the content activity that we have there. But we’re going to continue to invest as important as anything in the customer experience and making sure we have a great integrated customer experience, so we can give build, one phone number to call, one person to talk to the answer, one resolution and we continue to invest our resources in improving that customer experience.

On DIRECTV Now, so I believe you launched around December 1st, couple of months in the market base, you talked about roughly 200,000 customers I think as of the yearend. Can you give us an update on any trends you’ve seen year-to-date? And I guess secondarily to that, cannibalization risk, has there been any that you’ve seen thus far?

Yes. So, I will stick with 12/31 numbers. On specifics, what I’ll tell you is that generally, the 200,000 was very exciting, very successful. We had some good offers out there between the Amazon Fire Stick and the Apple TV. We did that intentionally. We wanted to get a lot of attention on the product and we wanted to get a lot of user. And we wanted to pressure test it and see how it worked. We wanted to get people excited about and use it. And did that and we’ve been able to learn those customer experiences and improve the product even more. So that’s been a very good thing. Second, we believe that right now, because of all the efforts that we’ve done, they’re really -- there is a real high quality to that product. In fact, we’ve announced some loyalty reward programs just in last day or so with regard to that to make sure we tell the customers thank you in a right way. So, we are going to continue to do those things. But it will be a learning and a platform that we can potentially use for all kinds of other activities or adding products and services to the DTV Now group of services. So it’s just a starting point. With regard to the first quarter activities, I won’t talk about customer counts. I will say, we had -- as we said, we were interested in generating a lot of activity to make sure we pressure test this system, we accomplish that. And now, we’ve moved off those promotional prices and moved to more run rate prices, which give us the opportunity to bundle wireless to get into new customer areas, multiple dwelling units, some of the used markets. That’s proven really positive. Quite frankly on the cannibalization issues; it’s been well within the modest assumptions we’ve had on what might be cannibalized that we are comfortable with where that stands. But it’s still early on all of these things. So, we continue to monitor it and we’ll continue to adjust as appropriate.

And on the traditional business, I think 25 million customers, somewhat more of a challenge as a tougher market and traditional linear video. What’s the latest you’re seeing there both within the DIRECTV business and as well as competitively relative to cable and some of the newer OTT providers?

We’ve been seeing probably more competition in the pricing structure on the video side from the other pay TV subscribers. I think it’s in response to our bundling initiatives; it’s in response to our wireless unlimited that we had 8 million of our video customers sign up for last year and some of the progress we were making so to speak with regard to getting customers into these bundled packages. So, we have seen more pricing competition from the cable guys and them using the broadband video bundle and taking prices off the video side to retain or attract customers. So, it’s been competitive on that side too.

So, if we sort of juxtapose the moving parts, you’ve got growth in DIRECTV Now, linear, maybe little bit challenged; you’ve got content costs that are rising but then you’ve got synergies that are little bit of an offset. So, if we sort of put all this together, how you’re thinking about the margin trajectory for entertainment group?

Yes. We’re not giving guidance out for the specific piece. What we have said though is we expect to grow overall margins for the year for the consolidated base. And we take into account all the moving pieces as best we can. But as I said before, if you think about the remaining DTV merger synergies, if you think about the improvements in the investment cycle down in Mexico, if you think about the network function virtualization activity that’s been going on, you can point to a whole host of reasons why you could give the thought or give good support for the promise that overall margins should improve.

Mexico, you alluded to, let’s talk about that for a little bit, if you can give us an update. And if we look back at 4Q, very impressive volumes. Can you talk to where the growth is coming from; and secondly, how you expect to continue the momentum in 2017?

The growth is coming from having 80 million people covered with just a lightning speed quality LTE network. I mean, you can get as a guy who is personally experienced in the last month I can get a whole lot of better speeds in Mexico than I can in Europe. And we’ve really built a top first class network. We also built great distribution and we’ve also built a great brand and we’ve also built a great employee base who treats customers right. So, when you see that, we are an attractive competitor in the marketplace with the quality of our products and services exceed our competition. Still the new guy in that sense and so we’ve got a ways to go and we’ve got to continue to grow. But when you add 3, 3.3 million customers in a year, it’s because of the quality of your service, the quality of your products and we feel really good about that. That’s why we’re winning because we invest in it. You build a great network and people want to use it.

And in terms of profitability and turning the corner, I think you’d talk about going EBITDA positive at some point in 2017. Has the maybe better than expected growth affected that profitability target in any way?

So, I’d say last year, the ability to get more than we expected done with regard to the LTE build, with regard to the effective market targets getting branding, getting distribution, those adds, we spent more money than we would have originally thought because we were making such great progress. With that being said, now we’d expect to have that start benefitting us this year. I am not going to change the guidance with regard to -- we’d expect the trend at the end of this year to be positive towards EBITDA; we’ll stick with that. And I think we’ve got operating income passive towards the end of 2018. And then, we’re sticking with those. The only variance from that is we’ve got chance to add another 3.3 or more really quality customers, we’re going to act for the long-term for our shareholders and for our Company. And so, the performance there has been great and still not changing any of the guidance on that but the one thing I was surprised by is the 3.3 million customers. That beat what I would have expected at the start of last year.

And just lastly on business, wireline, what’s the latest you’re seeing from your SME and enterprise customer base? And you talked about a lot of the cost savings initiatives. How does that translate into margin trajectory? Maybe we won’t get into specifics on the segment but how you’re thinking about profitability?

Couple of things. Demand for strategic services continues to be strong. Pressures, challenges with regard to legacy services continue. The biggest issue, and I’ll sound like I’m repeating myself here, but the biggest issue is there is no business fixed investment by the overall U.S. corporate business world. They’re not investing here in the United States. That is not driving demand for our services. Our competitive performance, our overall service qualities, our overall profitability are all good. The team is doing great job. But we need to get the business fixed investment, the investment in our country going again. And business solutions would be the number one beneficiary in our set of businesses from that and quite frankly that’s why we’re spending so much time working on tax reform because we think that’s the key to getting that business fixed investment increase.

I think we are just about out of time. John, thank you very much.

Thank you. Thank you for having me and thanks everyone for being here. End of Q&A: