John Stankey
Chief Executive Officer at AT&T
Thanks, Amir, and Happy New Year, everyone. I appreciate you joining us today, and I hope you enjoyed a restful and healthy holiday season. And at the conclusion of this call, I'm declaring the statute of limitations on this being the new year has run out. I'll share upfront that our commentary is a bit longer than usual. However, we thought it was important to provide a bit more clarity on our business today, primarily our fiber strategy since we haven't had an opportunity to discuss our December GigaPower joint venture announcement. Still, we'll ensure we have enough time to get to most of your questions.
As I reflect on not only this past year, but the past two and half years, it's clear that our teams have worked diligently to refocus AT&T around a connectivity strategy which has simplified our company and positioned it for sustainable growth. Our results over the past 10 quarters demonstrate we are on our way to delivering the full promise of the strategy. We're operating a streamlined and return-focused business with an improved profit trajectory that's committed to generating sustained cash earnings growth while delivering an attractive dividend. Underpinning all of our actions is a deep desire to connect our customers with greater possibility through 5G and fiber. And importantly, we're assembling the right assets, talent and capital structure to offer an experience and value proposition that customers appreciate. Our fourth quarter results are the latest example of how our teams continue to consistently deliver for our customers. We finished 2022 with strong momentum in growing customer relationships. As you can see from our profitability trends, we're growing them in the right way.
So let me highlight some of our progress. Let's start with wireless. We delivered 656,000 postpaid phone net adds in the fourth quarter and nearly 2.9 million postpaid phone net adds for the full year. And over the past two and half years, we've increased our postpaid phone base by nearly 7 million to 69.6 million subscribers, which represents our best 10-quarter stretch of wireless growth in more than a decade. During the same 10-quarter time span, we've grown wireless service revenues, EBITDA and also increased our postpaid phone ARPU by nearly $1. And while others may have jumped the gun to claim that they were the only ones to reduce churn in the fourth quarter on a year-over-year basis, we also lowered our fourth quarter postpaid and postpaid phone churn without offering richer promotions or free line giveaways. We consider this yet another data point highlighting that our comprehensive approach to improving the entire customer experience is working from our simplified go-to-market strategy, to our better network experience, to our focused market segmentation practices.
On top of that, our growth was not only robust but profitable with 2022 being the most profitable year ever for our mobility business. And we expect profit growth to continue in 2023 as we benefit from the investments we've made in our business over the last two and a half years. Our network teams have also consistently outpaced our mid-band 5G spectrum rollout objective. In fact, we now reach 150 million mid-band 5G POPs, more than double our initial 2022 year-end target. Our goal remains to deploy our spectrum efficiently and in a manner that supports traffic growth. In the markets where we have broadly deployed mid-band 5G, 25% of our traffic in these areas already takes advantage of our mid-band spectrum.
Now let's move to fiber. Where we built fiber, we continue to win. We had more than 1.2 million AT&T fiber net adds last year: the fifth straight year, we've totaled more than 1 million AT&T fiber net adds. And after 2.9 million AT&T fiber net adds over the last two and a half years, we've now reached an inflection point where our fiber subscribers outnumber our non-fiber DSL subscribers. The financial benefits of our fiber focus are also becoming increasingly apparent as full year fiber revenue growth of nearly 29% has led to sustainable revenue and profit growth in our Consumer Wireline business. As we scale our fiber footprint, we also expect to drive margin expansion.
In summary, we're enhancing and expanding our networks, while extending our long runway for sustainable growth. And I'm very happy with the high quality and consistent customer adds we achieved last year. We've emphasized that our plan was to grow customer relationships in a thoughtful and responsible way, grounded by an enhanced value proposition that resonated with customers. That's exactly what our teams have done, quarter after quarter. In addition to growing customer relationships, we've executed some of the most challenging actions associated with repositioning our operations. We've doubled down on our cost transformation. We've now achieved more than $5 billion of our $6 billion plus cost savings run rate target.
In 2023, you can expect the benefits from these efforts to increasingly fall to the bottom line. In fact, you've already seen the benefits of this cost transformation beginning to translate into operating leverage despite inflationary pressures. Our teams did an excellent job implementing pricing actions and business efficiencies to offset continued inflationary impacts, the impacts we anticipate will be with us in the near to midterm. Part of tapping into these efficiencies entails improving acquisition costs and further streamlining our operations and distribution. Another part entails rationalizing our Wireline copper infrastructure and reinvesting those savings into fiber and wireless where we're seeing improving returns.
As we look at our last priority, we also continue to generate meaningful levels of free cash flow even with record levels of investment. This gives us confidence in our ability to continue delivering an attractive dividend today and in the future, while also improving the credit quality of that dividend as we expect to increase our cash generation over time. We strengthened our balance sheet last year, reducing our net debt by about $24 billion. So as we close 2022, I'm proud of what the AT&T team accomplished despite a competitive market and challenging macro environment.
Turning to 2023, what's our strategy? Well, it's simple. Do it again. What exactly does that mean? It means we're focused on the same three operational and business priorities we set in place two and a half years ago. As I've mentioned time and again, our north star remains solely focused on becoming the best connectivity provider with 5G and fiber. We're confident we can achieve this because in wireless, we'll maintain our focus on building durable and sustainable customer growth in a rational, return-focused manner. Just as we've done over the past 10 quarters, we'll continue to take a disciplined approach to selectively target underpenetrated areas of the consumer and business marketplace and improve the perception and execution of our value proposition.
We also expect to continue our 5G expansion, reaching more than 200 million people with mid-band 5G by the end of 2023. In wired broadband, we have the nation's largest and fastest-growing fiber Internet, and we expect continued healthy subscriber growth as we grow our fiber footprint. As we keep expanding our subscriber base, we'll drive efficiencies in everything we do. This includes consistently elevating our customer experience through the improved durability and reliability of our 5G and fiber networks. When we couple our evolving networks with further enhancements to our distribution and digital and self-service channels, we'll make a competitive customer experience even more appealing. We expect to realize additional benefits from our consistent go-to-market strategy and lower cost structures. We also benefit from our improved brand perception, strong fiber and wireless asset base, broad distribution and converged product offers.
Additionally, we have a clear line of sight to achieving our $6 billion-plus cost savings run rate target by the end of this year. We expect even more of these savings to fall to the bottom line as the year progresses. With that improved performance, we remain focused on further strengthening the balance sheet by using cash after dividends to reduce debt as we progress toward our target of a 2.5 times range for net debt to adjusted EBITDA. Our commitment to providing an attractive annual dividend also remains firm. As our capex is expected to moderate exiting this year, following the peak investment levels of 2022 and 2023, we expect the credit quality of our dividend to improve on the back of our higher free cash flow and improved financial flexibility.
In summary, we feel confident that our growth and profit trends are sustainable despite the uncertain macroeconomic backdrop. As I stated previously, we continue to expect that we will be operating in a challenging macroeconomic environment where wireless industry growth is likely to return to more normalized levels. The resiliency of the services we provide are time-tested and only growing in importance. When you couple this resiliency with the investments we've made to our networks and proven go-to-market strategy, we're confident in our ability to navigate potential economic headwinds that may emerge and our improving financial flexibility only further strengthens that confidence.
Now I'd like to take a moment to touch upon our fiber strategy by quickly level setting on how I'm thinking about the success we've had, our plans for the next few years and how we'll hold ourselves accountable. Similar to the early days of wireless, we consider fiber a multiyear opportunity that will transform the way consumers and businesses growing connectivity needs are met in the ensuing decade and beyond. For AT&T, we segment this opportunity into three distinct buckets based on the specific input parameters and return dynamics each one possesses. The first is our in-footprint build where we can take advantage of our existing infrastructure, deep insights on both the customer base and competitive landscape and our market presence in order to take share and deliver attractive returns. We believe our performance over the last few years supports the wisdom of allocating our capital to these opportunities with sustainable and solid return characteristics.
As we stated previously, we currently size this opportunity as passing 30 million-plus consumer and business locations within our existing wireline footprint by the end of 2025. We finished last year with approximately 24 million fiber locations passed, including businesses, of which more than 22 million locations are sellable, which we define as our ability to serve. Our build to these locations is providing great returns, as you can see from our growing fiber revenues and ARPUs. As a general rule, about 5% of consumer locations passed may not be immediately sellable, primarily due to timing factors such as building access, construction or vacancies. Over time, we expect more of this inventory to become addressable for sale. We remain on track to reach our target of 30 million-plus passed locations by the end of 2025. The simple math would suggest 2 million to 2.5 million consumer and business locations passed annually moving forward. As we previously shared, build targets will vary quarter-to-quarter in any given year based on how the market is evolving.
The second bucket is availing ourselves partnership opportunities to not only expand but also accelerate our coverage in excess of that 30 million-plus location target. This is where our recent GigaPower joint venture announcement with the BlackRock infrastructure fund resides. While this deal is not yet closed, we're very excited about the expected benefits. Through this endeavor, GigaPower plans to use a best-in-class operating team to deploy fiber to an initial 1.5 million locations, and I would expect that number to grow over time. This innovative risk-sharing collaboration will allow us to prove out the viability of a different investment thesis that expanding our fiber reach not only benefits our fiber business, but also our mobile penetration rates. But what makes me most enthusiastic about this endeavor is that we believe GigaPower provides us long-term financial flexibility and strategic optionality and what we believe is the definitive access technology for decades to come, all while sustaining near-term financial and shareholder commitments. If I were to draw a parallel to this partnership approach, I'm reminded of the early days of wireless where the race to grow footprint was somewhat time-bound and facilitated by a similar approach, ultimately culminating in today's national networks.
The last bucket is framed by opportunities to connect people who previously did not have access to best-in-class technologies through broadband stimulus and BEAD funding. As I shared before, we truly believe that connectivity is a bridge to possibility in helping close the digital divide by focusing on access to affordable high-speed Internet is a top priority of AT&T. The intent of these government programs is to provide the necessary funding and support to allow both AT&T and the broader service provider community the means to invest alongside the government at the levels needed to achieve the end state of a better connected America. As the year progresses, we expect to gain more clarity around additional opportunities that exist, none of which are included in the 30 million-plus fiber location target I mentioned. As we compete for the subsidy, we'll bring our operational and market experience to compete for contracts in a disciplined manner. In doing so, we may be the only participant that has the ability to bid as part of an embedded wireline operation, a scaled national wireless provider and GigaPower may participate as a focused and flexible commercial open access wireline fiber network. We think this will prove to be a winning combination in pursuit of attractive growth.
The bottom line is this. Our commitment to fiber is at the core of our strategy. In footprint, we're on track to deliver our 30 million-plus location commitment and we're building the strategic and financial capabilities to take advantage of further opportunities as they emerge.
To wrap up, regardless of what transpires in the macro economy in the year ahead, we remain confident in the resiliency of the services our customers depend on in their daily lives. I believe our plan for the year rings true to who we are at our core. For almost 150 years, AT&T has invested heavily into connecting our country. And in the process of doing so, we provided a spark for innovation that connects people to greater possibility. This year, we'll continue to honor this heritage by significantly investing in best-in-class technology to build on a foundation for the future of our country's evolving connectivity needs: needs that we expect to grow significantly in the coming years.
With that, I'll turn it over to Pascal. Pascal?
