At the Morgan Stanley Technology, Media, and Telecom Conference on Tuesday, AT&T (NYSE:T) CEO John Stankey provided investors with an update on the wireless business, the upcoming HBO Max streaming service, cost-cutting, and a new share repurchase program. The company also maintained its full-year and long-term guidance.

5G progress and wireless growth

At the end of February, AT&T's 5G network covered more than 80 million people. There are few 5G phones available today, and a 5G-enabled iPhone isn't expected until later this year, so it will take time before AT&T realizes any benefit from offering the faster wireless option. 5G access is included in some of AT&T's unlimited plans.

The company expects to have nationwide 5G coverage by the end of the second quarter of this year. Overall, AT&T expects its wireless service revenues to grow by more than 2% in 2020.

The AT&T logo.

Image source: AT&T.

HBO Max and cost cutting

AT&T is still on track to launch its new HBO Max streaming service in May. HBO Max will include HBO content as well as content from Time Warner, which AT&T acquired in 2018. The service will cost $15 per month, pricier than Netflix and much more expensive than Disney's Disney+. However, the price is the same as AT&T's existing HBO Now service, which includes only HBO content.

Bundling is a big part of AT&T's strategy. Beginning in May 2020, U.S. customers who subscribe to HBO or receive it as part of a wireless plan will have access to HBO Max at no extra charge. The company's AT&T Unlimited Elite wireless plan includes both 5G access and HBO.

At launch, more than 10 million HBO subscribers will receive immediate access to HBO Max. That will provide an initial boost to the subscriber count for the new service.

While the streaming push from AT&T will be expensive, the company has plans to slash costs in other areas. Stankey said the company has identified 10 categories of cost initiatives, which will reduce gross costs by "double-digit billions of dollars" over the next three years.

Guidance and buybacks

AT&T still expects to hit its 2020 and longer-term guidance. For 2020, the company expects revenue growth of 1% to 2%, adjusted EPS of $3.60 to $3.70, free cash flow around $28 million, and asset monetization between $5 billion and $10 billion.

By 2022, AT&T sees adjusted EPS between $4.50 and $4.80, annual revenue growth between 1% and 2%, and free cash flow between $30 billion and $32 billion. The company expects to have fully paid off all debt related to the acquisition of Time Warner by that time, and it isn't planning on any more major acquisitions.

While paying down debt is a priority, AT&T is also pouring billions of dollars into share buybacks. AT&T announced a new accelerated share repurchase agreement with Morgan Stanley which will retire $4 billion of stock starting in the second quarter. A similar $4 billion repurchase program is being executed in the current quarter.

AT&T's wireless business continues to provide a steady supply of free cash flow to reduce the debt, pay the dividend, and fund plenty of share buybacks. HBO Max is a wildcard. The streaming market has only become more competitive, and HBO Max will debut with premium pricing. The service will need to be successful to justify the massive acquisition of Time Warner.

Whether AT&T can hit its long-term targets depends on how well it can use all its assets. Bundling and cross-selling should help HBO Max gain subscribers quickly, but the long-term success of service is far from a guarantee.