AT&T (T) is trying to help first responders during natural disasters by using things like drones to provide cell service. AT&T CEO John Stankey says it's "been a really good business for us." "We were under penetrated in the public sector before we started this effort. We've now got five million devices that we've sold into various agencies and first responder entities," Stankey says. On pricing, Stankey says the company is offering "more value to a customer than ever before," adding that he thinks his company's plans are "incredibly competitive."

When it comes to the ongoing discussion about lead cables, Stankey says the company has been working with regulators to try to understand what the Wall Street Journal was looking at when it filed its report. According to Stankey, "the data points that have come out since then suggests that we were correct. There isn't a public safety crisis."

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Video Transcript

BRIAN SOZZI: The biggest cell phone providers in this country have descended on this conference as well, to talk about what they're up to right now and ahead of next year. Joining me now is AT&T CEO John Stankey. John, good to see you again.

JOHN STANKEY: Brian, good to be here.

BRIAN SOZZI: So you're here to tell me that the future is drones, right?

JOHN STANKEY: [CHUCKLES] It's certainly one part of the future, yeah.

BRIAN SOZZI: So talk to us, what is this? Why is it here? And its-- for those who might be watching this right now, it's a giant drone. You know what-- why does AT&T have this in its arsenal?

JOHN STANKEY: Well, over six years ago, we started a public-private partnership with the government to create a first responders Network called FirstNet that ensures that any first responder can get data communications whenever they need to in a time of crisis.

Could be a hurricane, could be a fire like in Maui. We had to come up with a lot of different creative ways to meet the needs. And so we've got cell sites that show up on trucks. We have cell sites that show up in suitcases. We have cell sites that float around on blimps. And We have cell sites that we can put up in the air on a drone.

BRIAN SOZZI: These are a little scary. I'm like sitting next to these-- this was-- there's no-- the remotes aren't here. So these are not--

JOHN STANKEY: No, they're not going to turn it on, hopefully.

BRIAN SOZZI: Yeah. And I want to get us back to the Goldman Conference.

JOHN STANKEY: But this is a good example of when we're in a pinch and we don't have a cell site or it's been taken out by a disaster, we can put temporary service up and get people communicating so that they can save lives and do all the things that they're supposed to do.

And we've done a really nice job working with public safety to meet their needs. And we have a great not only infrastructure that supports it, but a great services organization that's always on the spot helping them out in a time of crisis.

BRIAN SOZZI: Now, part of your role is thinking many years in advance and putting initiatives in the ground today to bear fruit at some point in the future. Look at all the climate events we're having in the US and around the world. Is this a business that you want to expand? Should there be more drones out there and how will you be using these in the future?

JOHN STANKEY: Well, it's been a really good business for us. We were under-penetrated in the public sector before we started this effort. We've now got 5 million devices that we've sold into various agencies and first-responder entities. It's good business for us around that.

And it's great way to keep people communicating as well. But if you step back, relationship at 26,000 first responder agencies is a big deal for us. Drones, we'll do whatever we need to do to keep them happy and on the network.

BRIAN SOZZI: You now, I was joking with you a little bit off camera, this feels like a deja vu moment. We were just here one year ago. And at that time you had just sold off your media assets. And now it seems like you're in a different business. Where are you at in terms of transforming AT&T?

JOHN STANKEY: Well, we're real pleased with where we're at. To your point, we've got a lot of the structural transaction work done. And we're now focused on being the best communications provider there is.

And we're not there yet but we're certainly working our way toward it. And while we've gotten this structural deal transactions done, I think a lot of credit goes to the team and what they've been able to achieve and execute during that period of time.

Over the last three years, over 8 million new postpaid cell phone subscribers. We've seen over 3 million broadband fiber subscribers that have come on the network.

Our service indexes, either rated by external agencies like ACSI or JD Power, as well as our own internal customer service metrics have all improved. We've been able to generate more cash yield out of our business that you started to see in our quarterly results.

That's good execution. And team has done a really nice job of not only getting the transactions done, but getting the focus back on operating the business soundly.

Our wireless business at the time that I took over had some gaps between us and the performance of some of the better-run companies in the industry. We've closed most of those gaps on margin, churn, revenue performance, and really pleased with the progress that the team has made in those areas.

BRIAN SOZZI: We've been hearing murmurs recently about renewed competition, price-wise, for cell phones in terms of monthly bills. What's your take on the situation and are you ready to get more competitive on price?

JOHN STANKEY: Well, look we've been in a competitive industry for a very long time and we still are. And we're offering, frankly, more value to a customer than ever before.

If you look at the speeds that we're able to provide a customer, the utility that a wireless device gives somebody in their everyday life, the ability to use devices now as hotspots so that you can tether your laptop or your tablet with you when you go, those are all great things.

And customers are using 35%-40% more of the service a year ago than what they used last year. And so that's a big deal. And when we do that, I think what we're able to do is drive value and sustain pricing.

So I think our plans are incredibly competitive, especially when somebody buys into a family and has three or four devices on an account. I think we're incredibly competitive today and the industry is actually working on adding more value.

And you see ARPU is improving, meaning the customer is paying us a little bit more. You see people staying with us longer. They're not churning off as fast, which just a sign of satisfaction. And you see us growing the business over a billion dollars of incremental operational cash flow in the first six months of this year than last year. That's a good formula.

BRIAN SOZZI: A lot of low income households continue to struggle. We hear from the likes of Macy's and Nordstrom, people are not paying their bills on time, credit cards, you name it. Are you seeing that with your monthly payments? Or consumers are saying, you know what? I just can't make that payment this month for the cell phone.

JOHN STANKEY: Well, look we have a high quality customer base to begin with. And so it doesn't surprise me that maybe we were a little bit insulated from parts of the market that might be more value oriented.

But I think you should also step back and realize government's done a nice job of putting support in place for people to have these critical communications devices.

So the ACP program that provides $30 of subsidy a month, those people that are really in the position that you just articulated can apply for that government support. And we offer discount programs that match that.

So broadband by 100 service, $30 a month. $30 of subsidy from the government effectively makes that free. Similar in our cell phone business. We have certain programs that we offer under the low-income communities that allow them to take advantage of that subsidy.

And as a result of that, we don't see that kind of problem popping up right now. And I think part of it is not only the reasonableness, and the value of the product, and the subsidy that comes with it, but it's kind of like here, you need to have your communications to get through your day, right?

BRIAN SOZZI: Yeah, I need my phone.

JOHN STANKEY: Yeah, so I think maybe there's lower priority things that may be the ones that are on the chopping block before communicate--

BRIAN SOZZI: We're not buying that extra pair of socks but we continue to pay for our bill. OK, check, done. Now, key to your turnaround is you've been able to cut out a lot of cost from your business. Can you give us a number on how much in terms of cost savings in your model there is left looking out over the next few years?

JOHN STANKEY: Well, you know, we've taken $6 billion out of our run rate over the last three years or so, which is really good work by the team. And that's particularly impressive given it was done in an inflationary time period. We've just recently stated we're going to do another $2 billion. And I feel really comfortable about that.

We are a big business. We have a lot of opportunity to manage costs. We're in the middle of a transition like many other companies are, a combination of new technologies like fiber and 5G that customers love.

We have some technologies that were great the last 40 years but they've now served their purpose. And as we start to shed those products and services, costs come out associated with that.

We're using technology like anybody else. Our ability to apply AI into our business to handle customer inquiries effectively, to do it both digitally online and in call centers where a customer doesn't actually have to speak with somebody to resolve their problem, to do our engineering better, to write code in our software organizations more effectively. That's taking cost out. So we have a lot of places we can go to run our business more effectively.

BRIAN SOZZI: One more for you before I let you go. If you go to Yahoo Finance, you go to the AT&T ticker page, you'll see that the stock is yielding like 8%. Does that surprise you? And what's your message to investors that are looking at-- looking at AT&T or looking at a Treasury, where do you go?

JOHN STANKEY: Yeah, it disappoints me. It disappoints me that maybe folks aren't willing to bid the stock up to what I think is the fair value. But I think I'm pretty pragmatic about it.

And I think what's going on right now, as we just talked about, we're repositioning the business doing a lot different. We're coming out of major transactions and there's a little bit of a wait and see.

We need to do what we say we're going to do and do it consistently. When we do that, we remove some of these other exogenous things that are going on like what we see happening with the controversy over lead cable that we believe is not accurately represented in terms of what the exposure is.

BRIAN SOZZI: We've been looking into that.

JOHN STANKEY: Then been there. Yeah, then the business will perform and ultimately be valued fairly. And I'm comfortable that will happen. And we just need to, every day, come in and run it well, do our best, and eventually, the market will find the inherent value in the asset.

BRIAN SOZZI: And no new update on the lead cable situation. My interpretation from the last earnings call, you were looking into it and something you've been monitoring for many years.

JOHN STANKEY: Well, look, we said when the article was printed by the "Wall Street Journal" that A, number one, we care about the communities that we support and our employees. And we've been following the law and doing the things that experts felt needed to be done to manage lead effectively. And we still believe that.

But we said, we certainly want to be objective and understand if there's new information and new science-- and over the last several months, we've been actively engaged with our regulators like the EPA in various states, as well as, examining all the data that we can get our hands on to try to understand exactly what was the "Wall Street Journal" looking at.

The data points that have come out since then, Brian, suggests that we were correct. That there isn't a public safety crisis or a public health crisis. We've seen the state of New York evaluate a site that the "Wall Street Journal" framed in their article.

We've seen the EPA look at one of the sites. We've retested Lake Tahoe. We've submitted information on a site in Michigan to the EPA. All have come back and said there is not a public health crisis in any of those locations.

And we'll continue to look and understand. But our point of view is, the laws have been effective. We followed the laws. If there's tweaks and adjustments to make moving forward, we'll of course make them.

BRIAN SOZZI: All right. We appreciate you breaking that down for us. We'll leave it there. AT&T CEO John Stankey, thanks for always making time for Yahoo Finance. We appreciate it.

JOHN STANKEY: Appreciate you having me.

BRIAN SOZZI: Thank you.

JOHN STANKEY: Thank you.