Good morning, everyone, and thank you for joining us. Welcome to AT&T's 2022 Analyst and Investor Day. I'm Amir Rozwadowski, Head of Investor Relations. Before we begin, I need to call your attention to our Safe Harbor Statement. It says that some of our comments today may be forward-looking. As such, they're subject to risks and uncertainties described in AT&T's SEC filings. Results may differ materially. Additional information is available on the Investor Relations website, and as always, all of our materials are on our website. With that, in a moment, you'll hear from our CEO, John Stankey. First, let's watch a brief video.
It's obvious that we need connection. It's in our nature. It's what makes us human. It's the fundamental force that has always propelled us forward. The world is evolving, moving us towards the dawn of a new age of connectivity, shining a light on AT&T's expertise and purpose. Illuminating the simple fact that our network is uniquely designed to extend beyond anything ever thought possible. The speed of our 5G and fiber connectivity is accelerating new wonders and technologies that have yet to be dreamed of, which can make science fiction, well, fact. Our infrastructure enables leaps and bounds in medicine and service, commerce and care, public safety and play. It will help bridge the digital divide, inspiring a brighter, more vibrant future. This need for connection everywhere has never been greater or more important, so we've never been more customer-minded, agile and driven.
Making this our moment, our opportunity to show the world what it means to be truly connected.
Thanks, Amir, and good morning, everyone. It's great to be with you today, albeit virtually once again. We had to make a call weeks ago on how to handle this day with you and elected to go this route for certainty. Around me here in Dallas, it's nice to see so many of my coworkers back in the building and enjoying each other's presence. Most of all, thanks for choosing to invest your time with us today. We appreciate your interest. Today, we're focused on looking forward. We're coming up soon on a big transition at AT&T, a more focused company, a more focused management team, a commitment to being the best with our resources aligned to accomplishing that goal. We have stated our intent to focus and simplify our company, improve our returns, to become America's best broadband provider.
Thus far, this management team has shown you improved operating effectiveness through an enhanced customer service and customer acquisition engine, more postpaid wireless subscriber net growth than in the past decade, fiber growth of 1 million or more subscribers for the fourth straight year, and the establishment of HBO Max as a scaled customer favorite in streaming. Over the next couple of hours, we aim to enhance your understanding of why we're positioned to take advantage of what we believe to be a strong and unique market opportunity that plays into the DNA of our company. For the last 18 months, we've been positioning for this reality, and today we'd like to accomplish four things with you. First, we'll lay out how our network assets and strategy position us to serve important customer segments and set us up for growth.
Second, we'll highlight our path to differentiating the AT&T value proposition. Third, we'll outline our progress in reshaping our cost structure as a key element and in driving improved cash flows in support of our growing customer segments. Finally, we'll sum up how this execution and focused approach will drive improved returns and value creation for shareholders in the years ahead. I'm bullish and optimistic about the opportunity for our company with our assets, skills and customers. I believe we're at the dawn of a new age of connectivity, powered by the emerging business models requiring pervasive high-performance connectivity and establishing long overdue social policy intended to achieve universal access to the Internet. Underpinning my confidence, we conservatively project a 5x data increase on our network over five years. A couple of examples.
The evolution of social interaction, gaming, and experiential alternate realities will consume huge amounts of real-time, low latency two-way data. Dramatically improving collaboration tools will enable more effective distributed work environments that will take traffic off of corporate LANs and onto robust distributed WANs. Improved healthcare outcomes and lower costs to address an aging population will rely on access, telemetry and observation to address the challenge of rising cost curves, and the list goes on. Some worry and ask, "Will we get paid for this new world?" History has shown us that sound policy will in fact provide returns and solutions. Since the launch of the T1, demand has continued to increase. Cost per bit has continued to decline, returns have remained competitive. We believe the utility and value of these applications will continue to support those who make the long-term investments to support this dramatic innovation.
Cost of goods sold for connectivity will be comparatively small, amortized over a landscape of high utility and essential applications with significant end user benefit. Candidly, I worry less about getting paid and more about getting there fast enough. In the lab, software and hardware will mature rapidly and efficiently. As has been the case since the advent of compute, distributed networking will be running to keep pace. We exit the pandemic with a credible real-world testimony to the value of reliable and pervasive connectivity. Policymakers in the United States got so much right. Scaled mobile networks, which cover an incredible land mass, acted as a backstop and lifeline for the country. Highly capable and reliable fixed networks effortlessly accommodated record shifts and increases in the types and volume of traffic.
Even from this position of strength, the industry is still on the verge of a 2022 that will likely be a record year of investment to continue enhancing service to customers and enable new business models. That said, it's now time for every American to experience the social, economic, health, and educational benefits of universal access to the Internet. Policymakers got this right again, addressing the remaining gaps in some of the world's most capable and distributed broadband networks by passing the Infrastructure Act, leaning on public-private partnerships to get the job done. AT&T will be there to support and participate, looking to pair our capital with more than $43 billion of incremental public infrastructure deployment administered by the Department of Commerce and more than $14 billion of support through the FCC's Affordable Connectivity Program.
We feel this will be good for the industry, good for AT&T, and good for Americans. We're working with policymakers to design these programs to make participation as easy as possible, consistent with congressional intent. Couple this major policy shift with the strong tailwinds of technology and innovation, and we're set up for a strong demand cycle in increasing customer usage. We think these fundamentals are important and frankly define how networks should be designed and constructed. We offer that the next evolution of entertainment will drive a nearly 2x increase in bandwidth demands for improved resolution and clarity, coupled with demands for two-way interactivity. Consumer entertainment behavior will continue to transition from mass experiences to personalized and individualized consumption. A pattern that's barely crossed the halfway point in its evolution.
Pervasive application of AI will require persistent connection and instantaneous access to data stores to enable insights and functionality. Greening of transportation will require ubiquitous and reliable connectivity to achieve efficiency, autonomy, and improved utilization. Said another way, if the economy is to shift from shopping malls, bank branches, movie theaters, stadiums, classrooms, office parks, and medical plazas, it needs robust distributed networking to enable it. AT&T intends to facilitate this transition with America's most pervasive and scaled broadband network. The AT&T story will be written in two acts. Today, we'll focus on the first act, and that is taking our current asset base and delivering competitive returns. We'll walk you through this discussion articulating how our wireless business is performing effectively and at scale. We'll outline the effectiveness of our consumer fiber business and our progress in achieving our desired scale.
Finally, we'll explain our ongoing repositioning in the fixed line business markets. This will outline our approach to growing the franchise on sustainable, owned, and operated infrastructure and extending our leadership of the largest corporations in America to the mid and low end of the market. When our first act is done, we'll be a more focused, agile, and capable domestic network leader. We'll be a company with a smaller product portfolio built on the back of fiber in the core metropolitan and suburban areas, combined with a highly capable nationwide wireless network able to extend even greater capabilities and utility than ever before beyond our core. Our legacy cost structure will be permanently altered, and we'll be positioned for our next generation of growth. We're mindful that we operate in ever-changing and dynamic markets.
While we like the durability of our asset-intensive products, we desire a better balance of revenues and profits that are generated from more flexible and asset-light approaches that software brings. After retrenching from entertainment, we have more work to do to differentiate our connectivity. We're not talking about transformative M&A here. Instead, we're focused on developing software and capabilities to lay on top of our network and optimize our connectivity value proposition. I'll acknowledge we're hard at work on that front, but we're not ready to share any conclusions or projections with you today. It's vitally important we get act one right. Without successful execution on this act, our management team knows the second act doesn't really matter. As we establish your confidence in what we outlined today, I do expect we'll be back with more.
There are just too many exciting opportunities and unmet customer desires to be satisfied with a one-act play. Before you hear from our team, I'd like to offer a little more perspective on the macro environment we're operating in and its impact on some of the guidance and projections we'll provide. I suppose there's been one constant since I took this role, and that's been navigating through some unprecedented events. Unfortunately for all of us, we seem to find ourselves in another one of those moments on the geopolitical stage. All to go with the end of the easy money era, heightened risk at all levels of the economy, extended and persistent supply chain inconsistencies, and shifting domestic tax and investment policies. There is no doubt all these factors increase uncertainty for investors and hamper visibility for management, including those of us at AT&T.
However, we are comparatively well-positioned to navigate this moment. Our products are essential to everyday life and critical as the foundation for the next stage of software innovation. Our asset base is heavily physical and tends to reflect its relative value as markets evolve. Our customer relationships are strong, durable, and linked to value, enabling intelligent pricing adjustments. Our balance sheet and discretionary cash position will momentarily be meaningfully improved, and our obligations are largely fixed and long-term in nature, with no pressing needs to enter the debt markets in the near term. Our supply contracts are preferred and scaled, allowing us to navigate unplanned disruptions. Finally, we're investing at record discretionary levels, offering latitude to adjust our approach if economic conditions warrant. In short, we feel we're positioned to navigate this moment largely from a position of flexibility and opportunity.
We also are positioned to sustain strong cash flows and a dividend yield near the top of the Fortune 500. Our improved financial flexibility allows us to pursue durable and sustainable growth opportunities that offer future upside. I couldn't be more excited to launch this next chapter in AT&T's storied history, and I know the management team is equally excited to show you what we can do. Let's get to the material. To lead us through the discussion on our four objectives today, you'll hear from Jeff McElfresh to summarize the rationale behind our network capital deployments, Jenifer Robertson to share how the AT&T value proposition is winning in the consumer space, Rasesh Patel on how we're repositioning in business markets to remain the leading and most trusted name in networking. Jeff will come back with an update on our cost transformation.
Finally, Pascal Desroches will take you through our path to sustainable growth before I summarize and we get to your questions. Thanks again for being with us today. Jeff, why don't you take it away?
Thanks, John, and hello, everyone. Let's go deeper on our goal to become the best broadband provider in America. It's a bold objective, and I'm confident in AT&T's expertise to deliver. Now, to be recognized as the best in tomorrow's hyper-connected world, we believe the network must start with a solid foundation of fiber. A foundation that isn't just fiber in the core of the network, but is also in a dense distribution network with pervasive pathways of fiber serving customers out at the edge. We believe this fiber foundation is essential for a network to perform. To consistently deliver a great experience with greater ubiquity, reliability, and it must also have the capability to efficiently serve this increasing demand for high-quality bandwidth. It must do all of this while satisfying the unique needs across a diverse set of customers. That's where our network investment strategy begins.
It begins with the customer. Their demand guides our planning and our design, and how we position our assets across every square mile of our network footprint to meet their demands. Let's look at our three major customer categories to set the context for our network investment strategy. Consumers need more data than ever before. Their monthly consumption in their home is accelerating from 900 GB, nearly a terabyte today, to 4.6 TB by 2025. To put this into perspective, today we're consuming roughly 30 x more data in our home than we are on the go with our smartphones. Homes are getting smarter and becoming more demanding environments where flawless, high quality broadband is required. Let's take a look at a few consumption trends we're seeing in the home. The average household today has 13 devices, and that's expected to triple by 2025.
From smart TVs to smart appliances, these devices are consuming more and more data. There's an immense expansion in streaming and gaming, where higher resolution formats going from HD to 4K to 8K are becoming more the standard, and that's only increasing. Why? As more occupants in every home shift their entertainment consumption away from broadcast formats to unicast streaming, demand for concurrent high-quality bandwidth increases. Coupling that with the format shifts to 4K and 8K, the payload soars well over 2x. There's another dynamic that's driving the need, and that's in the reverse direction, the upstream. The home has become our new permanent workspace. An incremental 35 million U.S. employees have the option to work remotely post-pandemic, and not just temporarily. This new trend line for symmetrical performance in broadband is where fiber excels.
Upload quality is a premium and in high demand for applications like video collaboration, file uploads, and cloud sync. Being able to manage the performance of the home broadband network is becoming more important, requiring the ability to protect the bandwidth, serving the work from home traffic from everything else. With these dynamics in play, it's no wonder broadband consumption in our homes is on the rise, and based on the trends we're seeing, they're not slowing down. Small and medium-sized businesses are also consuming more and more and expected to grow 3.5 x in the next three years from 600 GB to over 2 TB. This category of customers is quite heterogeneous with a mix of needs, but the majority have something in common.
They are all seeking higher performing bandwidth across multiple locations, from their place of business to their employees' homes and all the spaces in between. This is also the fastest growing segment, with over 4 million new businesses created since 2020. They're always on the go, from sales to real estate to field workers who need the flexibility to work from anywhere consistently, to point of sale systems, document sharing, and the ability to display inventory catalogs. Small businesses and mid-market customers often seek expertise for their connectivity needs, so they depend on trusted providers like AT&T with a reputation of providing professional-grade services that are secure, dependable, and resilient, with always-on failover. Turning to the enterprise market, where AT&T has long held a leadership position, consumption is not only growing, it's being accelerated by shifts in where the bandwidth is needed.
Enterprises are automating business processes, migrating applications off premise to the cloud, and accessing new technology services through platform integration. Some enterprises have shifted upwards of 80% of their entire processes from manual to digital in the past year. Furthermore, as enterprises are managing a multi-cloud environment, they require more low latency and secure bandwidth, and this shift is further compounded by the evolution of the workforce to being more distributed and remote. To operate effectively and seamlessly, companies are becoming more reliant on high-quality bandwidth for their employees and their tools that they need to perform their tasks, like video collaboration and unified communications. The CIOs of these customers need their new, more distributed network to perform reliably and securely. While each customer we serve has unique needs, they share a growing appetite for high-quality broadband. We believe fiber is the best technology.
It's multi-gig capable the day we install it, so it can handle the demands of today and in our hyper-connected future without significant capital investments. It provides the fastest performance with expectations of up to 10 Gbps reliably with symmetrical upload and download speeds. To us, fiber is foundational to our entire network. We seamlessly plan and operate one large fiber network with multiple purposes or endpoints in homes, apartments, small and medium businesses, large multi-location enterprises, as well as our wireless network. Wherever fiber goes, wireless follows. It's also the most efficient technology. That's why a dense fiber infrastructure is foundational to AT&T's growth as it allows us to manage traffic on the most cost-effective technology.
Comparing the cost per byte carried for fiber and wireless, while also considering the forecasted demand, we engineer our network to serve high bandwidth traffic on fiber as it's the most economical use of our assets and provides the best industry-leading customer experience. We're not attempting to serve terabytes of monthly consumption over wireless. Rather, we choose to preserve our wireless spectrum assets to remain competitive for the high-value mobile applications. As consumption trends continue to grow, technologies other than fiber will need more costly capital investment cycles to remain competitive and deliver a consistent high-quality experience. With fiber being such a superior technology, let's talk about the number of residential and business customers not currently served by fiber.
In fact, in urban and suburban areas, we estimate there are roughly 60 million households and nearly 10 million business locations that are primed for fiber and are not covered today. This provides a strong growth vector for AT&T. After all, why wouldn't everyone want the best? As we continue to scale our current fiber build, the more we complete, the more economical it gets. Capital investment per location is lowered with densification while our returns improve with penetration. That's a positive thing, considering we're at the dawn of a new connectivity era. Executing a large-scale fiber infrastructure program like we're doing at AT&T is hard work up front, but we're planning for the long term. We're making the upfront investment to best position AT&T for sustainable and durable growth with the best fiber network to capture the benefits of this growing demand.
Now, we want to take you through the advancements we've made over the past year with our strong wireless assets. Last year, I declared my confidence in our ability to improve the performance and the perception of our wireless business. John touched on our industry-leading subscriber growth earlier. Customers are choosing AT&T's fast, reliable, and secure 5G network at record pace, and that's because it's never been stronger. Over the last 12 months, our network delivered consistently, maintaining a 99.5% reliability. We expanded the coverage of our network to industry-leading, now covering over 2.9 million sq mi. AT&T is America's largest wireless network. We have seen eight consecutive quarters of improved overall network satisfaction, significantly closing the gap to the industry leader by almost a third, all while remaining disciplined in our go-to-market approach, which Jenifer will touch on next.
Our design objective for our wireless network is simple. It's about coverage and consistency of our premium network to serve a high quality and diverse customer base. Our wireless investment strategy starts with a strong coverage advantage in square miles, made possible by our great low-band spectrum holdings. Low-band provides the best and most consistent experience because of its propagation characteristics, both inside and outside. It's because of this low-band advantage, we could be deliberate in our mid-band spectrum strategy in two ways. First, we could be opportunistic in acquiring 120 MHz of mid-band by choosing to participate in both Auction 107 and Auction 110. By doing so, we were able to accumulate 120 MHz at an attractive cost per MHz pop. Second, we could be efficient with our deployment plan.
As we deploy mid-band, we're installing two radios per tower that provides the necessary bandwidth and power to achieve the full performance of our entire 120 MHz of mid-band spectrum without sacrificing coverage. Because the 40 MHz from Auction 110 becomes available this year ahead of C-band phase two, we're able to deploy a total of 80 MHz of mid-band spectrum starting this year. During this phase, our network will remain competitive as we deploy this first tranche of spectrum, and we'll be positioned for efficient deployment of the remaining mid-band holdings going forward. We have what we need to remain very competitive and achieve our business plans. Customers want a consistent experience in connectivity, and it's a race to the home and to deploy 5G across the country.
Our capital investment will be elevated over the next few years as we aggressively build a next generation network in fiber and 5G. We expect our capital intensity to reduce as we exit this period of investment. We have been through cycles like this before, and we are confident our expertise in building scaled networks will play to our advantage. Our deliberate plan enables us to optimize asset returns across multiple segments and benefit not only from owner economics of the largest fiber network, but increase returns by multiple revenue streams. We are on track to double our fiber footprint by 2025. Despite the supply chain and labor challenges that we faced last year, our momentum is trending slightly above our expectations, and this reinforces our confidence in delivering a significant infrastructure build.
AT&T Fiber network will be a strong growth platform, covering more than 25 million consumer locations, 4 million small businesses, and 1 million enterprise locations with industry-leading multi-gig performance. This fiber network will fuel the backbone of a more capable 5G wireless network. In parallel, we will deploy our mid-band spectrum to over 200 million pops by the end of 2023. This complements our strong 5G footprint, which today covers more than 255 million pops in more than 16,000 cities and towns. Our fast, reliable, and secure 5G network will maintain its leadership with coverage and consistency. We are choosing fiber to fuel our vision of being the best broadband provider in America. We're investing in a scaled fiber network with a deliberate wireless strategy.
By owning and operating both, we have stronger flexibility to be the leader that captures both by providing high-quality broadband in more places for businesses and consumers. To explore those opportunities, let me hand it off to Jenifer and Rasesh to take you through our customer strategies that we're executing to deliver the plan that we've laid out.
Thank you. Hello, everyone. I'm excited to tell you our story, so I'm gonna jump right in. Jeff mentioned a key step of becoming the best broadband provider was our investment in improving market performance and perception. To do this, we needed to rethink how we were approaching the market top to bottom and be willing to make the necessary investments to reignite the growth engine in our business. How did we overhaul our business? We started by listening to our customers. You know what they told us? Their biggest pain point was that we didn't value existing customers as much as new ones, and that alone made them wanna leave. Customers cited not having access to new offers. Our long-tenured, most loyal customers didn't feel valued or appreciated. Looking at our investment in 2019, I can see why.
At that point in time, our competitors were outspending us significantly on acquisition and retention promotions, and our results showed it. In 2019, we added 483,000 net adds in an industry that added about 6 million. That's only 8%. Our promotional spend was weighted almost entirely towards acquisition. We underperformed in upgrade rate and in postpaid voice churn at 0.95%, and we were a distant third place in Net Promoter Score. That wasn't good enough for us, so we changed it. A year and a half ago, we raised our total investment to match industry levels, and we shifted that investment from acquisition to retention of our best and most loyal customers by responding with the launch of Best Deals for Everyone. It was a necessary move and an important investment in growth.
From that point forward, we've delivered six quarters of net add growth and industry-leading share growth. In 2021, we grew our postpaid voice base by 3.2 million net adds. That's more than double year-over-year and our best results in a decade. It's also the most efficient net add spend across the industry last year. Why focus on retention? Aside from the fact that customers told us it mattered, we all know it costs less to retain a customer than acquire a new one. There are other benefits as well. First and foremost, engaging in an upgrade cycle gives us the opportunity to move customers to the right plan for them, often higher-value plans. Second, we earn the right to sell value-added services like our Next Up plan and mobile insurance.
Third, it gives our customers flexibility to move into the latest 5G devices and get the best experience on our network. We do this with affordable installment plans. In exchange, we gain value for trade-in devices, and we better insulate our base from market variables like price changes and the timing of network updates. With about 80% of our postpaid voice base on an installment plan, we've increased upgrade rates to comparable industry levels while delivering the lowest postpaid voice churn. I'm talking industry-leading churn of 0.76%. That's down 20% since 2019. For those of you looking at ARPU, let me offer a few points. We continue to have the highest ARPU in the industry. It's slightly down from the investments we're making and migrations within the base, but we expect to stabilize in the latter part of the year.
Factors driving ARPU stabilization and improvements include 15% of upgrades moved to a higher rate plan, and almost half of all upgrades attach at least one of the value-added services I mentioned. We also expect a return in international roaming revenues. These benefits help offset the impact of our promotional spend. Part of this is also influenced by the quality of our growth adds, so I wanna touch on those too. We didn't lose sight of new customers. We made several parallel moves which improved the quality and the efficiency of our intake. We introduced simpler rate plans and maintained consistency of our offers. You don't see us changing offers on a weekly basis. Today, over 75% of our base is on unlimited plans. Our fastest-growing unlimited plan also has the highest ARPU.
With only 27% of our base here, we have plenty of room to grow value as we move customers up. The result is an acquisition cost per growth add that's down 23% year-over-year and down 46% from 2019. This growth investment is about discipline. It's important to remember that not all customers take a promotional offer. About 60% of our customers do, with only half of those, or 25%, qualifying for our premium offer. Because of our consistency and simplicity, our offers are very effective. We don't need to stack these offers with rich pusher credits, and you don't see us putting smart phone BOGOs in the marketplace. We've maintained focus on growing the right way with high quality intake and investments in our existing customers. Our customers, they've responded favorably with higher NPS scores.
As a matter of fact, our highest NPS ever on record. I'd sum it up this way. We're growing subscribers at a record clip with record low churn. We've improved return and we've increased the lifetime value of the base 14%, fully accounting for promotion amortization. We learned another valuable piece of information listening to our customers. Specifically, what matters most to them when they choose a wireless provider. The rhetoric in the marketplace is confusing. Here's what's not. Simple, reliable, secure. As we like to say around here, it's not complicated. We go to market with simple offers and experiences delivered on America's largest and most reliable wireless network. With the launch of Unlimited Your Way, our customers can tailor plans around their data needs with no surprises. Our Best Deals for Everyone offer.
Well, I already mentioned that offer gives customers flexibility to move into the latest 5G devices. We've strengthened our overall value proposition by including security with AT&T ActiveArmor, extending 24/7 proactive security, extra device protection and more tools to block those unwanted calls. We've had simple, consistent offers and messaging since 2020, which enables efficient spend and best in class execution. Our brand and message recall is well above industry norms and ahead of competitors, even though we spend less on advertising. Our frontline teams are executing better than ever before because of that consistency, spending more time serving our customers and less time training on new offers. As a result, we're winning in the marketplace with flow share of 34%. That's a 4x improvement over 24 months. By the way, we're not just winning in postpaid.
Included in our outlook are the strong results we get from our prepaid and wholesale businesses. Based on net adds in 2021, AT&T was the fastest growing prepaid carrier in the U.S. for the fourth year in a row. The Cricket brand works hard for us with a value proposition of simplicity and a smile. It delivers the best experience in the industry, demonstrated by recent J.D. Power wins in purchase experience and customer care. As a result, Cricket consistently delivers industry-leading prepaid churn. The customer base is higher income and more diverse with strong ARPU that have grown both of the last two years. Our high quality, high value offers are working and we'll stick to that formula. Put differently, we have the best prepaid base in the industry and we're going to keep our focus on those customers.
Wholesale is a segment where we've traditionally been underrepresented, but our strategic agreement with DISH positions us to grow this customer segment with revenues that ramp in the second half of this year. Looking forward, we expect to build on our success in 2021 and target additional market opportunities where we historically under-penetrated. We'll stay disciplined in our approach and target customer segments that play to our strengths. Let me give you a few examples of where we see opportunity. First up, mid-market business and public safety. In both areas, we believe we have more upside. Since we were selected to build FirstNet five years ago, it's grown to cover more first responders than any network in America. With 3 million connections across nearly 20,000 agencies, we're just getting started.
We've expanded the market and will continue to do so through incremental new connections like body cams, connected cruisers, school buses, biometrics and two-way radio devices. FirstNet was a deliberate focus for us, one where we made a commitment to asymmetrical share gains, and we delivered. It yielded strong growth and gave us a playbook we can continue to run for other customer segments. In mid-markets, simply put, we're under-penetrated. Rasesh will talk to you in a minute about our distribution plans to reach a customer segment of about 6 million businesses. Second, the Hispanic customer segment. It's expected to reach nearly 70 million people in the U.S. by 2025, with an annual growth rate of about 2% and a total addressable market value of almost $90 billion.
With our postpaid market share of 24% in this customer segment, we're under-indexing our overall share and we clearly have opportunity to grow. It's a prepaid segment we've had success in, with 30% Hispanic market share up 100 basis points year-over-year, so we know what it takes. To win in this space, we'll use our network assets to introduce new products and go local with distribution. With network access on both sides of the border, we're the only carrier to offer unlimited talk, text, and data in both countries. One network, two countries. From a product perspective, we have plans to introduce some interesting offers in the second quarter, and we're expanding third-party distribution to reach these customers in their communities. Third, we have an opportunity to cross-sell in our fiber footprint. You heard earlier today where fiber goes, wireless follows.
We've proven we can grow wireless relationships where we have fiber. In fact, our wireless market share is 60% higher in our fiber footprint. We're not just talking about discounting a bundle. Rather, we create a halo effect by providing premium, reliable products. If you assume about three postpaid phone users per household, it's clear there's significant yield here, especially when you consider we have 4 million fiber households where we still don't have wireless. With better share where we have fiber, and as you heard, we're building more fiber every day, I feel good about delivering on this opportunity with targeted approaches. By contesting in our base, these customer segments will drive growth utilizing our current and planned network assets. Speaking of fiber, Jeff talked to you last year about our strong performance, and I'm happy to tell you that strong performance has gotten even better.
We've put down a marker. Everywhere we have fiber, we intend to own the home it's connected to with the best connectivity and the best experience. Our home internet customers have told us what they value, and above all, it's speed, security, and simplicity. Sound familiar? Let's start with speed. AT&T Fiber is the premier product in the market, and it's the fastest internet among competitors. Our recently announced Hyper Gig product offers 2 and 5 Gig symmetrical speeds to more than 100 metro areas. You know what's next? Faster speeds, more locations. For security, we provide AT&T ActiveArmor. It helps safeguard all the devices within the home from known threats, and it's effective, stopping an average of 15 threats per day. Today's consumers also say emphatically they want simplicity. Simplicity it is.
With straightforward pricing, no annual contracts, no price increases at 12 months, no data caps, and no equipment fees. It's really not surprising that AT&T Fiber's Net Promoter Score leads the industry by more than 3x, and that's driving penetration. We ended 2021 with 37% penetration across our entire fiber footprint, including new build. Two-thirds of our net adds are new to AT&T Broadband. We're also focused on accelerating penetration of our new build. Let me give you a quick takeaway. Take a few key markets like New Orleans, Miami, and Louisville, where we've been building rapidly. The penetration rates on our more recent builds in those markets are well north of 30% after only 12 months of fiber deployment. How are we doing that? First, we've significantly enhanced our pre-build marketing and communications, giving us a head start on attracting potential customers.
We also intensified our local efforts, putting teams directly in the neighborhoods so people can better understand the benefits that fiber can bring to their lives. These are just a few examples, because across our broader build, our average one-year penetration rates are roughly 2x what we've seen historically at almost 24% versus 12%. Sustaining this level of penetration accelerates payback in our already attractive business base. I shared earlier that cross-selling into our fiber base is a key wireless growth tactic. We know our customers love the combination of fiber and wireless, and we love it too. Jeff already mentioned why we believe fiber is the best technology and that we plan to double our footprint. Let me give you a little more context on why our fiber strategy is a key principle to our growth. First, our build.
We're building in adjacent geographies with approximately 90% being overbuilt, and we've reasonably balanced our builds across the year. The outcome is a more cost-efficient build. Second, I mentioned that two-thirds of our net adds are new, but for those customers migrating, we see an approximate 10%-15% lift in ARPU. As we build out these markets with a superior product, we expect customers will pay more for that value even as we remain competitively priced in the industry. We also expect data needs to grow. With the launch of Hyper Gig, we're ready to serve those customers as they continue to step up speed and the price curve. This all leads to strong fiber returns in the mid- to high teens. When we have wireless, it's even better. Churn has reduced significantly with higher ARPUs and higher NPS.
You can see why it makes sense to keep investing in fiber to grow and generate returns by winning the home. I hope you get a sense for how focused and excited we are to grow this business. We're focused on our wireless base, targeting key customer segments for new wireless relationships and future-proofing the home. It all gives me confidence in our ability to continue generating long-term value. This growth is durable with increased value and synergies to us and our customers. Speaking of long-term value, let me hand it to Rasesh to walk you through our plans for the business segment.
Thanks, Jen. As you've heard so far, fiber and mobility have been a common theme. I'm also gonna pick up on this golden thread because for AT&T Business, fiber and 5G are keys to unlocking the next tranche of growth. Before I dive into the specifics, let's set the stage here. As you all know, our Business wireline unit is a period of transition consistent with industry-wide trends. In the near term, we expect both its top line and profits to be impacted by continued pressure from declining legacy product revenues. Similar to what we have done with our consumer wireline business, we are leaning into this transition and see a path to profit stabilization as we exit 2023.
The foundation of our transformation is expanding our fiber footprint using our market-leading position in enterprise to drive fiber and 5G adoption and increasing penetration in the small business and mid-market segments. We will focus on repeatable core connectivity and transport solutions where we have owner economics. AT&T Business is well positioned for this transformation. We're a trusted brand with sales to over 90% of Fortune 1000 businesses and more than 200 government agencies. We lead the industry in connecting businesses. 70% of our large customers buy both wireline and wireless services. We're also the leader in customer experience. We've received the J.D. Power Award for enterprise and medium businesses across both wireline and wireless services. As we transition to 5G, we're a leader in the IoT space with over 95 million connected devices and greater than 50% share of the market.
With FirstNet, we are proud to be America's only purpose-built public 5G network. While we've had a strong position with enterprise businesses, we are under-penetrated with the small business and mid-market segment. With the shift to cloud, we see a profitable growth opportunity to serve the segment across fiber, mobile, and fixed wireless. We're expanding our fiber footprint to reach more than 5 million business locations by 2025 or approximately 50% of the addressable market. Now, let me give you a sense to why this is such a compelling opportunity. As Jeff mentioned earlier, SMB is a fast-growing market with a little over 4 million new businesses created in the U.S. last year. We have a repeatable playbook we can use to capitalize on the market we have historically under-penetrated. Let me start by saying these are valuable customers.
For fiber broadband, more than 80% of customers are new or switching to AT&T from a competitive service. On average, they stay with us more than 60 months, and their lifetime value of a fiber business customer is approximately $10,000. For these customers, the most important buying criteria are reliability, speed, and simplicity. Their businesses increasingly depend on it. AT&T checks all three boxes. We're number one in reliability across fiber and 5G, and our fiber offers the fastest internet in the nation with our recently announced 5 Gig symmetrical speed tiers. We have simplified the experience with straightforward pricing, no annual contracts, no exploding offers, no data caps, and no equipment fees. While fiber is the gold standard solution for retail-based businesses, we have seen a tremendous opportunity to serve mobile or field-based businesses as well.
These include construction sites, pop-up retail, and COVID testing sites. Our fixed wireless broadband has quickly grown to 130,000 subscribers. The speed to market, mobility, and quality of the service has been well received by our customers. As Jen mentioned, we're also investing to expand our distribution to reach more mid-market customers. We're recruiting and deepening our relationships with established value-add resellers who really know and understand the mid-market segment. We are also expanding our direct sales coverage and enabling our nationwide AT&T retail stores and digital distribution to serve this segment. We have a brand that plays well, best-in-class technology, and a value prop that is resonating in the market. As we expand the fiber footprint, we are positioned to take share. We're also seeing success and momentum in business mobility.
In 2021, AT&T won 53% of postpaid phone flow share, the highest value business mobility service. This was driven by momentum in small business and by the undisputed success of FirstNet. In fact, over the last 18 months, our small business wireless market share has improved from mid-thirties to 40%. As we expand fiber footprint and distribution for mid-market businesses, we see a similar opportunity to expand share, which is currently in the low twenties today. We are also the share leader in IoT connectivity, which is now a $1.3 billion business that is growing 18% year-over-year. The next wave of digital transformation is being driven by cloud, AI, and connected sensors, so we really like our position here. We've taken a deliberate approach with FirstNet, establishing a dedicated organization that has a deep understanding, relationships and trust with public safety organizations.
For those of you who don't know, FirstNet is America's only nationwide purpose-built platform for public safety. It offers inter-agency communications with unprecedented priority and preemption service. Reaching more than 2.9 million sq mi across the country with Band 13 and AT&T LTE bands, FirstNet covers more first responders than any commercial network in the country. FirstNet has rapidly grown into a $1.7 billion business, which posted 60% year-over-year growth in 2021. In the past couple of years, the number of FirstNet connections has expanded to nearly 3 million among 20,000 agencies. AT&T is now the market leader in law enforcement community. We made a commitment to drive asymmetrical share gain. We've delivered strong growth, and we are positioned for continued performance. We're making good on our mission to modernize public safety through the FirstNet platform.
For example, we're offering expanded solutions, including connected body cams, fleet, surveillance, and interoperable push-to-talk communication with more than 7 million public safety radio users. In addition to the success with FirstNet, we have also become a trusted partner in the automotive industry. We have greater than 80% share of all connected cars in the U.S. market. There is no question the automotive industry is going through a dramatic shift to electric and autonomous vehicles. In fact, the car is rapidly becoming a platform where electronics and connectivity are essential. We see a 40-fold increase in connectivity consumption in these next-gen vehicle platforms. That will further expand with autonomous vehicles in the future. We will offer next-generation network services, including MEC, network slicing, and Edge. We believe these capabilities are table stakes and are required to compete in the industry.
We are actively working with customers to develop their solutions. We have recently signed long-term deals with GM, Ford, Nissan, Tesla, among others. We're helping these brands solve next-generation use cases that will make the car a more engaging, entertaining, and safer experience. We intend to replicate this approach of having a dedicated organization that deeply understands the customer's needs and tailors the service proposition to differentiate our offerings to customers in the manufacturing and healthcare verticals. For customers in manufacturing segment, digital transformation is being driven by the combination of cloud, edge, and private 5G capabilities. Let me take you through how we're helping Ford transform their iconic Dearborn, Michigan factory. We're deploying private 5G in the factory coupled with edge compute powered by Microsoft Azure.
This will enable Ford to better transform their manufacturing processes with capabilities such as machine vision to enable real-time quality checks during manufacturing through low latency communications. Acoustic detection to capture in real-time the sound of a seatbelt click to confirm that the seatbelt is working properly. Over-the-air firmware updates to the F-150 Lightning as it's moving across the factory floor. In healthcare, COVID drove a 78-fold increase in telehealth adoption. We're working with healthcare providers to improve patient care and experience. We are piloting an industry-first deployment of MEC and 5G capabilities in partnership with the VA. Among the healthcare-focused use cases being deployed are mobile-to-mobile connectivity between medical devices, improved medical procedures and training through the use of augmented reality. We are enabling patients with serious illnesses to immersively travel to their favorite destination through virtual reality and take their mind off their illness.
This deep understanding of the industry positions our sales teams to become trusted advisors to these customers and ultimately enables us to drive our core connectivity services. As you can see, we are excited about the new capabilities enabled through these next-generation services. We're collaborating with our most valued partners to develop these solutions. First, let me discuss network edge. We have launched partnerships with Microsoft Azure and Google Cloud to deploy network edge zones throughout the country. Combining the speed and low latency of 5G with cloud and edge compute capabilities opens up an entirely new world of opportunities for businesses to serve their customers in new ways. We have two monetization models. The first is a revenue share model with the cloud service providers. The second monetization model is where we directly have the relationship, like the example of the Ford factory.
The next area of opportunity is private 5G. We are deploying private cellular networks for businesses, universities, and public sector organizations. Although a lot of players are entering the space, the advantage AT&T brings is the ability to seamlessly integrate to our nationwide macro network and deploy our spectrum assets when necessary. For example, devices leaving a medical facility into an ambulance can be seamlessly tracked beyond just the four walls of the hospital. Finally, a unique opportunity for hybrid work. The nature of work has permanently shifted coming out of the pandemic. Most organizations face the need to provide safe and secure connectivity, not just through the four walls of their campus, but anywhere employees choose to work.
AT&T will launch a new solution later this year that will provide a secure lane to directly connect employees to their corporate network, extending the reliability, security, and performance of a corporate campus to their homes. We expect to offer this both on our network and over the top. As I mentioned before, these next generation services are being enabled by some of our most valued partners, and I'd like you to hear from a few of them.
Microsoft and AT&T are accelerating innovation in the cloud, the edge, and next generation connectivity. In a market-making move, AT&T is moving its 5G mobile network core to the Microsoft Cloud. At the same time, Microsoft's Azure platform will support the AT&T private 5G edge private networking trial. I'm incredibly proud of this collaboration, not only for the value that we can bring to each other and our customers, but for the aligned ambitions we have around sustainability. For example, we're collaborating on AT&T's Connected Climate Initiative to reduce 1 gigaton of greenhouse gases by 2035. We truly believe that when you bring AT&T's best-in-class network services with the most trusted and comprehensive cloud in the market, the possibilities are endless.
IBM is working with AT&T to reinvent application and network management with an innovative next generation platform created by IBM, but using AT&T's secure global network and API infrastructure and IBM's network automation and orchestration technology. The outcome for customers is an end-to-end managed service bridging hybrid multi-cloud and edge networking, ensuring the sustained performance of networks and applications wherever they may reside. Together, we're reinventing how customers consume and deploy networks, clouds, and applications in unison.
We really appreciate these relationships and value the work we're doing together. To recap what we discussed today, we are focused on building out our fiber footprint, committed to increasing penetration in small business and mid-market segments, and developing the next generation services to help enterprises with their digital transformation. Now, let me show what that means for business wireline EBITDA. As a reminder, business mobility, FirstNet, and IoT are reported in the total mobility segment. As we simplify our product portfolio, we expect declines from legacy products will be mostly offset by accelerated growth in fiber and fixed wireless services, with business wireline EBITDA approaching stability as we exit 2023. With this approach, we are reorienting AT&T Business with a focus on fiber and 5G-based services where we have owner economics and can generate durable value.
I hope you get a sense for how focused and excited we are about this market opportunity. Now, I'll hand it back to Jeff for an overview of what makes every day AT&T stronger, and that's our transformation program.
Thanks, Rasesh. You have heard a lot from our leaders today on why we are excited about our vision for the future and the opportunities for growth. Our ability to fuel these areas of growth comes from cost and operating efficiencies we're delivering as part of our transformation program that we announced two years ago. The transformation objective is straightforward: to become a leaner, simpler, and more customer-focused company that delivers sustainable long-term value. A year ago, we shared our goal of growing customer relationships across wireless and fiber broadband, reinvesting much of the early savings we've earned from our transformation program. As you've heard here today, we've enjoyed some nice success in accomplishing that goal. That goal was just the beginning. The transformation program is a multi-year journey, and I am pleased to report that we are making steady progress with more opportunity in front of us.
We expect with continued focus and discipline, our program will drive further efficiencies to the bottom line to deliver growth in an accretive manner. Allow me to walk you through the current status of the program. To help break it down further, there are three main areas. First, sharpening our focus on the network. Second, enabling our customer experience. And third, streamlining our back office operations. I've mentioned simplicity and focus. These are good ways to think about what we're doing to transform our legacy copper network footprint and all the fixed and variable costs that go along with running and maintaining a very large copper network that's carried the load for decades. It's widely known that our highly profitable legacy revenues that are served by this network are declining.
Now, controlling the timing and profitability curve while we migrate these customers to our next generation fiber and 5G services is essential to our transformation. It's a big reason why we launched the transformation program and why we've chosen to do this work internally, as opposed to seek other options for this legacy component of our business. Reducing the legacy fixed costs and associated trailing expenses and migrating these customers to fiber and 5G solutions maintains our margins. It enables simpler operations and creates a better experience for our customers and for our employees. We plan to reduce our copper footprint 50% by 2025. In doing so, we are rationalizing a cost base of $6 billion. This program is in the early days of gaining scale, and we're getting to the point where the cost savings are materializing.
To date, we've turned down or decommissioned over 900,000 network elements program to date. We've reduced over 4 billion in annualized kWh program to date. We've seen a 16% reduction in copper maintenance, troubleshooting, and repairs. These actions not only drive cost efficiencies, but they're opening up more opportunity that is meaningful for our future. Our teams in these network areas are able to reinvest their time towards building out our next generation fiber and 5G networks, the growth platform for the future. AT&T is uniquely positioned to work with state and local jurisdictions to compete for and win government funds to upgrade our network. Dependable companies that can deploy large-scale next generation connectivity across the greatest geographic reach are the solution policymakers are looking for. This part of our transformation program is significant.
We will end the journey with more fiber deployed and an even more capable wireless network. To put it simply, today, 20% of our wireline footprint is served with fiber. By 2025, our goal is to improve this to more than 75% served by fiber and 5G, which represents the majority of our network surface area. That's a platform to fuel growth, and we won't stop there. We will continue to push our capable 5G network further to support the remaining wireline footprint. Let's turn from our network to enabling our customer experience and streamlining our operating model. Our focus on the customer experience is unquestioned. We're seeing and hearing it from our customers and what they're telling us. We have much more to accomplish. Simplifying our product portfolio across our segments has been a key focus area.
We plan to reduce the number of products and legacy rate plans by 50%, and we have already made strong strides. This alone allows us to declutter the back office business support systems and rationalize billing systems, where we are on track to transition off approximately 30 more by 2023. More importantly, by decluttering, we freed up capacity to focus on simplifying our customer journey to drive a better experience across our retail distribution, customer service centers, and online channel experiences. For example, we're creating an enhanced digital experience that leverages AI and machine learning to drive better direct fulfillment performance and help our business units deliver more efficient growth. As we transition the customer journeys, it allows us to reorient our internal operating model and make material reductions in our infrastructure requirements.
We are consolidating back-end platforms, reducing energy costs and technical space occupancy enough to consolidate 20 of our data centers that are not deemed strategic or part of our network edge compute architecture. Equally, for the remaining platforms and the applications they host, we're well underway migrating to the cloud with our partners at Microsoft. We have successfully migrated 1,500 applications to the cloud. This not only allows us to decommission servers once again, but the process of migration alone forces a harmonization of these applications so that our product and platform teams can efficiently code enhancements, allowing for the launch of new product capabilities in record time going forward. Embracing a flexible work schedule post-pandemic, we've been able to reduce real estate by nearly 15 million sq ft.
The improvements that we are making in our operating model as a smaller, more focused AT&T go beyond our operating teams. We're carrying these improvements forward to rebalance our staff support teams as well. In each case, what you see, once again, is progress in the direction of simplicity, which is our ultimate goal. One network, one platform, lower cost, better scale dynamics, and a better experience. These results are making life better for our employees and for our customers. While I shared a bit of context and specifics around our transformation program, we're confident in our commitment to deliver the $6 billion of run rate savings. Prior, we had mentioned savings in benefits and supply chain. Each of the three areas I've covered today are also material in our pursuit of the $6 billion.
We're already more than halfway to our goal with line of sight in the areas that will produce the remaining value, which you should expect to see materialize on the bottom line this year. Pascal will walk you through more detail in his section. We're making solid progress and will continue to drive significant, sustainable savings for years to come with the incredible amount of work we've accomplished in the following transitioning our network to best-in-class technology and cost reduction, improving our customer experience with product simplification, billing system consolidation, and omni-channel optimization, and streamlining our internal infrastructure and support costs. Employees at all levels have embraced the challenge. From the front line to the senior management team, transformation has become our way of doing business. As a result, we've never been more customer driven, focused, and inspired than we are today.
I couldn't be prouder of the work the team has done and will continue to do to transform AT&T to being the best broadband provider in America. I'll turn it over to Pascal for a deeper dive into our financials. Pascal, over to you.
Thank you, Jeff, and hello, everyone. You've now heard a lot of insights on how we plan to realize sustainable growth in our business focus areas underpinned by our 5G and fiber investments. Our vision and strategy are clear, and our results reflect this clarity. Building on our success, we expect to continue to execute. We will focus on a disciplined go-to-market approach across both mobile and fixed broadband, deliver best-in-class technologies, and simultaneously reduce costs through identified and targeted cost transformation efforts. Before I connect the dots and discuss our financial expectations for 2022 and 2023, let me review our framework for how we plan to deploy capital going forward. We believe we have the brand and assets to be the best broadband company in America, and we are leaning into this opportunity by continuing to invest in our business.
As John shared, we're now at the dawn of a new era of connectivity, and we intend to lean into secular trends that will define both our company and the industry for the foreseeable future. This is why we feel strongly that now is the right time to invest in that future by expanding and enhancing our fiber and 5G networks. We are also continuing to prioritize our investment and transformation to deliver operational excellence and sustainable improvements in our cost structure. The irrefutable principle is to sow now and reap later. We want to be clear. We believe our company can grow meaningfully and sustainably on a consolidated basis from both a revenue and EBITDA standpoint. We are committed to make the necessary investments and take the necessary steps to unlock that growth. In 2022, our expected $24 billion in capital investments will be our highest level ever.
It reflects, in part, a shift in our orientation from paying a high dividend at the expense of making investments that deliver sustainable earnings growth. Our comfort in investing at these levels is grounded in our belief that investments in 5G and fiber can generate the best returns for our shareholders. 5G and fiber will serve as the digital backbone for this country's economy for at least the next decade. Now is the right time to put those investment dollars to work. We believe investing in 5G and fiber, along with transformation, will fuel earnings growth over the next several years. In 2022, on a combined basis, we are spending around $6 billion in 5G deployment and transformation.
As previously indicated, we expect to continue to spend at similar capital investment levels in 2023, which should be the peak year for our mid-band 5G spectrum deployment and investments in transformation. Starting in 2024, we expect our capital investments to begin tapering to around $20 billion range as we surpass peak levels of our 5G investment and transformation. Shifting to our fiber deployment, we are currently spending in the range of $3 billion-$4 billion per year to target our goal of 30 million+ locations by 2025. Once we achieve our intended target, our fiber investment levels thereafter will depend on the attractiveness of the expected returns we see in the market.
Another priority is to continue to reduce our leverage by using free cash flows after dividends to pay down our debt and thereby achieve the goal we set for net debt to EBITDA in the 2.5x range by the end of 2023. As we get closer to this target, we expect our financial flexibility to increase our ability to pursue other ways to deliver incremental value for our shareholders. This includes the optionality to buy back shares or make success-based investments that generate very attractive returns. In the meantime, investors will participate in our expected earnings growth and receive a high credit quality dividend. Our adjusted dividend ranks our stock among the very best yielding stocks in the U.S. Post-transaction, our expected annual total dividend of around $8 billion reflects a payout ratio of about 40% against our 2023 free cash flow outlook in the $20 billion range.
Putting this all together, the key financial metrics we expect to measure our business moving forward include revenue, adjusted EBITDA, adjusted EPS, and free cash flow. These are clear, reliable, and leading indicators for our business. These metrics are also the best indicators of our improving financial flexibility we will use to reduce debt and provide improved returns to shareholders. In order to provide better context, this morning, we published our pro forma consolidated financial statements. In addition, as we look to improve the financial transparency, we will be providing updated business unit level pro forma financials post-close of the WarnerMedia transaction. I'd now like to share our updated 2022 financial outlook, which excludes WarnerMedia and Xandr for the full year. Let's first start with our 2022 guidance, which essentially confirms the guidance we provided to you in January.
For 2022, we expect total revenue growth in the low single-digit range and wireless service revenue growth in the 3%+ range. We expect broadband service revenue growth in the 6%+ range. We are also refining our adjusted EBITDA expectations to $41 billion-$42 billion range for the year. Keep in mind that between peak 3G shutdown costs and the absence of CAF II credits, our 2022 adjusted EBITDA growth is impacted by approximately $600 million. Much of this impact is expected to be felt in the first half of the year. In addition, as we've previously mentioned, we expect increased fiber rollout investments and ongoing rationalization of our Business Wireline products to have a more pronounced year-over-year impact in the first half of 2022.
This should lead to an improved adjusted EBITDA cadence as we make our way through the course of the year. Driving annual growth in adjusted EBITDA is both in wireless and broadband service revenues and incremental transformation savings. We expect this growth to be partially offset by mid-single digit declines in business wireline. In total, we expect incremental transformation savings of $1 billion in 2022 and $1.5 billion in 2023. We expect this transformation savings to be driven primarily by the optimization of our field dispatch and customer service. Fourth, energy and real estate savings from our continued transition from our legacy power network and consolidation of back-end platforms and rationalization of administrative G&A support costs to make smaller and more focused AT&T. Specifically, we expect to reduce G&A support costs cumulatively by around $1 billion between 2022 and 2023.
As Jeff mentioned, we've achieved over $3 billion in transformation savings to date. Some of you may be wondering why that has not resulted in earnings growth in 2021. Here are a few things to keep in mind. During COVID, our international roaming revenues largely disappeared, and we are now just starting to see those recover. We expect the return of roaming to be a tailwind going forward. Our success in growing wireless and fiber footprint comes with some upfront cost recognition, including advertising and promotion. Going forward, the subscriber growth achieved will serve as a tailwind. Last year, we spent around $700 million in expenses in executing our transformation program. We expect those to taper off over the next two years. Turning next to free cash flow. We've incorporated investor feedback to simplify and sharpen our definition of free cash flow.
Going forward, it will be measured as our cash from operations, less capital investments, which includes vendor financing payments, plus cash distributions from DIRECTV. Using this revised definition, our expected free cash flow is $16 billion for 2022. AT&T's adjusted EPS is expected to be between $2.42 and $2.46 for the year. Keep in mind, expected growth in adjusted EBITDA and operating income is expected to be partially offset by a higher effective tax rate. Lastly, as John indicated, our expectation is that the WarnerMedia transaction be closed before the typical May dividend distribution date. The decision on our common dividend payout is always made by the board at the time that each dividend is declared.
However, as we've said previously, we expect payments post-close of the transaction to be at the new expected annual common dividend amount of $1.11 per share. Shifting gears to 2023. We understand that there has been considerable discussion on the trajectory of our core connectivity operations, specifically, whether we can deliver sustainable earnings and free cash flow growth post the close of the WarnerMedia deal. Let me provide you with several factors to consider when thinking about our financial expectations for 2023. We expect total revenue growth and wireless service revenue growth in the low single-digit range. We expect broadband service revenue growth to accelerate from 2022 levels as we benefit from the expansion of our fiber footprint. Last year, we added 2.6 million new fiber locations.
Based upon our current build rate, we expect our fiber inventory to increase by 3.5-4 million locations over each of the next several years. Our adjusted EBITDA expectations are in the $43.5 billion-$44.5 billion range. Adjusted EPS for 2023 is expected to be between $2.50 and $2.60. Now, let me provide you a bit more color on our free cash flow outlook. Our newly defined free cash flow guidance is $16 billion for 2022, which compares to about $19 billion in 2021 on a comparable basis. The primary year-over-year deltas include approximately $2 billion in higher expected cash taxes and about $4 billion in higher capital investments.
We expect these factors to be partially offset by $1 billion in organic adjusted EBITDA growth and $1 billion in transformation savings. In addition, we expect about $1 billion in lower cash interest and working capital savings. We expect $4 billion in cash distributions for DIRECTV in 2022. This is consistent with the combined 2021 cash generation from our investment and our seven-month full ownership of the video business. Now, how do we get from the current 2022 expectations to our 2023 cash flow outlook? We start at $16 billion for 2022. We expect $1 billion in lower cash distribution from DIRECTV, which brings us to $15 billion. We then add a benefit of approximately $2 billion. This reflects lower cash interest from debt pay down expected to take place after the WarnerMedia deal closes, as well as some working capital benefits.
The balance will come from growth in adjusted EBITDA of approximately $3 billion per year for our core connectivity business, including transformation. We believe adjusted EBITDA growth will be driven by four factors. First, mobility EBITDA. We expect growth in the low single-digit range driven by subscriber growth. We expect a more normalized industry backdrop, surgical price increases, and a ramp of the DISH MVNO subscribers to support our outlook. Second, Consumer Wireline. As you just heard, the plan from here is to pivot from a copper-based product to fiber, moving from a product that historically has been good enough to meet the basic connectivity needs to the very best technology available today. In making this pivot, we expect EBITDA growth in the mid-single-digit range, driven by mid- to high-single-digit growth in broadband revenues and subscriber net adds on our new fiber build.
This will be partially offset by declines in legacy copper voice and data products. Third, business wireline EBITDA is expected to be down low single digits. Declines in legacy products are expected to be mostly offset by growth in higher margin connectivity service in small and medium businesses. We expect business wireline earnings to stabilize as we enter 2023. Fourth, transformation savings. We expect to deliver incremental transformation benefits of approximately $1.5 billion in 2023. Many of you have also asked for increased clarity on the bridge from adjusted EBITDA to free cash flow. This morning, we provided a historical reconciliation in the materials on our website. Looking forward, this is how you should think about the walk for 2023. Start with the mid point of our adjusted EBITDA guidance of $44 billion.
Back out capital investments of $24 billion and reduce your cash interest assumption by approximately $2 billion. Next, input your expectations for cash taxes. Our expectations are broadly for steady levels from 2022, which we indicated would be up $2 billion over 2021. Then factor in a modest benefit from working capital. Remember that device subsidy amortization doesn't track revenues and adjusted EBITDA, but from a cash perspective, we've already incurred the subsidy. As our contract assets flatten in 2023, the cash conversion improves. Also, expect the remaining other non-cash items to be consistent with the trend. Lastly, add back your expected cash distributions from DIRECTV. We indicated cash from DIRECTV should be approximately $1 billion lower versus 2022 levels. That should get to our guidance of the $20 billion range.
As we issue this financial guide for 2022 and 2023, we recognize that over the last few months, the degree of macroeconomic and geopolitical uncertainty has increased, including wage and supply inflation, rising interest rates, higher energy costs, and potential implications of the Russian invasion of Ukraine. We are not immune to these macroeconomic risks and geopolitical disruptions. That being said, we have a resilient business that delivers mission-critical products and services. In addition, we have multiple levers we can pull to help us navigate future potential challenges and continue to deliver strong results for our shareholders. These include having a meaningful portion of our energy costs locked in on stable long-term contracts, having a vast majority of our debt fixed in manageable near-term maturity towers, given the de-levering that will take place post the WarnerMedia separation.
Our ability to increase prices in response to wage and supply inflation. Our ability to adjust the pace of capital spending if we face severe economic conditions. In prior periods of economic pressure, our business has performed well given its strong defensive characteristics and subscriptions-based revenues. While we have not seen an inflationary environment like this in a very long time, we are confident that our business will be resilient. The bigger picture here is that we have taken significant steps to improve the financial flexibility of our business. Whether it is the accelerated paydown of our debt through asset disposition, the right sizing of our dividend, the cost takeout initiatives we've put in place, or the reallocation of capital towards durable and sustainable growth vectors, we are in a much better place to navigate potential impacts of any macro or geopolitical uncertainties.
Speaking about bigger picture, we realize there are some questions about whether we have the right amount of financial flexibility to meet all of our financial obligations. Perhaps this quick exercise can help frame our comfort with the current obligation level. Let's first start with our free cash flow expectations of $16 billion for 2022. Add back an expected nearly $2 billion from interest savings from the WarnerMedia separation and the absence of 3G shutdown costs. This gives you a better picture of our run rate cash flows of approximately $18 billion. Hypothetically, let's assume our business runs at this current run rate over the next three years. In other words, let's not even adjust any material benefits from growth, cost reduction, or our expectations of a declining capital intensity beginning in 2024.
In this scenario, starting in 2023, we would expect to generate $54 billion of free cash flows over the next three years. $30 billion of this cash would be distributed to shareholders via our common and preferred dividend as well as minority interest obligations. What would that leave us with? On a simple, consistent run rate basis over the next three years, we would generate at least $24 billion in excess cash even if we don't materially grow cash earnings. If we grow the business as expected and benefit from the tapering of our peak investment levels and benefit from our cost reduction plans, we would improve our excess cash position. This is why I'm comfortable with our capital allocation plans. This excess cash generation provides us with tremendous flexibility and optionality to invest in the business to generate attractive returns.
It also creates the financial flexibility for us to return value to shareholders in other ways as we get closer to our leverage targets. So let me quickly summarize. What we've shared with you today provides you with our capital allocation approach and financial guidance for the company moving forward. We've also shown you that we are a company intensely focused on disciplined growth, execution, and delivering shareholder returns. Simply put, we say what we mean, and we mean what we say. We have a clear, practical, and achievable path to deleveraging our business through a thoughtful and dedicated capital allocation process. By early second quarter, we'll have a business with an increased ability and interest to invest in the areas we consider most important for the future, fiber and 5G. We expect those investments to deliver revenue and earnings growth.
This growth will be supplemented by delivering efficiencies across our business through transformation. Given our cash generation expectations, we really like the ability and agility we'll have to invest in growth parts of our business or to unlock additional ways to return value to our shareholders. Our transformation sets up AT&T post-peak complexity to emerge from 2022 as a simplified, more focused, and purpose-driven company committed to growth and creating shareholder value. That concludes the financial portion of our presentation. I'll now turn it over to John for closing comments before we begin the Q&A.
Thanks, Pascal. I wanna quickly wrap up with a couple of comments, and then we'll be on to your questions. I hope we've driven home today why and how we believe our network strategy and assets set us up to serve our important customer segments and create a clear path to sustainable growth. We believe we're differentiated with our wireless and fiber combination. We're on track with reshaping our company's operations and cost structure, and our focused execution in the market will drive improved returns and value creation in the quarters and years ahead. This management team and I are energized by the cycle we're creating with our repositioning. It allows us to invest in our key areas of growth and capture new opportunities with both 5G and fiber. Our more focused company and management team is aligned to become America's best broadband provider.
Most importantly for you, I hope we've displayed the information and insights to earn your confidence in our ability to reach our financial projections, including the questions we know you have in particular areas like free cash flow as we enter this next new chapter in our company's history. We now welcome your questions and feedback with Jeff, Jen, Rasesh, and Pascal rejoining me. Amir, let's get started with the questions.
Thanks very much. Let's kick off Q&A here. Our first question comes from John Hodulik of UBS. Jonathan?
Great. Thanks, guys, and thank you all for all the information you guys provided today. I have two questions. First, maybe for John or Jeff, the 30 million locations being passed with fiber, why is that the right number, especially given the impressive penetration numbers that Jen gave us this morning? Second, it looks like, you know, I would say the $3 billion in EBITDA growth from 2022 to 2023 is the number that stood out the most, and it sounds like a fair amount of that is driven by cost savings.
If you walk us through a little bit of what's going on in terms of the copper decommissioning, is that just areas where you guys are deploying fiber, or are you actually sort of, you know, converting to wireless or just decommissioning copper in certain areas? How confident are you that all these costs fall to the bottom line? Thanks.
Jeff, why don't you go ahead and take that and start out with the build and then carry on to the cost structure issues that John just raised.
Yeah. Hey, John. Thanks for your question. Our current plan over the next 3-4 years is about 3-4 million new passings per year. We're on that pace right now with the build and our capacity, our construction and our engineering teams.
As I and Jen alluded to earlier in our comments. Yes, we have a lot of success. We're seeing some success in our early penetration rates there. Look, we're setting ourselves a doable plan. John has challenged us to run faster and quicker as hard as we can. To the extent that we can step that up, we will. We're not guiding to any number above that. In fact, in the guidance that we've offered today, we've tried to give you a little bit more color and texture into the kinds of locations that we're passing with our current build.
Most importantly, currently this year right now, the team's been doing great work, and so we're comfortably guiding the build for this year up to the 3.5-4 million range. For sure, where we're building our copper, where we're building our fiber footprint, as I mentioned in my comments earlier, we kind of engineer this every square mile of our entire fixed footprint. In the areas where we're building our fiber, we are taking market share. Our fiber product is the premium superior product in the market, and we're able to grow as a result of that, not only in our broadband business but our wireless business. In those areas, we are reclaiming copper, removing copper and costs, but that's not the only area of our copper sunset and optimization strategies.
We have many square miles outside of our fiber footprint that we have very little to no demand that's existing in this part of our footprint, and we've made the necessary filings and the cooperation work with the local authorities and the FCC to begin to unwind and remove that copper infrastructure out of that footprint. In those parts of the market, we're going in with cash products, transitioning customers that are in that part of the footprint to a better product served by wireless in many instances. As we make increasing speed and pace in our copper sunset activities across our entire footprint, those costs begin to mount up, and those savings start to reveal themselves on the bottom line of our multi-year plan.
Thank you.
Thanks very much, John. Next question comes from Simon Flannery from Morgan Stanley. Simon?
Great. Thank you. Good morning, everyone. Thanks for doing this. My first one is on the CapEx. Pascal, you talked about $20 billion tapering down. Also there was a comment about increased potential for increasing success-based investments. I want to understand, is it kind of coming down $1 billion or $2 billion a year, or could there be a sharper drop than that as we think about our model? Jeff, one for you on the 5G. Can you update us on the tower climbing, the equipment availability? You gave us that year-end 2023, but what about an interim target? Obviously, your peers at T-Mobile have already rolled out their plans. You know, when are you gonna get to 100 million, 75 million, etc.?
Pascal, why don't you go ahead and touch the capital issue first?
Sure thing. Simon, thank you for the question. Here's the way I described it in my script. We're starting off at $24 billion this year. Over the next couple of years, because of the C-band deployment and the transformation CapEx, we will get to a normal run rate of around $20 billion in 2024. My comments that I made about success-based fiber is, remember, by 2024, we have a lot of financial flexibility, and we're gonna look for alternative ways to deploy that capital such that we're generating the best possible returns to our shareholders. We haven't committed to additional fiber deployments, but we're really gonna be guided by how do we deliver the best value for our shareholders long term.
Jeff?
Simon, on your 5G mid-band spectrum deployment, we haven't wavered off of our interim target of 70 million by the end of this year. Equipment's coming in line in the back half of the year, kind of coincident with the availability of Auction 110 spectrum. All of our tower touches at the back half of this year will be lifting the full 80 MHz of spectrum, deploying the two radios, one for both bands.
Everything's going okay with the FAA?
Yeah, everything's going fabulous with the FAA. I think we in the industry have done a nice job, kind of working through that. No urgent issues or anything that gives us caution.
Thanks very much, Simon. Next question. We've got Brett Feldman from Goldman Sachs. Brett?
Yeah, thanks for taking the question. Two related: assume in the business plan that you laid out for us in terms of proactively migrating your households from copper to fiber, or would that be a potential incremental discretionary capital expenditure over time? Second, when we look at the consumer wireline segment, your margins in the low 30s are arguably low for a connectivity centered business. I'm curious, how do you think about the margin potential of that business segment over time, and what would be the conditions that could ultimately get you to a much more scaled margin profile? Thank you.
Hey, Brett, can I ask you maybe to repeat the first part of your first question a little bit? You cut off, and we weren't able to pick it up.
The general question is, what are you assuming in your business plan for proactively moving copper households over to fiber as you deploy?
Okay. Jeff, why don't you go ahead, and you can keep carrying on that.
Yeah. Brett, thanks for the question. When we are deploying our fiber into a footprint, as Jen mentioned earlier. Over two-thirds of our net growth in that footprint area are new to AT&T Broadband. Suffice it to say that, you know, we've sacrificed for lost business in this area for many years. Now as we bring you back in a superior technology that serves up multi-gig speeds on a symmetrical bandwidth both up and down, we're seeing really strong adoption rates without the need for us to stimulate anything unique or special or specific to motivate a household to migrate. That motivation is occurring on their own. I mean, customers are recognizing they need this capability that fiber brings.
As to your question about margin and EBITDA, you know, look, the way I would encourage you to think about our consumer wireline business is this. If you go back a year, for the first time in a long time, we had actually transitioned that segment to revenue growth. We've achieved that revenue growth on the backs of our strong fiber build and performance that was just beginning last year. We were just starting this next tranche of fiber deployment. This year, that business, our consumer wireline business, will make the transition to positive EBITDA growth. Every dollar that we're investing today, for that business in this fiber footprint is really durable and future-proof.
Meaning, as we continue to grow, penetrate that fiber deeper, we've already got pre-built in multi-gigabit speed capabilities to meet the demands and expectations of these customers in these footprints without the need to deploy incremental capital to meet that demand. As we think about the scale of our consumer wireline business, the more we scale it, and as we're doing now, the more velocity we get, that EBITDA performance improves and we expect to see expanding margins as a result of that scale.
Brett, maybe, let me fill in two thoughts that might help you as we look at how we do the turndown of some of the legacy services. It's not something we're necessarily gonna provide you discrete guidance on, but as we measure it internally, our goal is to equate a square miles of turndown to our cost structure, and that's kind of how we look at it. As we've been working through our transformation estimates with you, we now have enough experience to understand when we are able to take down a certain number of square miles, what we can ultimately pull down from a cost structure perspective, and the team has objectives in working through that over the course of the next several years in the way that Jeff described it.
That's how we kind of equate the transformation and our ultimate achievement of the cost structure objectives to what we're doing in copper, either replacement, turndown, and then supplement of the wireless network. You know, if I were to characterize the margin dynamics that you're alluding to, I just encourage you to go back and think about every access architecture change we've had in the business. If you look at the business case of deployment of fiber, it doesn't look any different. When we did the access change to DSL initially, first couple of years, margin structures were pressured. We did the access architecture change to Ethernet. First couple years, we're always having these conversations, oh, boy, that looks like it's pressuring overall transport margins. Well, what happens is you get to steady state and you get to the marginal customer additions.
They go back into the traditional transport margins, and that's what's accomplished over the last several years. I see nothing different as you start to look at the mature fiber business as you get into scale and mature through, we shouldn't expect those same kind of margin structures after we scale into the business.
Thanks very much, Brett. Moving to our next question, we've got Mike Rollins from Citi. Mike.
Hi. Thanks for taking the questions. Two, if I could. So the first is that the management team has previously acknowledged that the postpaid phone volumes may not grow at the pace being achieved during 2021. Curious what the team is seeing in terms of industry growth, the size of the switcher pool, state of competition that can facilitate your ongoing growth in wireless postpaid volumes. And then secondly, curious to return back to some of the discussion that was referenced earlier on government programs, and curious how much of that $40 billion plus of build and upgrade in terms of funding that's available that AT&T could pursue and potentially win. And maybe, you know, as in reference to ACP, how many of those subs are you serving today, and where does that go over time?
Jen, why don't you take the first part of that, and then I can fill in what you don't ultimately cover there.
All right. Happy to. Thanks for the question, because I would tell you I am excited and the team is very proud of the results we've delivered to date. What we are seeing is customer demand, and we talked about it all morning, of demand continuing to increase. The appreciation for the need for connectivity in our lives is certainly becoming more and more clear. The guidance that Pascal offered today is built on our plan, and that assumes that the industry returns to a more normalized growth level this year. Any strength above and beyond that that we see this year would be upside to the plan. I feel like we're being very balanced in our expectations for the year.
Given the fact that we've solved the biggest pain point we know from customers, and that is treating existing same as new, we feel good about our ability to compete consistently, simply, and stay disciplined, and continue to take share.
Mike, on where we go on the government program side of things and what we expect to see happening, you know, it's still pretty early in the cycle. As you know, each state ultimately determines its particular program and how they're going to go and allocate out the infrastructure build. I think over the next several months, as the FCC solidifies the maps, we'll start to see some of the bigger states probably be the leaders in saying exactly how that gets done. Now, having said that, you know, we've gone out and we've kind of looked around where we expect based on the data we have and information we have, where the governments are likely to come forward and start trying to incent some kind of a cooperative build.
We've gone in and, you know, we've set our sights internally around what we think we can be competitive for. We've set up a special organization that is focused on this. They're actually already out bidding on opportunities that have come under other federal government-sponsored programs or state programs. We've had some success in the last couple of months around that, where we've been able to pick up a couple of build areas. In fact, our win rate is looking a little bit better than what we would have expected it to be. We've now got an organization and a mindset to be able to go in and compete and be successful in ultimately pulling down some of these funds. We actually think the approach, as I indicated in my opening comments, is a really smart public-private approach.
The combination of the subsidy that comes in, plus the additional monthly subsidy that comes in with ACP makes it a really good combination, and we're highly interested in continuing to participate in it. We haven't given you anything in our guidance right now, but as soon as we're going to be successful in those programs, we've given you guidance and we've given you direction that's consistent with the build as we characterized it and what we're doing in the markets today. It's entirely possible as we get through this, to Pascal's point on success-based capital, that we might come back in and tell you know, we've been successful and we're gonna do some more, and it ultimately has an impact on some of our forward-looking guidance if that comes to pass.
Thanks very much, Mike.
Thank you.
Next question, we've got Craig Moffett from MoffettNathanson.
Hi. Thank you, and thank you for all the information today. I wanna drill down a little bit more on the fiber plans that you talked about. You talked about, I think, 75% of your footprint eventually being built with fiber. But when you talk about 50% of all businesses, I think being built with fiber, that would, to me, imply that you're gonna start to do significant building of fiber outside of your footprint. I wonder whether you could just flesh that out a little bit as to what your plans are for fiber construction beyond your traditional wireline footprint.
To the extent that you see a real value to the bundled offering, which I think you talked about the uplifts that you get in wireless market share, how do you think about going to market with a bundled offering in places where it's either outside your wireline footprint or where you don't have fiber?
Rasesh, why don't you tackle the business side of that first, and then we'll come in behind that, if that's okay.
You bet. Yeah, Craig, great to see you. As we mentioned in the presentation, we are doubling our fiber footprint between now and 2025 for business locations. We will reach 5 million business locations. All of that is within our franchise footprint. You know, as Jen shared, fiber is a superior product. Customers, you know, adopt it quickly, both the speed advantage on the symmetrical side, the multi-gig capability that we've launched. For businesses, we have the added benefit of not only having fiber broadband, but being able to sell dedicated internet services that have sufficiently higher ARPU and lifetime values. We feel very good about this investment. Its returns are in the low-to-mid 20s.
I think there's further room from there as we exit 2025 to continue to build out our footprint. We feel good about that investment.
Craig, good to see you. The question on what we might do elsewhere is a good question. If you couldn't tell from the numbers that we shared with you earlier, we're incredibly bullish on our performance and how we've been successful in the market. We've seen the fiber economics. Frankly, if I go back to the first business cases I was involved in, probably in the 2010 timeframe, to where we stand today, they've gotten progressively better for a variety of reasons. Some of it is the market demand. The willingness to pay is higher. Some of it is getting up the learning curve on scale that's allowed us to change certain cost dynamics.
You heard Jen talk about the fact that we've come up with approaches that allow us to penetrate much faster than we've historically penetrated, which advances cash into the business case. Those things have all certainly given us a lot more confidence where we're asking ourselves the question, should we be restricted to what might be the traditional footprint? We don't advertise this a lot right now, but we're actually edging out from our traditional footprint today in places where we have interesting communities that we can go and attach right to what used to be our franchise territory. We are not opposed to doing that, and we are doing that in many instances. Those are really natural, and they're easy because there's no incremental cost startup dynamics associated with that.
We've seen really good success when we've moved into those areas to pick up the customers. Now the next question becomes, do you wanna go a little further? Do you wanna move away from something that's immediately in juxtaposition to your franchise territory? Certainly, some of the subsidy dollars that are coming in causes us to ask that question as well. I think as we're looking at that, it's possible we may come back to you and tell you we have a business model and approach that allows us to sell two products, and we can find territories to deploy capital with the right kind of returns that look as effective as the returns as what we're getting in what I'll call our traditional franchise footprint.
Right now, I don't have anything to tell you in terms of guidance or homes or numbers specifically that would say, this is what you should factor into your modeling or how you carry things forward.
Thanks very much, Craig. Moving to our next question, we've got Phil Cusick from JPMorgan. Phil?
Thanks, Amir. Two if I can. First, fiber returns in the mid-teens is great. John, I think you said they've gotten better over the years. Can you expand on the penetration assumption that goes into that? You know, I know you aren't pushing fixed wireless access, so what drives your confidence that wireless from competitors won't take enough share to impact you? Second, John, you spoke about layering software on top of the network over time. I know it's not the focus today, but are you talking about moving up the stack and creating more revenue on top of the pipes and any preview you can give us? Thank you.
Sure, Phil. It's good to see you. Jen, why don't you go ahead and talk a little bit about the penetration dynamics and why we're winning with fiber in the nation and come back in and talk about the act two.
All right. Happy to. Let me talk a little bit. I mentioned earlier this morning that because of build momentum that Jeff referenced and our ability to go in, level load the plan, and very efficiently build, our sales and marketing teams have stood up behind that and figured out how to communicate and market to customers and drive penetration much faster. We're seeing, as I mentioned, on average, one-year penetration rates that are 2x what we've historically seen. That dramatically improves an already good business case. The sales teams are also coming out, as we've talked about, a superior product. When you have speeds that are symmetrical and that are faster than standard cable, you're meeting a customer need. Customers are responding, as Jeff already mentioned this morning, favorably. I wanna hit a little bit on your bundling.
We absolutely see competition out there, and cable is out there making some aggressive bundling moves. We use that tool as well. It's an effective, long-standing tool in the industry to bundle products together. What customers are telling me every day is they want more than just a bundled discount. They want us to come in and offer a simple, secure, and fast product, and we are delivering on that value proposition. Because we're delivering and because customers have higher demands, we're seeing opportunity to move them up in the stack. There's some revenue potential as well.
Phil, you know, we're not opposed to fixed wireless, and I'm sure there's going to be segments of the market where it's gonna be acceptable, and folks are gonna find it to be adequate. Right now, I would just tell you, having played the catch-up game for a significant part of my career on the broadband side of the equation, I tried to give you a little flavor in my opening comments around where we see demand for bandwidth going and the demand it's going to put on these networks. The reality is that the curve is moving away from the scalability of wireless.
I think as a result of that, I'm making a longer term bet that a much higher percentage of the market is gonna go for exactly what Jen described, which is the best product in the market. I think that's going to become more and more important, frankly, as applications become more demanding on the reliability and consistency of the bandwidth, and nothing is gonna top fiber in that regard. On your second question about, you know, what I refer to as act two, you know, we are doing a lot of work today that is enabling us to open up aspects of the network for others to come in and start offering value added services associated with it. In addition, there are things that we can do with our customer base to start giving them control.
I think Jeff alluded in his remarks about how much we're seeing. We go into our large enterprise customers, and a CIO talks to us about, "I need the ability to manage a network for my employee who's working from home, just like I did when they were sitting at their desk on the corporate LAN." Some of the work that we're doing right now is on how do we begin instituting software to add these features back into the network that allow us to put value add on top of it and sell those managed services or capabilities back into the core connectivity that we put in place. That would be an example of that.
We're doing a lot of work, I think, as you heard Judson talk about in the customer segment on enabling software capabilities to the network and the hyperscaler cloud so that those capabilities can be attached to certain applications and services that people choose to use. We believe those features and capabilities over time add core value into the connectivity and can improve other aspects of our connectivity. I'm not talking about moving up the stack to try to attack Salesforce or to try to replace APIs in the application space.
We're talking about moving up the stack to do things with our network that allows us to prefer our connectivity because it will work better with people who are running more sophisticated software on top of that stack, which allows us to stay in a premium position in the market and differentiate in ways that others cannot.
That's helpful. Thanks, John.
Thanks very much, Phil. Next up, we've got Walt Piecyk from LightShed.
Thanks. You guys are doing 75% build, right? In 2025, assuming you get like a 50% share, which is typical for fiber, what do you anticipate the response to be from a pricing standpoint? I mean, I guess you could argue it still is monopoly. Do you think ARPU for broadband can continue to rise several years from now if you're offering fiber versus the cable? I mean, Rutledge said earlier this week at Morgan Stanley, I guess, they can respond quickly. Can they respond quickly? How do you think the ARPU will look? Because that obviously impacts your view on returns.
Jen, you wanna take the question?
Sure. As we mentioned, customers absolutely are looking for higher speeds. We've announced our Hyper Gig product, 2 and 5 Gig speeds, at a higher price point because there's a great value exchange there with customers.
Yeah.
We expect that demand to continue to increase.
Cool.
As customer demand does increase, we expect to be able to raise in exchange with that. Let me tell you a little bit. We are already testing in lab speeds that are 10 Gig. As I mentioned, we see faster speeds, more locations coming. Where we're positioned today, we have room to move in ARPU and still stay very competitive. I think we've got room to grow that.
Can you also just comment on, you should be able to hit your 2.5 leverage targets next year? Is that when we should think that you would consider just to begin this share repurchase program and look at a mix of M&A opportunities?
You know, Walt, good to see you. The answer is that's what we said we want to evaluate at that point in time, what we're going to do on a capital allocation front. I don't wanna consider buyback prior to that. There's a lot of reasons why I think it's important that we hit that particular threshold. But at 2.5x , it certainly should be on the table. Now, when we arrive at that moment, we're gonna be evaluating a lot of things. We're gonna be evaluating where the equity sits and how it's trading. We're gonna be looking at interest rates. As Pascal indicated, we may be looking at other organic investment in the business that has interesting returns and opportunities. We'll come back out at that point and declare what we think our right approach is going forward.
We've kind of put that stake in the ground just to let you know that until we get there, it's not something I've got on the table as to where we should be deploying our capital. It certainly opens up at that point in time, we look at the environment, what the balance sheet's gonna look like, how much we're paying for debt, all those types of things, that we see it could very well be a possibility at that juncture.
Great. Thank you.
Thanks very much, Walt. Next up, we've got Frank Louthan from Raymond James. Frank?
Great, thanks. Two questions. You hear the thesis around, you know, fiber and mobility as well. Considering there's, like, several other telcos, maybe some large fiber builds out there, would you guys consider an MVNO to have them have a wireless product that you can offer as well, would also possibly help offset some of the wholesale losses you might have from TracFone with their new owner? That's the first question. The second one is, where's sort of the bottom on large enterprise? That business has been in decline for 10 or 12 years. Do we think we can see a point where we'll see an inflection in that business? Thank you.
Jeff, why don't you kick off the first part of Frank's question, and then, we'll have Rasesh maybe talk a little bit about where we are on the enterprise slide.
Hey, Frank, it's great to see you. On the first question was?
The first question.
Oh, yeah, the MVNO.
MVNO.
Sorry, MVNO, add a footprint with other fiber overbuilders. Certainly, Frank, we'll look at any opportunity that's attractive for us anywhere across our footprint where we're not directly competing with the underlying partner, just as a principle of the way the management team thinks about it from a strategic lens. Now, you know, right now, we've stood up the MVNO and wholesale arrangement with our partners at DISH, and we expect to see that begin to grow here in the back half of this year and really become more material in 2023. Our capability to integrate with third parties like fiber overbuilders out of franchise, we've got that capability inside the business. If that opportunity becomes attractive and there's an option for us, we would certainly take a look at it.
In terms of the turnaround transition in our enterprise business, Rasesh, you wanna take that?
Yeah, you bet. Happy to share more about that. I would say we can divide it in sort of three phase. The first is we're doubling our fiber footprint, and that allows us to actually grow our share of penetration with small business and mid-market enterprises. As I mentioned in the presentation, as we approach 2025, fiber revenue base becomes 44% of our EBITDA contribution. That's a very material growth sector. We report business mobility under the total mobility segment, but just as Jen mentioned, when we win in fiber-wireless, we also see strong strength in business mobility, and we've seen some nice share gains on the SMB side for mobility. The second part of this is really our enterprise business.
As we talked about, we have some unique opportunities to reposition that business from a vertical perspective. We're really winning in public sector with FirstNet. We talked about the automotive space, and we've got additional verticals that we are gonna be centering around to really drive more customer-oriented value and solutions. The last part is we are actually repositioning the product portfolio. As Jeff mentioned, we've reduced our product offerings by about 40%. Some of what you see in both top line and bottom-line trends are actually discretionary decisions we're making to exit out of, you know, high labor intensity, low margin services such as outsourcing.
When you sort of put these things together, what I can share with you is as we exit 2023, the growth from our fiber services will outpace the legacy headwinds. Fiber becomes more and more a component of EBITDA mix of our enterprise segment. I feel very good about our ability to drive that as we exit 2023.
Great. Thanks for doing this.
Thanks very much, Frank. Next up, we've got Doug Mitchelson from Credit Suisse. Doug?
Thanks, Amir, and I'll add my appreciation for all the information today. Two questions if I could. John, Jeff, within the financial framework you laid out, what are the company's plans for premium services for unlimited customers like your current free HBO Max offer? And should we assume that investment is stable, growing or shrinking? I'm just curious if you have plans to or if you're interested in the strategy Verizon announced last week where they would give their customers choice as to which streaming or other services they would receive for free as part of being on the premium price tier. That was all meant to be one question.
Pascal, I was just hoping you could clarify if your expectation for DIRECTV cash flow in 2023 is based on AT&T receiving 100% of the free cash flow, if you're still in the catch-up phase or if that's been completed and that's down to a 70% free cash flow payout. I'm just trying to think about the sustainability of that level from 2024 and beyond. Thank you.
Jeff, do you wanna maybe pick up on Doug's question about services aggregation, and then, Pascal, you can talk a little bit about the tranche payouts.
Thanks for the question, Doug. We are seeing great success in our value proposition that we've been consistent with over the last six quarters, as Jen pointed out earlier in her commentary. In fact, if we've learned anything from our customers, it's this consistency and fairness that we've offered them that's really winning in the marketplace, both retaining and gaining share. Our HBO Max bundling on our elite tiers, which we have today on our high-end unlimited rate plan for mobility, as well as our Gig plans in fiber, we'll let you continue that play and similar plays into the future. We suspect that as we get more targeted in the pockets of growth, these segments that Jen laid out earlier today, that we're probably gonna have to do a thing or two to spice up the total value proposition for each segment.
Teams will evaluate, but today we're not announcing any change or any difference or a change of course and direction, I would say.
Pascal?
Doug, the way you should think about it is 2022 and 2023, 100% of the cash flows are expected to come from us. Once you get beyond that, we go to our economic share, which should be within 70/30. We feel really good about our visibility into 2022 and 2023, which we've guided to.
Great. Thank you.
Thanks very much, Doug. Next up, we've got Dave Barden from Bank of America. Dave?
Hey, guys. Thanks so much for doing this. It's safe to say good luck to Tim. I guess a lot of detail, Pascal, on the free cash flow bridge. This is something that we've been talking about since a year ago, and it's great to have that detail. I just wanted to do a couple housekeeping items on that. I guess first, there's no change in the pro forma free cash flow guide from when you were including half of the year of WarnerMedia to now. That implies that there was never any free cash flow from WarnerMedia baked into the business. I wanna just confirm that. Second, I think I heard you say that while this year there's a $2 billion cash tax step up, you should expect it to be completely flat in the 2023 guide.
I apologize because I know it's a repeat of a question. As we think about 2024, the moving parts there seem to be continued growth in the business, an increment from maybe Dish Retail, a $4 billion step down in CapEx, and if I'm worried about two things, I'm worried about the step down for DTV and maybe a step up in tax rate. I was wondering if you could talk a little about that. Thank you.
Dave, great seeing you again. We're not gonna provide the cash flows for 2024. Regretfully, I'm not gonna comment on that. In terms of 2022, we had really good line of sight when we set our guidance, that about what WarnerMedia would contribute for the period we held. We understood where we thought this transaction would close. In that regard, we factored it into the guides for January. Really, just to comment on that. Then you asked about cash taxes for next year. We expect those to be relatively flat to 2022.
When we talked in the fourth quarter about moving parts into 2023, I just wanted to make sure. You've already kind of ticked off a bunch of moving parts for 2024. Are we missing anything? Did I mischaracterize anything?
Boy, you are good, Dave. I'm not gonna comment on that.
Okay. Thanks for that. I appreciate it.
Thanks very much, Dave. Next up we've got Eric Luebchow from Wells Fargo. Eric?
Yeah, thanks for taking the question. I wanted to dive into the fiber business. I know you've had a lot of questions about it. I know you don't give exact cost per pass numbers, but wondering if you could talk about at a high level how these costs have trended and kind of where you expect them to go. Obviously, we've seen, you know, higher equipment costs, higher labor costs in fiber trenching and installation. How are you working to contain some of those costs and whether that will have any impact on kind of the return hurdles you've set out for mid to high teens.
Hey, Eric, Jeff why dont you just go ahead and give a little color.
Yeah. Eric, what Pascal commented about the capital that's in our plan for fiber in the $4 billion-$5 billion range is currently what we're spending in a 4 million passings target per year. I would point to those data points as a rough number. In terms of inflationary pressures, cost of goods sold, look, it's one of the benefits if you want to describe us as a fiber overbuilder, we are a very large fiber overbuilder. We've got scale, and we've done it before. That scale translates to things like supply chain agreements that are long in tenure and that have really good protections for both us and our suppliers.
It's in a really strong and fruitful labor agreement with the distribution elements and the engineers that are constructing and the technicians that are installing these services all in these territories, which we know well. I feel like we've got a really good operating model, and our scale plays to our advantage here as we build fiber footprint further this year, next year, and the following year. Of course, as we continue to penetrate and edge out the network, as John alluded to earlier, certainly where we find opportunity to perfect our cost per passing, we do it. We've seen improvements over the last two years in our cost to deploy fiber on a per passing unit. We're not expecting any material significant improvements in our current run rate just to satisfy our multiyear plan.
We've got a pretty level loaded at pace and speed build right now, and so we feel really good. We've got the right protections for any kind of inflationary pressures.
Great. Thanks, Jeff.
Thanks very much. Next up we've got Brandon Nispel from KeyBanc Capital.
Brandon, we're having trouble hearing you. I don't know if your volume's up on your mic or.
Here we go.
There you go. That might be a little better.
Can you guys hear me?
Yep. There we go.
Sweet.
All good.
Thanks, Amir. Pascal, the question's for you. I think you gave some of the components in your comments, but I was hoping you could just walk us through one more time your expectations for mobility, consumer and business segment EBITDA growth in both 2022 and 2023.
All right.
Thanks.
Here are some of the dynamics to keep in mind as you think about 2022 and 2023. We expect Mobility, we expect subscriber growth and our relatively stable ARPU as we make our way through the next couple of years. Consumer Wireline, as you heard earlier, this is a business that we made the pivot last year from in terms of revenue growth. We expect to make the pivot in terms of profit growth from here as the business scales and we build out, we continue to build out our fiber footprint. We're expecting both top line and bottom line growth for Consumer Wireline. With Business, Rasesh said this, we are expecting to be down mid-single digits this year and low single digits next year.
As we exit 2023, we expect the business to be stabilized and to into 2024. The other piece to keep in mind is we have our transformation efforts, which will take out cumulatively between 2022 and 2023, about $1 billion in structural costs. All those are the piece parts as you think about how we expect to get to our guidance for 2022 and 2023.
Thanks very much, Brandon. Then for our last question, we've got James Ratcliffe from Evercore ISI. James?
Thanks for taking the question. Two if I could. First of all, just to clarify, if you're taking the, you know, copper footprint, which is right now sort of 60 million home locations, and taking it down to half to 30, fiber's going up to 15, then so it looks like you're talking about shutting down the copper network and moving to wireless in about 15 million locations in the next four years. How do we think about the pacing for that? And just context on where you are in terms of FCC and state PSC approvals and, you know, socializing that concept with them. And secondly, just to understand the free cash flow of $16 billion for 2022, does that include the $4 billion in distributions from DIRECTV, or a portion of it?
I'm trying to work through the free cash flow walk that y'all shared with us from 2021 to 2022 and the $19.2 billion of 2021 included $2 billion from DIRECTV. I don't see the billions step up there in, you know, in any of those columns to get to this $15 billion. I'm not too sure. Thanks.
Jeff, do you wanna take the front end of the question there, and then Pascal can come in and deal with the look-in from the DIRECTV distributions?
Yeah, on the copper optimization strategy that we've laid out, I want to reiterate we are following the demand from the customer, and we have first prioritized parts of our footprint where we've had no demand or zero demand and very small actual customers being served by the footprint. As we make our way through the filing process with the local jurisdictions in the states, we're finding some success working with them to enable us the potential to unwind and retire that copper footprint. We've got the majority of our states that are in our 21-state footprint that have signed off on this, on the strategy or on this execution plan. We're in the early days of actually performing the physical work. Last year, we just started.
We're not disclosing the percentage of the square miles that we have optimized. We're not disclosing that data. Suffice it to say this year, in 2022, it's probably a 10x increase, and this program will reach a peak probably by the year 2024, is how I would think about the total footprint in copper reduction or copper sunsetting.
Some of that is contingent, James, on the CaaS product work that's necessary on the wireless network to pick up some additional customers that sit on very lightly penetrated products in copper that we can pull off. That work is, in some cases, just finishing or other products come in later this year. That allows us then to accelerate more of those areas that Jeff just alluded to as zero demand areas by ultimately doing the replacement. Pascal, do you wanna hit the DIRECTV piece?
Sure thing. Here is, James, what to keep in mind. We owned the asset for seven months last year, 100%, and that is included in our cash from operations. Then we got cash when we were an investor with TPG. The sum of those two is roughly the same as what the $4 billion that we are getting in 2022. There is no increase in year-over-year contributions to DIRECTV, from DIRECTV to our $16 billion guide.
All right. Thank you.
Thanks very much, James. With that, we've concluded the Q&A portion of today's day. John?
Folks, we really appreciate your attention. I know it makes for a long morning and into your lunch hour for some of you, but we appreciate your interest in AT&T. I believe what you have seen from us today is a very, very focused management team that is absolutely committed to ensuring we are the best broadband provider in the United States. I think what we're most excited about is we have great alignment, not only to our strategy to make that happen.
We feel like we are on the dawn of the capital flexibility and how our balance sheet is structured, how our capital structure is set up in total to allow us to execute in a way that I know the team is incredibly energized and focused about, focused on to make happen. With that, I'm glad you were with us today. We hope you all have a great weekend, and we'll see you at the close of the quarter.