AT&T Wireless, Fiber Subscription Wins Display ‘Real Momentum’, Says CEO
The telecom behemoth is focusing on 5G, wireless connectivity and fiber as pathways to growth in 2021, executives told investors during AT&T’s second-quarter 2021 earnings call.
Telecom giant AT&T is going strong in the first half of 2021 as growth in both consumer and business wireless and fiber subscriptions tick up as it continues to simplify its strategy centered on core telecom services.
AT&T has invested more than $60 billion over the last 12 months in 5G, spectrum, fiber and premium content, CEO John Stankey said during the company’s second-quarter 2021 earnings call Thursday. “The momentum in our strategic areas of focus is real. We have the right business strategy in place for longer-term success,” he said.
Dallas-based AT&T’s wireless and broadband strength continued to anchor the carrier in the first half of 2021. The carrier saw 789,000 postpaid phone net adds and 1,156,000 postpaid net adds overall in the second quarter of 2021, matching its record for the highest number of net adds of its highest-value subscribers in a decade. The carrier had 246,000 fiber net adds during second-quarter 2021 and 36 percent penetration, up from 31 percent a year ago. AT&T said it is on track to pick up 1 million net fiber adds in total for the full-year 2021.
Stankey said that by year-end, AT&T will have expanded its fiber footprint by 3 million residential and business customer locations.
AT&T’s mobility segment revenue totaled $18.94 billion during second-quarter 2021, an increase of 10.4 percent compared with $17.15 billion in the same quarter a year ago. The overall communications business, which includes high-speed internet, video and legacy voice services, climbed 6.1 percent to $28.13 billion during the quarter compared with $26.51 billion in the second quarter of 2020. In mobility, AT&T said its service revenue grew 5 percent, while equipment revenue climbed 31.9 percent during the quarter.
Business wireline services revenue, on the other hand, slumped 4 percent during the second quarter of 2021 to $6.05 billion compared with $6.31 billion a year ago, which the carrier attributed to lower service revenue due to less demand for legacy voice and data services in the current year and higher demand for pandemic-related connectivity in the prior year. AT&T expects to see much of the same performance from this segment in third-quarter 2021, said Pascal Desroches, AT&T’s new CFO. Desroches was formerly CFO of AT&T’s WarnerMedia division.
However, business wireless services climbed 7.4 percent to $2.03 billion compared with $1.89 billion a year ago. Business wireless equipment revenue climbed 33.5 percent, while business wireline equipment revenue decreased 5.9 percent, Desroches said.
In June, AT&T inked a deal with Microsoft that is bringing the carrier’s 5G workloads to the Azure for Operators platform and gives AT&T access to Microsoft cloud, artificial intelligence and edge technology to assist with launching new 5G-enabled services. As part of this deal, Microsoft will acquire AT&T’s Network Cloud, which will bring real-world production 5G workloads to Azure for Operators, Microsoft’s telecom cloud offering, according to the two companies. Microsoft also acquired AT&T’s engineering and life-cycle management software to develop and deploy a carrier-grade cloud running containerized or virtualized network services.
Desroches assured investors Thursday that AT&T is not outsourcing its core network functions as part of the Microsoft deal. Instead, the partnership has Microsoft Azure supporting AT&T’s network workloads for scale and efficiency purposes. “As a partner in this, we’re going to enjoy some anchor-tenant benefits,” he said. “We are relying on Microsoft to develop scaled compute and storage capabilities at the edge, while we maintain control over our network stack and the kinds of services and products that we’re going to offer to the market.”
The carrier in July said it had expanded its existing relationship with tech giant Google with the introduction of two new co-developed solutions that are using AT&T’s on-premises Multi-access Edge Compute offering and the carrier’s Network Edge capabilities through LTE, 5G, and wireline, as well as Google Cloud’s Edge Compute portfolio. The solutions will target a variety of verticals, including retail, health care, manufacturing, entertainment, according to the two companies.
AT&T’s WarnerMedia unit, which includes Turner and premium TV channel HBO that AT&T acquired as part of its Time Warner purchase in 2018, is bouncing back from the pandemic. The segment reported revenue of $8.79 billion in the quarter compared with $6.73 billion last year, a 30.7 percent increase, which reflected the partial recovery from prior-year COVID-19 impacts and higher content, subscription and advertising revenue, according to the company.
Adjusted earnings per share during AT&T’s second quarter, which ended June 30, was 89 cents, up from 83 cents one year ago. Total revenue was $44.05 billion, a 7.6 percent bump from $40.95 billion in the same quarter one year earlier. Net income was $1.57 billion.