John Stankey, CEO and chairman of AT&T said it can serve nearly 24 million premises with fiber broadband today. It will complement its plans by working with its GigaPower partner, Black Rock and pursuing government funding mechanisms like BEAD.
“We now have about 24 million fiber locations that we can serve on our network with additional opportunities to provide service through our GigaPower joint venture with BlackRock or BEAD funding opportunities,” he said. “Given the returns we're seeing, we believe leaning into an attractive return profile of 5G in the fiber business makes strategic and economic sense.”
Fiber broadband gains were a highlight. AT&T claimed 13.7 million fixed broadband subscriptions during the third quarter, of which 8.03 million are connected via fiber-to-the-home (FTTH) networks. The provider added 296,000 AT&T Fiber subscribers, more than offsetting losses in non-fiber services.
AT&T Fiber can now serve 20.7 million customer locations and offers symmetrical, multi-gig speeds across parts of its entire footprint of more than 100 metro areas. Total broadband net gains, excluding DSL and AT&T Internet Air, were 15,000. As a result of strong FTTH broadband growth, consumer broadband revenues are up 9.8%, driven by AT&T Fiber revenue growth of 26.9%.
AT&T’s third-quarter consumer revenues were $3.3 billion, up 4.6% yearly due to gains in broadband more than offsetting declines in legacy voice and data and other services. Broadband revenues increased 9.8% due to fiber growth of 26.9%, partly offset by a 9.0% decline in non-fiber revenues. The company now expects full-year broadband revenue growth of 7%+, versus prior guidance of 5%+. Given the better-than-expected broadband revenue AT&T has achieved up till now, it expects to deliver 7%-plus broadband revenue growth for the year.
“Our fiber investment is driving Consumer Wireline growth and strong returns,” Stankey said. “The consistency of fiber's appeal continues to shine as we've added more than 200,000 fiber net adds for 15 straight quarters.”
He added that AT&T has reduced “fiber churn year-over-year despite recent pricing actions, highlighting the superior product and experience customers consistently receive with fiber.”
Gaining share
As it enters new markets, AT&T finds more consumers adopting the fiber service while raising interest in the mobile market.
Like its fellow ILECs and cable MSOs, AT&T’s ongoing fiber broadband drive comes amidst a weak house-moving market.
“Where we build fiber, we win,” Stankey said. “We win by delivering the undisputed best broadband solution on the planet, improving our brand position, gaining broadband share, and improving our mobile share. Our strategy is working. We delivered nearly 300,000 high-quality net adds against a muted backdrop of household move activity this quarter.”
He added that “the returns on our fiber investment continued to improve from our initial assumptions, and we’re exceeding our expectations for penetration in new markets.”
But as AT&T gains market share in fiber and wireless in the market it enters, it keen on advancing a wireless and wireline convergence plan. “We’re only in the early stages of reaping the long-term benefits from the inevitable convergence of 5G and fiber,” Stankey said. “Where we've deployed fiber, we see a tick in mobility growth. Additionally, AT&T customers with fiber and wireless service have our lowest churn and the highest lifetime values to match.”
Raising ARPU
As AT&T expands fiber into more markets and consumers migrate off lower-speed DSL plans to fiber, AT&T’s APRU continues to rise. During the third quarter, fiber ARPU rose 9% year-over-year to $68.21.
The service provider finds that more customers are adopting faster speed tiers, supporting ARPU growth.
“ARPU growth is being driven largely by migration into higher speed plans where customers are moving up in the continuum,” Stankey said. “Plus, we've been managing the base of some of our embedded stuff at the low end with some pricing adjustments that we've made that have helped.”
However, the speed migrations will continue as it expands the availability of higher speed tiers. In 2022, AT&T started offering 2Gbps and 5Gbps symmetrical Internet speeds over its FTTH network. The multi-gigabit rates were initially available to nearly 5.2 million customer locations in parts of more than 70 metro areas, such as LA, Atlanta, and Dallas.
“We've got a lot of customers that have a lot of room to go from maybe their migration into a 1-gig product and ultimately moving up to a 2.5- or 5-gig product as their needs adjust and when they decide they want to do that,” Stankey said.
From an overall financial standpoint, AT&T reported consolidated operating revenues of $30.4 billion, up 1.0% from $30.04 billion annually. EBITDA for the period under review dipped from $10.5 billion to $10.487 billion year-on-year, while third-quarter operating income slipped from $6.01 billion to $5.8 billion.