AT&T Reports on 5G and Fiber Buildout Goals

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AT&T (NYSE: T) is executing on its two strategic initiatives – the buildout of its nationwide 5G network, and expansion of its fiber network both within and outside its operating footprint. Its year-end 2022 results reflect that progress. The company expanded its retail wireless customer base to 104 million postpaid and prepaid subscribers, up over 3 percent on a year over year basis. Including connected devices and reseller lines, AT&T’s wireless network supported over 217 million connections on December 31. 

It is ahead of schedule with its C-band 5G spectrum rollout objective, now reaching 150 million mid-band 5G POPs, more than double its initial 2022 year-end target. Where mid-band 5G is deployed, 25 percent of the traffic already utilizes that spectrum. The company expects to cover more than 200 million people with mid-band 5G by the end of 2023.

In fiber, AT&T had over 1.2 million net adds in 2022, bringing total consumer fiber connections to 7.2 million. That figure now exceeds non-fiber DSL subscribers. AT&T segments its opportunity in fiber into three distinct buckets based on the specific design parameters and return on investment characteristics. 

The first bucket is its in-footprint build where the company can take advantage of its existing infrastructure, established customer relationships, and where it can assess competitive threats. It plans to build out its fiber network within its existing wireline footprint to pass more than 30 million consumer and business locations, and achieve a roughly 40 percent penetration, by the end of 2025. 

AT&T finished 2022 with approximately 24 million fiber locations passed, including businesses, of which more than 22 million locations are sellable, or that it is able to connect. 

As a general rule, about 5 percent of consumer locations passed may not be immediately sellable, due to timing factors such as building access, construction, or vacancies. Over time, the company expects more of the total locations passed to become available for sale. AT&T says it is on track to reach the target of 30+ million plus locations passed by the end of 2025. This target suggests an annual run rate of 2.0-2.5 million consumer and business locations passed, although build targets will vary quarter-to-quarter in any given year based on how the market is evolving.

The second bucket addresses opportunities to expand beyond its territory and to exceed the 30+ million passings target through partnerships. One such partnership is the recently-announced Gigapower joint venture with a BlackRock infrastructure fund, Inside Towers reported. Gigapower will use an experienced operating team to deploy fiber to an initial 1.5 million out-of-territory locations. AT&T sees the joint venture as collaborative risk-sharing that allows it to prove the viability of a different investment thesis that expanding its fiber reach not only benefits its fiber business, but also mobile penetration rates.

The third bucket leverages opportunities to connect people in underserved or unserved areas through broadband stimulus and Broadband Equity, Access, and Deployment Program funding. While the company is prepared to compete for that funding, it recognizes that the intent of these government programs is to provide the necessary capital and support to allow both AT&T and other service providers to invest alongside the government at the levels needed to achieve expanded broadband connectivity across the country.

AT&T CEO John Stankey, emphasizes, “The bottom line is this. Our commitment to fiber is at the core of our strategy. In footprint, we’re on track to deliver our 30 million plus location commitment and we’re building the strategic and financial capabilities to take advantage of further opportunities as they emerge.”

The company’s 2023 guidance is for growth in wireless service revenues at more than 4 percent, broadband revenues at over 5 percent, and Adjusted EBITDA at 3 percent. In 2022, the company’s aggregate wireless and wireline capital expenditures totaled $24.3 billion including $19.6 billion from continuing operations and $4.7 billion in vendor financing. AT&T says that 2023 aggregate capex will be “consistent with 2022 levels.”

By John Celentano, Inside Towers Business Editor

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