UPDATE Inside Towers reported FirstNet and AT&T announced that the carrier has won an investment of up to $8 billion over the next 10 years to continue expanding FirstNet coverage and to deploy standalone 5G in the network. That breaks down to $6.3 billion for ongoing investments and roughly $2 billion for 1,000 additional sites, says New Street Research (NSR). The announcement said the investment has no impact on AT&T’s 2024 guidance.
Late last year, FirstNet certified that AT&T had met its initial 2023 coverage requirements under the first five-year buildout leg of the 25-year FirstNet contract, which came with $6.5 billion of funding. When AT&T initially won the FirstNet contract, the carrier explained that it was expected to make $18 billion of “sustainability” payments to the FirstNet authority over the 25-year contract, to fund FirstNet’s operating expenses and reinvestments in the FirstNet network.
The carrier further explained that it expected only $3 billion of this to go toward FirstNet’s operating expenses, with the remaining $15 billion ultimately being returned to AT&T to reinvest in its network, for the 20 years following the first five-year buildout leg. The latest $8 billion announcement for the next 10 years simply guarantees AT&T the funding it had already expected, according to NSR.
It was always likely AT&T would win the next leg of funding from FirstNet, as the agency would otherwise have to select another carrier and create a new FirstNet network from the ground up, says NSR. “Nevertheless, because FirstNet is subject to federal acquisition rules, the agency was ‘prohibited from contractually committing to a specific vendor’ [i.e., AT&T] for future FirstNet investments beyond those first five years. From the outset AT&T thought it was ‘highly probable’ it would win the right to reinvest these ~$15B of sustainability payments into its network, but it couldn’t be guaranteed until AT&T had met its initial five-year coverage requirements,” said NSR analysts.
By Leslie Stimson, Inside Towers Washington Bureau Chief
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