Stock Analysis: Jennifer Fritzsche, Senior Analyst , Wells Fargo Securities
“This week in its 5G press release, AT&T definitely put a stake in the 5G playing field,” said Jennifer M. Fritzsche, Senior Analyst , Wells Fargo Securities. “While it has been quieter on this subject than its closest competitor, the approach seems to be changing in 2017. The question we have been getting is given AT&T seems to be talking about multi-Gbps speeds with its fixed wireless product (in a lab setting), then do they really need to deploy fiber beyond its commitment to the FCC to reach 12.5MM locations by 2019? While maybe that 12.5MM premise number does not go up, but fiber most certainly will still be needed in our view. In the same release, T pointed to its “First 5G Business Customer Trial” it launched last fall in Austin, TX using millimeter wave technology. Results were very good as it saw upload and download speeds of 1GBps in phase 1 of the trial. But is it a coincidence that Austin, TX is one of AT&T’s most fiber dense markets? Probably not. So before people go down the line of thinking fixed wireless, Project AirGig, and G.Fast (pick your poison) are going to negate the need for more fiber, I would peel back the onion a bit more,” Fritzsche said.
“On January 25th when T reports Q4 and offers its 2017 outlook, it will likely give ONE capex number. The days of breaking out wireless vs. wireline capex are gone. Why? Are they hiding something? Is it some conspiracy against the towers?” Fritzsche said. “No…. not at all, in our view. It is just to separate the two may be nearly impossible because the spending curve today is morphed together in an incredible way, with fiber at the base of it. This may be one of the key reasons why we think at this year’s MetroConnect conference the most popular panel may be ‘How Will Metro Fiber Providers Benefit from the Impending 5G Boom’? They will because fiber is the critical ingredient of any 5G infrastructure. My guess is attendance at MetroConnect will be up nicely y/y – and that like Austin and AT&T – it is not likely a coincidence!” she said.
January 9, 2017
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