There might be a business case for AT&T to deploy fiber to more than the 30 million locations that the company has forecast to have fiber broadband available to them by 2025 — especially if the Senate infrastructure bill becomes law, said AT&T CEO John Stankey at an investor conference yesterday.
“Do I believe there’s going to be other opportunities for us to come out as we hit those scaling metrics that we have in place, the supply chain metrics that we might be able to go in and say, ‘There’s more that we could possibly attack,’” said Stankey, according to a transcript of the event posted on the AT&T website. “I’d love to be in that position to do that.”
Stankey added that he had “put that out as a challenge to the management team to say, ‘The only thing that stands in the way between you doing 30 million and doing more is your execution and performance.’”
Defining the business model for fiber deployment may not be as clear cut as some might believe, Stankey suggested.
“I think there’s probably places that we can go where we haven’t defined the model,” he said. “Things are changing around us. And we can possibly do something either with partners or under different models where it may not look like . . . an effective return today, but circumstances may change that in fact, make it an effective return.”
Another impending development that could impact the fiber deployment business case, according to Stankey, is the Infrastructure Investment and Jobs Act that passed the Senate and will become law if adopted by the House and signed into law by President Biden.
If that happens, Stankey said, it will “change the landscape of the broadband business in this country. And it will also change my posture and point of view of where we should be playing as a company. And as a result of that, I would lean into it. And I’d probably be coming back to you and say . . . 30 isn’t the right number.”
The 30-million AT&T fiber location forecast that the company has set for 2025 represents about half of the locations in the company’s local service footprint, according to Goldman Sachs Group Equity Analyst Brett Joseph Feldman, who conducted the question-and-answer session with Stankey.
Take Rates
Feldman also asked Stankey about the take rates that AT&T should expect for its fiber broadband offering.
Stankey responded that almost 80% of fiber net additions are new to AT&T. “We’ve got a lot of new customers coming in,” he said.
And while AT&T continues to lose internet customers who only have lower-speed service available to them, he said, “we’re starting to get ourselves to a point where that consumer business is a growth business today, despite the legacy drag on historic telecom products.”
Fiber growth, he said, “is beginning to outstrip that.”
He added, though, that “I’m not going to be happy until we have a 50-50 share split in places where there’s two capable broadband providers.”
AT&T currently doesn’t invest in areas where it doesn’t expect to get a 40% take rate, he said.
The transcript of Stankey’s Q&A session at the Goldman Sachs Communacopia Conference is available at this link.
