AT&T raised guidance for the year based on a strong third quarter performance, emphasizing that its 5G and fiber-focused strategy is enabling the company to drive profitable customer growth and “healthy” revenue gains across its mobility and fiber segments.
Here are key takeaways from the company’s results and quarterly call with analysts.
–AT&T is already seeing benefits from applying generative artificial intelligence across its business. CEO John Stankey said that while it’s still “very early”, AT&T is already seeing “tangible AI-driven improvements in productivity and cost savings,” including lowering customer support costs, more efficient software development and improving effectiveness of network design. “We expect these capabilities to play a key role in our continued efforts to achieve our future cost savings objectives,” he added.
–5G continues to expand. AT&T is on track to reach at least 200 million people with midband 5G service by the end of the year, up from about 190 million currently.
–The iPhone is still a source of strength for the carrier. Stankey said that pre-orders for Apple’s iPhone 15 in September were the “strongest … we’ve had in many years” despite the fact that other service providers were offering steeper discounts. And the “vast majority” of people taking advantage of AT&T’s iPhone promotions were signing up for the company’s most expensive plans, he added—even though it wasn’t a requirement for the promotions.
In terms of overall mobile adds, AT&T reported postpaid phone net adds of 468,000, with revenues for mobility up 2% and service revenues up 3.7% year-over-year. Postpaid phone churn was at 0.79% for the quarter.
–Fiber is a strong adoption and revenue driver. Despite high interest rates resulting in fewer households moving to different housing, Stankey said, AT&T still added 296,000 net new fiber broadband customers. Fiber as an investment is also providing higher than expected returns, he added, with higher take rates than anticipated and customer step-ups to pricier plans driving nearly 9% increase in fiber ARPU year-over-year. AT&T saw its fiber revenues grow nearly 30%, driving its total broadband revenues up almost 10% compared to the same period last year.
AT&T is on track to pass more than 30 million fiber locations by the end of the year, with another 24 million additional opportunities to provide service through federal broadband build-out funding or its joint venture with BlackRock, Stankey said—though he mentioned that he expects BEAD to have more impact in 2025 than in 2024.
–5G FWA is a “targeted” and selective part of its service portfolio. The company’s 5G Fixed Wireless Access product, AT&T Internet Air, nonetheless has already helped the company gain about 25,000 subscribers. As AT&T turns down legacy copper networks, the plan is to offer customers AT&T Internet Air as a service alternative, aiming to get those customers to stick with the company rather than churn away.
“We can give them a better service on Internet Air than we could possibly on the existing infrastructure that’s in place,” Stankey said on the company’s quarterly call, adding that the existing legacy infrastructure “is generally going to be infrastructure that we’re going to be replacing in fairly short order with fiber.” As a “holding strategy,” he said, AT&T may offer Internet Air to retain its high-value customers. “It allows us to move into our process of shutting down infrastructure in places where we need to ultimately pull out costs and shutter network and infrastructure, and it becomes a tool in allowing us to do that,” Stankey explained. “And so that’s how we intend to use it, and we’ll use it … on a very careful, surgical and targeted basis.”
–AT&T also sees itself as in “the very early stages of reaping the long-term benefits from the inevitable convergence of 5G and fiber.” Where it deploys fiber, it also sees an uptick in wireless service customers—and AT&T customers who have both wireless and fiber services are the most valuable and have the lowest churn rate, Stankey said.
“As the one player scaling both wireless and fiber networks, we’re well positioned to be the provider of choice for the ubiquitous connectivity that consumers want,” Stankey said.
