AT&T continues its fiber + 5G focus and is considering adding another 10-15 million passings to its goal of 30 million
AT&T and fiber provider Corning have expanded their ongoing relationship with a multi-year purchasing deal for fiber products, which Corning said is valued at more than $1 billion.
AT&T is already Corning’s largest customer with preferential volume status for Corning products, the fiber provider added. Corning also noted that the products which AT&T will be buying, including Corning Evolv FlexNAP multi-fiber product, are compliant with the Broadband Equity, Access, and Deployment program (BEAD) program requirements around products being made in America.
Corning has been in the midst of a $139 million expansion of its operations at multiple locations in Monroe County, New York over the past two years, in order to help meet anticipated fiber demand.
John Stankey, CEO of AT&T, said in a statement that the new, multi-year agreement with Corning “helps us to connect more households, communities, and businesses with the high-speed, reliable internet they need to thrive in a digital world.”
“As data and bandwidth requirements continue to grow, Corning is committed to the work of ensuring all Americans have access to reliable, high-speed fiber connections,” said Corning Chairman and CEO Wendell Weeks. “By extending our longtime relationship with AT&T, we’re helping bring the transformational benefits of fiber to more people and communities. We share a fundamental belief that the more people you connect, the more value you create. And optical fiber is bringing people together at an unprecedented scale.”
AT&T executives, including Stankey, extolled the role of fiber in AT&T’s strategy during the company’s third quarter call with investors last week. Stankey said during the call that AT&T continues to see “strong underlying customer demand for fiber,” and noted that the company has seen more than 200,000 consumer fiber net additions for 19 consecutive quarters. “These consistent results make it clear that our fiber investment is generating attractive returns with improved operating leverage as we transition from legacy networks,” Stankey said, later adding: “While our 5G and fiber businesses are performing well on their own, it’s increasingly clear that customers prefer to purchase mobility and broadband together as a converged service. Only AT&T can offer this at scale with benefits from owners’ economics. This is driving a reinforcing cycle, where the success of our fiber business drives growth in mobility, and vice versa.”
Stankey laid out a number of other supporting points for AT&T’s fiber investments as part of its wireless strategy and as a product that “elevates the AT&T brand.” Stankey pointed out that about four of every 10 AT&T Fiber households also use AT&T for wireless, and he said that the company’s share of postpaid phone subscribers within its fiber footprint is significantly higher than its national average. “This highlights the true benefit of owning and operating both 5G and fiber networks at scale, which is the ability to drive higher share in both mobility and broadband through converged service penetration,” he explained. “Over time, we expect this should drive higher returns on our invested capital in both our mobility and broadband businesses than either could achieve as a standalone operation.”
AT&T is both offering its owned fiber, and expanding its fiber offerings outside of its owned-fiber footprint through agreements with other fiber providers, such as its Gigapower joint venture BlackRock.
AT&T CFO Pascal Desroches said in his remarks on the quarterly call that: “The sustainable strength of fiber is driving consumer wireline growth and yielding strong returns. … It is clear that where we do have AT&T Fiber, we win.”
AT&T passes more than 28 million consumer and business locations with fiber and is on track with its plan to pass than 30 million by the end of 2025. Because the company is seeing better-than-expected returns on fiber investments, it is also looking at expanding its initial build target by adding another 10-15 million additional locations. AT&T plans to provide more detail during its analyst and investor day on December 3.
