AT&T is benefitting from a growing convergence between its fiber and wireless services, according commentary during the company’s Q2 2024 earnings call with CEO John Stankey.
In the second quarter, AT&T added 239,000 new fiber subscribers, marking the fourth consecutive quarter of positive broadband net gains. This growth is part of a broader strategy to enhance connectivity across the United States, with nearly 28 million consumer and business locations now passed by AT&T’s fiber network. The company remains on track to exceed 30 million fiber locations by the end of 2025. Stankey emphasized that the returns on fiber investments have been better than expected, leading AT&T to consider expanding its fiber footprint beyond initial targets by an additional 10 to 15 million locations.
Nearly 40% of AT&T Fiber households also use AT&T wireless services, demonstrating the appeal of bundled offerings. This synergy is not only driving customer acquisition but also improving customer satisfaction and reducing churn. Stankey noted that the ability to sell fiber services to mobile customers and leverage mobile distribution channels has been a key factor in AT&T’s strong performance. The company is also exploring capital-light arrangements with other providers of commercial open access fiber networks to further expand its reach.
• Fiber Subscriber Growth: 239,000 new AT&T Fiber subscribers in Q2.
• Broadband Expansion: Nearly 28 million locations passed, aiming for 30 million+ by 2025.
• Investment Returns: Better than expected, considering expansion by 10-15 million additional locations.
• Convergence Strategy: 40% of AT&T Fiber households also use AT&T wireless services.
• Sales Synergy: Strong performance from selling fiber to mobile customers and leveraging mobile distribution channels.
• Capital-light Expansion: Exploring partnerships with other commercial open access fiber network providers.
A transcript of the call is posted on the AT&T Investor Relations page.
In December 2022, AT&T and BlackRock Alternatives announced a joint venture to deliver fiber access outside of AT&T’s traditional 21-state wireline service footprint.
The newly formed joint venture — Gigapower — launched in May 2023 with plans to deliver fiber connectivity in select metro areas throughout the country using a commercial wholesale open access platform. AT&T, which will be the first tenant on Gigapower, said the new JV will greatly expand the number of customers and communities with access its AT&T Fiber internet service. AT&T is already the nation’s largest fiber internet provider in the U.S. and has previously announced plans to pass 30 million-plus consumer and business locations in its traditional service areas by the end of 2025. Gigapower will enable AT&T to expand its fiber service reach beyond its traditional service areas. In addition to Las Vegas, Gigapower now expects to expand beyond its previously announced fiber deployment in Mesa, to the Chandler and Gilbert areas of Arizona. Gigapower also plans to build fiber in parts of Northeastern Pennsylvania (including Wilkes-Barre and Scranton) as well as parts of Alabama and Florida that are outside AT&T’s current service areas.
This week, T-Mobile and KKR announced a joint venture partnership to acquire Metronet, enhancing T-Mobile’s digital transformation and expanding its network capacity. As part of the deal, the joint venture will also acquire Oak Hill Capital’s existing stake in Metronet, with Oak Hill and Metronet founder John Cinelli retaining minority positions. T-Mobile is expected to invest approximately $4.9 billion for a 50% equity stake in the JV and 100% of Metronet’s residential fiber operations, with the transaction slated to close in 2025.
The renewed interest in fiber broadband expansion across the U.S. comes as NTIA seeks to accelerate the $42 billion BEAD initiative.
