AT&T Pursuing FirstNet Contract
AT&T has made a bid to participate in FirstNet, the national wireless network for first responders, AT&T Chief Financial Officer John Stephens confirmed on a quarterly earnings call. AT&T has been widely seen as a likely candidate to make a play for the FirstNet contract, likely in competition with Verizon (see 1606300064). T-Mobile has said it won’t participate.
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AT&T, the first of the major telecom carriers to report quarterly results, said Thursday it had 2.1 million wireless net adds in Q2, driven by connected devices, its expansion in Mexico and growth from its prepaid Cricket subsidiary. Postpaid wireless churn was 0.97 percent, which AT&T said was its second lowest churn rate ever. Verizon, Sprint and T-Mobile report next week.
The wireless company is in a good spectrum position, with 150 MHz to draw on, including 40 MHz of “relatively untapped” AWS and 2.3 GHz WCS spectrum, Stephens said on the analyst call. “We have the best, most balanced spectrum portfolio in the industry,” he said. “Adding spectrum is the most effective way to add capacity.” AT&T is also making spectrum deals to round out its portfolio. The company can’t elaborate, but plans to participate in the TV incentive auction, he said.
The carrier will be a leader on 5G, Stephens said. “We’ve already filed patents, trials are already underway and testing is ongoing,” he said. “When 5G is ready to roll, we will be ready as well.” AT&T has 70,000 cell sites, more than any other U.S. carrier, he said.
AT&T is starting to see some churn pressure from the planned shutdown of its 2G network at the end of the year, Stephens said. “That will increase as we move closer to the shutdown. We’ll manage through the process and the cost savings from one less network to support will be meaningful, so will be the additional spectrum available to redeploy.” Stephens also highlighted AT&T’s “significant progress” in Mexico. The company added 742,000 wireless subscribers in Mexico in Q2 as it nears the 10 million subscriber mark and its LTE network there now covers 65 million POPs with plans to reach 75 million by the end of the year, he said.
AT&T had 342,000 U.S. DirecTV and 38,000 global TV net adds in Q2, AT&T said in a news release. In wireless, AT&T had a net loss of subscribers with 72,000 postpaid net adds and 365,000 prepaid net adds only partially offsetting losses of 446,000 reseller subscribers. The company reported a total of 54.3 million wireless subscribers. Dish Network said it lost video subscribers in Q2 (see 1607210040).
Revenue at the telco was up sharply at $40.5 billion, up more than 22 percent compared to the same quarter last year, but still below expectations. Operating income was $6.6 billion compared to $5.8 billion a year ago.
“One year after our acquisition of DIRECTV, the success of the integration has exceeded our expectations,” said AT&T CEO Randall Stephenson. “Cost synergies are ahead of target, we’ve added nearly 1 million DIRECTV subscribers since the acquisition, and our new video streaming services are scheduled to roll out later this year.” AT&T reported after the close of regular markets.
Meanwhile, Qualcomm is driving toward 5G as quickly as it can and 5G looks increasingly likely to see commercial deployment earlier than predicted, CEO Steve Mollenkopf said on an earnings call with analysts after regular U.S. markets closed Wednesday. Qualcomm is developing an orthogonal frequency-division multiplexing (OFDM)-based 5G air interface that will work across multiple bands, from low-frequency to the high-frequency bands recently authorized by the FCC (see 1607140052), he said.
“We are very pleased that regulators around the world are beginning to allocate spectrum for 5G consistent with our 5G design and development efforts,” Mollenkopf said. “Recent spectrum regulatory decisions and movement in the U.S. and Europe combined with progress on the spectrum regulatory front in China, Japan and Korea are good indications that the world is preparing for 5G.”
Just a year ago, 5G deployment looked most likely in 2020, Mollenkopf said. It now looks more likely in the 2018/2019 time frame, he said. “To be a strong player in 5G, you have to be a strong player in 4G, 3G and Wi-Fi.”
For its Q3, Qualcomm reported net income of $1.44 billion, up 22 percent. Non-GAAP revenue increased 3.6 percent to $6.04 billion, compared with $5.8 billion a year ago, the company said. The stock closed at $59.93 Thursday, up 7.36 percent for the day.
Qualcomm is still in the "early innings of where we think we're going to take the company," Mollenkopf said in an interview Thursday on CNBC's Squawk Alley. Qualcomm sees the IoT as “an opportunity to leverage the strength of the smartphone,” he said.