AT&T Will Look at Buying Spectrum but Has Options Following EchoStar Deal: Stankey
AT&T CEO John Stankey told analysts Wednesday that the carrier is interested in buying additional spectrum, but the $23 billion purchase of spectrum from EchoStar gives the provider options. Stankey also emphasized that the company is speeding up its fiber deployments. AT&T became the first of the “big three” U.S. wireless carriers to announce Q4 results, which included continuing subscriber growth. The Wall Street reaction was positive, and AT&T closed for the day up 4.57% at $24.05.
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In a deal announced in August, which is still before regulators, AT&T is buying 3.45 GHz and 600 MHz spectrum from EchoStar (see 2508260005). Since FCC Chairman Brendan Carr pressured EchoStar to sell some of its spectrum, the transaction is widely expected to win approval, though it faces opposition (see 2512160006).
The EchoStar deal is “preemptive and opportunistic for us” and allows AT&T to be “a lot more strategic and judicious about what we do moving forward,” Stankey said Wednesday. All the major carriers are “hanging” 300 MHz of spectrum on their towers, he said. “This isn't the days when we're growing 10 MHz at a time. … We've put large swaths of capacity out there. We have a lot more flexibility in how we manage things.”
Stankey said AT&T plans to ramp up the pace of its fiber build from 3 million new locations in 2025 to 4 million by the end of this year. With its pending Lumen purchase (see 2505220012), its Gigapower joint venture and other open access agreements, the carrier expects to pass more than 40 million customer locations with fiber by the end of 2026, up from 32 million at the end of 2025, Stankey said. AT&T continues to increase its share of wireless subscribers in markets where it offers fiber or fixed wireless, he added.
Stankey also highlighted AT&T's progress on copper retirements. Following approval by the FCC, the carrier stopped the sales of all legacy copper-based services in 85% of its wire centers and will discontinue copper-based services in more than 30% of its wire centers by the end of 2026, he said.
Last year, AT&T saw more than $1 billion in cost savings, “and we plan to accelerate efficiency gains across the company by leveraging AI, moving more customer transactions to digital and achieving greater operating leverage,” Stankey said. “The DSL base is going to go away,” and that “probably can’t happen fast enough.”
AT&T reported 421,000 wireless postpaid phone net adds in the quarter, slightly below estimates. Postpaid phone churn was 0.98%, up 13 basis points year over year. The company also reported 283,000 fiber net adds and 221,000 AT&T Internet Air net adds. Among other results, it reported net income of $4.2 billion on revenue of $33.5 billion in the quarter. Net income was down 5.7% compared with last year, while revenue was up 2.9%. Capital expenditures came in at $6.8 billion. The company had 1.5 million postpaid phone and more than 1 million fiber net adds for the year.
MoffettNathanson’s Craig Moffett told investors that “there’s a broad sense that AT&T is no longer the safe bet it was once viewed to be.” Growth that it hoped for at the start of 2024 “didn’t really come to much,” he said. “AT&T’s convergence strategy is still a dead-end street,” and wireless competition has stiffened, Moffett added. “Verizon has embarked on a much more aggressive strategy at a time when industry growth, more than ever, is a zero-sum game.”