AT&T’s decision to ditch DirecTV and WarnerMedia and leave the video content rodeo continues to pay off, as the carrier added new customers in the third quarter while meeting its goals to build out its 5G network.
The Dallas telco’s refocus on mobile and fiber Internet added 708,000 more network payphone subscribers during the period, a figure the telecom industry uses as a measure of success and reliable revenue. As customers switch to more expensive plans and buy more expensive phones, the operator reported a 6% increase in mobile revenue compared to the same period in 2021.
“The vast majority of our customers are talking to us, making adjustments to their plans, moving them to higher value plans that … return more value to customers, allowing them to be stronger, longer-term customers,” CEO John Stankey said during the quarterly call about AT&T’s earnings.
AT&T said it was ahead of schedule with the rollout of so-called 5G C-band, which it spent $27 billion to acquire last year and began activating in January. The carrier has already met its year-end goal of reaching 100 million people in the US with this variant of 5G, and has revised its goal to reach 130 million people by the end of 2022. Those numbers don’t include the 3.45 GHz mid-band 5G band, which AT&T paid $9.1 billion to acquire in January and is gradually rolling out this year.
These additional “mid-range” airwaves are critical to delivering wider and more consistent 5G services in more areas, giving you a competitive alternative to T-Mobile and Verizon, which have also been looking to build out their networks.
Read more: No, AT&T will not allow older phones to connect to its full 5G network
AT&T’s broadband Internet business also had a similarly good quarter, gaining 338,000 pay-as-you-go fiber subscribers. Internet revenues were up 6.1% year-over-year, due in part to customers switching from older copper Internet to the new fiber service.
“Our revenues from fiber customers are much better than our copper customers,” Stankey said.
The rise in fiber comes a day after a Bloomberg report that AT&T is dramatically expanding its fiber network in the US. The carrier will partner with banker Morgan Stanley to spend $10 billion to $15 billion in a joint venture to roll out higher-speed wired internet across the country. AT&T declined to comment for this story.
AT&T is doubling down on its fiber deployment at a time when rivals Verizon and T-Mobile are investing heavily in wireless home Internet through their 5G networks. AT&T does offer wireless Internet access, but only in rare areas where its fiber-optic Internet does not reach.
“I’d rather have a million new fixed-wireless customers a year than a million new fixed-wireless customers a year,” Stankey said, noting that in the long term, fiber-optic subscribers are more valuable to shareholders.
AT&T certainly means the long game with fiber and is experimenting with 20-gigabit connections that would far surpass current speeds of up to 5 Gbps.
Read more: AT&T is set to bring HBO Max back to wireless plans
AT&T reported third-quarter revenue of $30 billion, down 4.1% from the same period last year due to the spinoff of HBO Max and other WarnerMedia video projects in July, resulting in adjusted earnings of 68 cents per share. That’s about where industry estimates call for earnings per share of 71 cents.
Despite concerns about earnings inflation, Stankey was cautiously optimistic about AT&T’s prospects. Worse economic conditions can affect small businesses, but not enough for the carrier to threaten a cut in revenue.
“We’re undervalued in that regard,” Stankey acknowledged on the call, though he said AT&T is slowly adding more small business customers.