AT&T Chief Slams Biden Administration's Spectrum Policies
AT&T CEO John Stankey on Wednesday criticized the Biden administration’s work on making more spectrum available for wireless carriers. During the carrier's release of Q2 results, Stankey apologized for the February AT&T wireless outage, the topic of an FCC report this week (see 2407220034).
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Most results were positive, with AT&T adding 419,000 net postpaid phone customers in the quarter, with postpaid phone churn at 0.70%. FirstNet appeared to drive growth, adding about 200,000 connections in the quarter to reach a total of 6.1 million. AT&T stock was up 5.22% on Wednesday to $19.16.
“I do not think spectrum policy in this country is on the right path right now,” Stankey said during a call with analysts. He has tried making that point clear as he advocates for policy changes, he said. Adjustments could come with a new president in the White House, Stankey predicted.
AT&T will use “every trick in the book as we historically do” to ensure it can satisfy surging demand for wireless connectivity, Stankey said. The carrier is being “very deliberate” about deploying the spectrum it has. Adding spectrum is “the most effective way to increase capacity in a network.” But Stankey said using fiber to handle high-density traffic is often preferable to relying on wireless. AT&T may have options for acquiring spectrum through the secondary market, he noted.
Bank of America’s David Barden asked about outages and data breaches. “There's nobody more disappointed that we have to actually address your question and work through these issues than I am,” Stankey said. AT&T has taken the right steps to respond, he added. “We care about our reliability” and “about how well we run this business from a privacy and a data security perspective.” The FCC report noted AT&T's procedural mistakes and said the Enforcement Bureau may impose sanctions.
Among other results, AT&T reported net income of $3.9 billion, versus $4.8 billion in the year-ago quarter, on revenues of $29.8 billion, which fell just short of expectations. AT&T reported mobility service revenues of $16.3 billion, up 3.4% year over year and net fiber adds of 239,000. Free cash flow was $4.6 billion, up $400 million over last year. Capital expenditures were $4.4 billion in Q2.
The business wireline segment continues to struggle, with revenue down 9.9% year over year “primarily due to lower demand for legacy voice and data services as well as product simplification.” Operating income was $102 million, compared to $396 million a year ago.
AT&T should continue to add wireless and broadband subscribers through the year, Stankey said. “While some portions of our business are still being pressured as customers transition off legacy voice and data services, our significant investment in 5G and fiber and consistent execution is driving durable growth across the large majority of our business.”
Stankey said it’s unclear whether a new AI-based iPhone from Apple (see 2406120046) will drive growth. There are “a lot of ways you can experience AI without having to necessarily change out hardware.”
AT&T remains focused on open radio access network infrastructure, and may work with vendors beyond Ericsson (see 2402260027), Stankey suggested. ORAN is “busting open the smaller cell structure to get more innovation, more providers and how to then layer that on top of the fact that we're putting denser fiber … into our network,” he said: “That allows for a more efficient growth of capacity as we move forward.”
AT&T's stock price was up Wednesday, while Verizon’s report Monday triggered a sell-off (see 240722002), noted Livy Investment Research. The “upsurge” reflects “the market's optimism for AT&T's sustained market share gains, especially given the rising mix shift towards its higher-margin postpaid phone and fiber businesses,” the firm said.