FirstNet Set for Competition Ahead of Schedule, AT&T Says
FirstNet is on 40 percent of AT&T's network and the telco likely will complete the network ahead of a five-year deadline, AT&T executives said on an analyst call Wednesday. The company reported adding fewer wireless subscribers in Q4 and losing more video subscribers than expected. The stock closed down 4.3 percent at $29.37.
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“The buildout is going great,” AT&T Chief Financial Officer John Stephens said of FirstNet. Deployment hit “40 percent at the end of last year, well ahead of schedule,” he said. “We’ll continue at a comparable pace that we were at last year for most of this year.”
AT&T has about 450,000 FirstNet customers from 5,000 agencies, Stephens said. About 60 percent of the early adopters already were AT&T customers, “but we are now getting a lot of new adds,” he said. As the deployment adds more areas of the U.S., “the new customer share and number” will grow “significantly,” he said. AT&T is “clearly on track” to complete the FirstNet build within five years and get the majority of the nation covered by next year, he said.
The company's 5G deployment “works hand in glove” with the 700 MHz FirstNet build, said CEO Randall Stephenson: “As we go to a site now ... we're also doing the physical work necessary to make it ready for 5G and from a software upgrade perspective.”
The carrier is poised “to get the majority of the country covered by 2020 with standards-based, mobile 5G,” Stephens said. Over the next three to five years, “unequivocally,” 5G will emerge as a “fixed broadband replacement product,” said Stephenson.
It invited first responders to a test of the FirstNet network in New York's Times Square New Year’s Eve. “The first responder community that saw it was quite impressed,” Stephenson said. “We have some high expectations on where FirstNet goes this year and next year.”
AT&T had $23 billion in overall capital expenditures in 2018, with FirstNet to reimburse $1.7 billion, the company said. Other numbers were below consensus expectations.
AT&T's streaming service lost 267,000 subscribers and DirecTV lost 403,000 satellite TV subscribers, both larger than expected. The carrier reported 134,000 net postpaid adds in the U.S., compared with the 653,000 announced by Verizon (see 1901290016). AT&T added 1 million wireless customers in Mexico. Postpaid churn was 1 percent. Adjusted earnings were 86 cents per share, compared with 78 cents last year, on $48 billion revenue.
AT&T’s video losses were unprecedented, said BTIG's Walter Piecyk on CNBC. DirecTV Now “lost 14 percent of their subscriber base in one quarter,” he said. “Their plan on the wireless side is a little bit more clear. They’ve got a lot of spectrum that they’re putting in the market” and customers should see better network performance. “That should help to lower churn, something that has been rising for the last three quarters, stimulate growth,” he said: “That should be the focus.”
“Longer-term, the trajectory of the business isn’t great,” New Street's Jonathan Chaplin wrote investors. “In wireless, churn continues to rise and subs slow. In entertainment, linear video declines accelerated, DTV Now went from growing to declining sharply, and broadband growth stalled.”
Communications Workers of America slammed AT&T for allegedly cutting more than 11,000 U.S. workers in 2018. "AT&T continues to earn astronomical profits and those profits are not being invested in the communities that it serves and the workers who provide that service," said CWA President Chris Shelton. AT&T didn't comment.