AT&T is on a quest to deploy fiber broadband to 30 million locations by the end of 2025. But if comments from COO Jeff McElfresh are any indication, its ultimate goal could be much, much higher.
McElfresh said at an investor conference this week that despite a choppy economic environment, demand for fiber remains high and its rollout is still delivering the right level of returns. With that in mind, he added, the 30 million target it set in May 2021 is “not the entirety of what I think the market opportunity is there.”
“We're going to be on this journey for a while. I mean we think there's 50 million homes, urban, suburban in America that deserve fiber,” McElfresh stated. “We're playing a long game. We're not sitting here looking at just this year or next year.”
It’s not entirely clear how AT&T plans to reach those extra 20 million homes, but there are a few likely possibilities.
First, the operator recently announced plans to bring fiber to an additional 1.5 million locations outside its ILEC footprint through a joint venture with private equity firm BlackRock Alternatives. AT&T CEO John Stankey has indicated that the passings figure could grow if it is able to successfully prove out the joint venture’s business model.
McElfresh also pointed to the $42.5 billion Broadband Equity, Access, and Deployment (BEAD) Program as another avenue for expansion beyond its target, reiterating the operator’s previously expressed interest in grant funding.
“BEAD gives you the opportunity to probably fill in areas that economically you might not have had high on the priority list,” he explained. That includes areas within its legacy copper footprint.
AT&T has said that it’s looking to retire 50% of its copper footprint by 2025 and reinvest the savings it reaps from lower network maintenance costs in more fiber.
“If you think about the actual carrying cost of an underutilized copper network that is across 511,000 square miles – think about all the access circuits, you think about all the maintenance and support, you think about all the energy that we use – we are in the early innings of that wireline transformation,” McElfresh said. “And so over the next two to three years, you will see us draw costs out of this part of our franchise, reinvest them into the future of the company, and it should be a nice virtuous cycle of great returns for investors.”
BEAD funding isn’t expected to begin flowing in earnest from the states to operators until next year. But in the meantime, AT&T is also pursuing state and local grant opportunities. AT&T executives previously told Fierce the operator had already identified well over $1 billion in prime grant opportunities but said there was no limit to how much funding it might chase.