AT&T's Stankey: Expect a slow climb out from COVID-19 hole this year

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AT&T's John Stankey says that while his company has seen a slight uptick in business from enterprises during the COVID-19 crisis, its uncertain how many SBMs will be able to open their doors going forward. (FierceWireless)

AT&T's John Stankey doesn't think there will be a quick bounce back from the effects of the coronavirus pandemic, but there are a few bright spots starting to emerge.

Speaking Wednesday morning at the JP Morgan Technology, Media and Communications Conference, Stankey, who will take the CEO reins from Randall Stephenson in July, said one of the biggest uncertainties was how many small-to-medium sized businesses (SMB) will be able to re-open once the COVID-19 restrictions have been lifted.

RELATED: Stephenson out, Stankey in as AT&T CEO

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Retail stores and restaurants face some of the same issues as SMBs, although restaurants have ramped up their take-out businesses.

"I think we're going to be in a fairly slow climb back out at the low end of the market," said Stankey, who is AT&T's chief operating officer. "Look, we've got some enterprises that are spending, especially as they reconfigure their business to deal with a more distributed workforce, and we're right in the thick of that. But that's offset by a couple of industries that are just in a significant recovery mode, and travel and tourism is going to be a tough place for a period of time.

"We're seeing a little bit of activity coming back in some hoteliers and some segments of the industry, but it's going to be a bit of a push for a period of time. And I don't expect this is going to be a quick bounce back or snapback. We're expecting this is going to be a fairly slow climb out this year."

Stankey remained optimistic that AT&T will meet its nationwide 5G deployment goals this year, and that 5G will start to drive business use cases especially as employees become more distributed due to work-from-home policies.

Stankey said where 5G is widely deployed, it will allow enterprises to "think about" highly managed wide area networks (WAN) "with incredible levels of security that supports the kind of environments we're in today."

"And so I think it [5G] plays very well into the enterprises thinking about a more extended, managed network and having the ability to go and deal with the workforce that's out there as well as new business models that we've talked about," Stankey said. "You think about managing a distributed environment, like manufacturing, or you think about zones, like medical communities and medical establishments, and what can occur. I think those use cases in the midterm will be the ones that we see start to pop up."

Even before the pandemic, Stankey credited Stephenson with putting enough tools in the toolbox to allow AT&T to reposition its business and refocus its priorities going forward.

"It just tends to fall to me now to carry that forward, and part of that repositioning is getting focused on where there's growth in this business," Stankey said. "Where there is growth is in broadband connectivity that's driven by fiber or wireless, and that's going to be a key emphasis. And it's about software-based entertainment distribution, and that will be a key element of it.

"And now it's time to make sure that the broader AT&T that isn't circled around those areas rationalizes and reengineers…I think the opportunity is significant, meaningful."

Stankey said fiber fuels AT&T's wireless business from a performance and density perspective while also providing a means to connect SMBs to faster broadband speeds.

"I think it [fiber] helps our enterprise business in getting more endpoints, as we can walk up to customers and talk to them about being fiber [ready], and I know it helps our consumer business," he said.

RELATED: AT&T executives measure COVID-19's impact during Q1 earnings call

AT&T is in the process of shifting its broadband base to low-cost fiber as it continues to build out fiber beyond the 14 million households it reached at the end of the most recent first quarter. AT&T added 209,000 AT&T Fiber subscribers in the first quarter for a total of 4 million customers.

"I think the business has been taking a hard look at any place that we can extend the balance sheet further and do things differently," Stankey said. " And I can tell you, I'm laser-focused on it right now. I believe there's a tremendous business case for AT&T to continue to take the great success we've had with fiber thus far, and push it further and faster."

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