AT&T targets fiber boost after WarnerMedia deal

ATT
AT&T CEO John Stankey said it is aiming to more than double its fiber footprint by end-2025. (Getty Images)

AT&T CEO John Stankey outlined plans to boost spending on fiber and 5G rollouts, after the operator announced a move to spin off its WarnerMedia unit and combine it with Discovery in a $43 billion deal. 

During a call with investors, Stankey said the move will provide the operator more “flexibility to invest in 5G and fiber to support the growing long-term demand for reliable high-speed connectivity.”

He noted AT&T is aiming to more than double its fiber footprint in the coming years to reach 30 million customer locations by end-2025, “with the single goal of offering the best fixed broadband service in the market.” On the wireless side, he said the operator is planning to boost its rollout of C-band spectrum to reach 200 million people by end-2023, up from the 100 million target previously outlined.

To achieve those goals, AT&T is planning to boost annual capital spending to “around $24 billion” once the deal closes. Stankey said the transaction is expected to wrap in mid-2022.

AT&T’s move to spin off its media unit comes two weeks after Verizon announced a $5 billion deal to sell its media assets to Apollo Global Management.

Tammy Parker, a senior analyst with Global Data, said the WarnerMedia deal will allow AT&T to get back to basics. She characterized its foray into entertainment as a “costly” distraction, which hitherto “constrained AT&T’s ability to invest in its core telecommunications business at a time when it needs to be building up its 5G and fiber broadband services to remain competitive.”

Parker added AT&T and Verizon “learned a tough lesson that focusing on their core competencies allows them to grow and prosper, while still leaving room to partner with pure-play content companies.”

Teasing out the deal’s impact on AT&T’s competitors, analyst Jonathan Chaplin of New Street Research explained “it all depends on whether the transaction alleviates resource constraints at AT&T.”

“If the company is left in a position to ramp up investment in wireless and fiber, Verizon, T-Mobile and the cable companies would all face a tougher challenger than would otherwise be the case. If the deal leaves them with too much debt and an inability to accelerate investment, AT&T's competitors will be smiling,” he concluded.