AT&T extends fiber to over 950K business locations, enhances on-demand Ethernet reach

AT&T (NYSE: T) has installed fiber to over 950,000 business locations located in multi-dwelling units (MDUs) in its wireline territory, nearing its goal to reach a total of 1 million buildings.

Driving fiber into business buildings has been carried out through the fiber-to-the-building (FTTB) program in its multi-billion Project VIP program.

"We continue to drive fiber deeper into our wireline network and we have deployed fiber to 950,000 business locations," said John Stephens, CFO of AT&T during the third-quarter earnings call. "As you can see in our business results, we're just beginning to tap this growth opportunity."

The ongoing FTTB build as well as the growth of mobile Business Solutions helped drive up business revenues 1.2 percent year over year to $17.7 billion. Once again, strategic business services rose, which include VPN, Ethernet, cloud, hosting, IP conferencing, VoIP, MIS over Ethernet, U-verse and security services, climbing 12.6 percent to $2.8 billion. Total wireline data rose for the fourth consecutive quarter and now makes up 59 percent of total business wireline revenues.

Two of the key highlights of the wireline business growth were Ethernet and Managed Security. AT&T's Switched Ethernet Service via Network on Demand -- which is available in more than 170 cities – is now serving more than 275 customers to date. Meanwhile, Managed Internet Service on Demand, a service that virtualizes routing functions for business customers so they have even more ability to adjust and add capabilities in near-real time.

Along with the growth in fiber-based buildings, the move to an SDN-based architecture is enabling it to add new services but give customers more control.

"Our move to software defined network architecture is not only allowing us to add more compelling services, but we have signed over 275 new customer deals."

In addition, the company added 20,000 high-speed IP U-verse broadband business subscribers. Total business broadband had a loss of 23,000 subscribers in the quarter.

However, total business wireline revenues were $8.1 billion, down 2.5 percent year over year as declines in legacy products were somewhat offset by continued growth in strategic business services. Gains in enterprise, small business and public sector gains offset wholesale pressure.

The service provider also saw gains in its Entertainment and Internet Services (EIS) division, which is a combination of the DirecTV U.S. operations and its AT&T's consumer operations.

During the quarter, AT&T reported it added 26,000 domestic DIRECTV net adds and 192,000 IP broadband net adds. Year over year sales improved throughout the quarter. It ended the quarter with 25 million U.S. video subscribers.

However, Stephens said it lost 92,000 U-verse customers in the quarter due to fewer promotions and "shifting its focus to the lower content cost DirecTV platform." It also lost 278,000 legacy DSL customers. 

Stephens added that U-verse video losses "put pressure on broadband numbers due to our high attachment rates, but we think we can work through this as our single service experience for broadband and satellite is ruled out."

From an overall financial perspective, AT&T reported consolidated revenues of $39.1 billion, up nearly 19 from the same period a year ago, a factor it said was primarily due to the acquisition of DirecTV.

Analysts polled by Thomson Reuters estimated earnings of 69 cents a share and revenue of $40.42 billion. 

In the third-quarter of 2014, the company earned 63 cents a share on revenue of $32.96 billion.

Shares of AT&T closed at $33.96, up 36 cents or 1.07 percent at the end of Thursday afternoon trading on the Nasdaq stock exchange.

For more:
- see the earnings release

Special report: Tracking wireline telecom earnings in Q3 2015

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