AT&T's Stephens: We could reach 14M FTTP customers by 2019

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During the second-quarter earnings call, CFO John Stephens told investors that AT&T has been making great headway with its fiber build.

AT&T says it could reach 14 million customers by the year 2019, surpassing its commitment to the FCC to build out FTTP to 12.5 million locations. The 12.5 million goal was part of the agreement it made with the FCC to get its DirecTV acquisition approved. 

During the second-quarter earnings call, CFO John Stephens told investors that AT&T has been making great headway with its fiber build. “We have the largest fiber footprint in the country and we’re ahead of the plan to reach our 12.5 million new fiber locations FCC commitment by mid-2019,” Stephens said. “By the time it’s all said and done, we could be looking at around 14 million FTTP customer locations.”

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The service provider recently announced that its latest target market for expansion was Tulsa, Oklahoma, noting that customers in certain select areas of Tulsa, Jenks, Owasso and "surrounding communities" now have access to the ultrafast service. After bringing FTTP to Tulsa, the service provider said it has now deployed gigabit fiber to parts of 55 metro areas nationwide, with plans to reach at least 75 metros eventually.

Meanwhile, AT&T expects the fiber footprint expansion to improve churn trends, as it will enable customers to bundle broadband with DirecTV and wireless services.

“We’re seeing on an out of footprint basis where we don’t have fiber subscriber losses to competitors that can bundle,” Stephens said. “We believe we’ll address that as we continue to build out fiber.”

Whether it was fiber or its hybrid VDSL2 IP broadband product, AT&T saw its broadband base grow in the second quarter.

“Total broadband grew for the third straight quarter, overcoming what is normally a seasonally slow second quarter,” Stephens said. “The strategy to simplify pricing, cross sell broadband with TV and wireless service and expand our fiber footprint has been paying off.”

But fiber is just one part of AT&T’s broadband story. The service provider said the combined efforts of the FTTP build and converting more customers from legacy DSL to IP broadband is helping drive up subscriber additions.

“The DSL conversion combined with extending fiber to 5.5 million customer locations is strengthening our broadband position,” Stephens said. “In fact, the number of broadband subscribers on speeds of 18 Mbps or higher has increased by 6 million in the past year.”

Here’s a breakdown of AT&T’s second-quarter key metrics:

Business services: AT&T continues to see challenges in the business segment due to wireline pressure from legacy services and equipment sales.
Business Solutions segment revenues were $17.1 billion, down 2.7% year-over-year due to continued declines in legacy services and fewer wireless equipment upgrades, partially offset by growth in strategic business. 

“We continue to see the similar historic pressures in our business segment,” Stephens said. “Strategic services and wireless are working hard to overcome legacy wireline losses.”

In the business segment, AT&T said it will continue to focus on cost management initiatives and process automation service delivery efficiencies as well as SDN and virtualization.

Entertainment: The entertainment segment reported revenues of $12.7 billion as growth in IP and video services offset legacy declines. AT&T saw broadband gains as customers chose higher speeds. During the quarter, AT&T added 8,000 total broadband customers and 112,000 IP broadband subscribers.

The service provider noted on the video front that continued DirecTV Now gains help offset increased pressure from traditional TV declines in a seasonally weak second quarter.

Financials: From an overall financial perspective, AT&T reported consolidated revenues were $39.8 billion, down from $40.5 billion in the year-ago quarter, primarily due to what the telco said were declines in legacy wireline services and consumer mobility.

Second-quarter net income attributable to AT&T totaled $3.9 billion, or $0.63 per diluted share, compared with $3.4 billion, or $0.55 per diluted share, in the year-ago quarter.

Shares of AT&T closed at $36.22, down by 1 cent, or 0.03%, in Tuesday afternoon trading on the New York Stock Exchange.