Here’s what AT&T and Verizon’s Q2 results could mean for Frontier, Lumen

Operators AT&T and Verizon led the charge for the latest earnings cycle, unveiling Q2 stats late last week. Here’s how their fiber and broadband metrics stacked up and what analysts think their results could mean for upcoming reports from Frontier Communications and Lumen Technologies.

Verizon posted 268,000 overall broadband net additions, a figure up substantially from 93,000 in Q2 2021. The latest adds were mostly made up of 256,000 fixed wireless access gains. Fios net additions of 36,000 were partially offset by DSL losses, leaving it with a total of 12,000 wireline broadband net adds.

During an earnings call, CFO Matt Ellis noted it expanded Fios availability to an additional 150,000 homes during the quarter. He added it remains on track to hit its target of reaching 550,000 new homes in 2022.

The operator posted $3.2 billion in Fios revenue in Q2 across its Consumer and Business segments, with this roughly flat year on year.

AT&T added 316,000 fiber subscribers in Q2, a figure which was up year on year from 246,000. However, it lost a total of 25,000 broadband customers in the quarter as non-fiber broadband losses of 341,000 outpaced its fiber gains.

The quarter proved a rough one for both operators on the business wireline front. During its earnings call, AT&T highlighted the impacts of enterprise transitions away from legacy MPLS solutions, lower government spending and higher wholesale network access charges. Verizon CFO Matt Ellis, meanwhile, noted pressures from foreign currency exchange rates, the federal Universal Service Fund and technology migrations. The latter, he said, is expected to continue to weigh on its legacy voice and data service results.

Analysts at MoffettNathanson estimated in a note to investors Verizon’s Business Wireline growth rate came in at -8.2% minus the impact of the USF subsidies, with slowdown accelerating from a rate of -7.4% a year ago. In a separate note, they pegged AT&T’s Business Wireline growth rate at -7.6%, compared to -4% in the year-ago quarter.

Frontier and Lumen

While the analysts noted that AT&T, Verizon, Frontier and Lumen’s earnings “do not move in lockstep,” they said the former operators’ comments about legacy declines could have negative implications for Frontier. That’s because only about 40% of Frontier’s business revenue is from fiber while 60% still comes from copper, they wrote.

MoffettNathanson also pointed out that AT&T and Verizon’s statements about the impact of enterprise transitions away from legacy technologies could indicated headwinds for Lumen given 55% of its business segment revenue comes from international and large enterprise accounts.

The firm lowered its forecast growth rate for Lumen’s business segment from -3.9% to -4.3%. It also revised Frontier’s from -6.6% to -6.8%.

Lumen is set to report earnings on August 3, with Frontier following on August 5.