Basking in the glow of huge savings from the new US corporate tax cut, AT&T plans to plow more capex into fiber deployment throughout the nation as it continues to shift its broadband subscribers over to its growing FTTP network.
On their fourth-quarter earnings call late Wednesday, AT&T Inc. (NYSE: T) executives said they now plan to double the number of customer locations passed by their new fiber plant over the next 18 months. The operator closed out 2017 with its all-fiber network reaching more than 7 million locations in 67 metro markets, including about 400,000 commercial buildings and 1.8 million businesses overall. (See AT&T Expands Fiber Footprint to About 2 Million Business Locations.)
"When you're suddenly looking at your after-tax returns improving by 20% roughly, it just changes how you think about your investment thesis," AT&T Chairman, President and CEO Randall Stephenson told analysts on the earnings call. "It changes the profitability equation on fiber as well as 5G and how you think about rural and how you think about FirstNet. And so it gives us the ability to consider starting to push our fiber deployments faster and further." (See AT&T to Spend Trump Tax Bump on Fiber, 5G 'Foundation'.)
With its fiber network buildout in full swing, AT&T boasted a gain of 95,000 IP broadband subscribers for the fall quarter, boosting its total to 13.5 million at year-end. The company, which netted 600,000 new IP broadband customers over all of 2017, does not break down how many of those subs are served by FTTP lines and how many by FTTN lines.
Those IP broadband sub gains more than offset the continuing erosion of AT&T's once-mighty DSL customer base. The operator reported losing another 76,000 DSL customers, for a net gain of 19,000 overall broadband subs, as its DSL sub base fell well below 1 million to just 888,000. While the quarterly rate of loss is slowing down, that total still represents a steep drop from about 1.9 million DSL subs at the end of 2015 and 1.3 million at the end of 2016
With the overall sub gain, AT&T closed out 2017 with 14.5 million total broadband customers, maintaining its position as the third largest broadband provider in the US behind Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Charter Communications Inc.
Notably, AT&T reported deep in its financial filings that it abandoned an astonishing $2.9 billion worth of assets in 2017, mostly from its legacy copper network, as it rolled out the new fiber network.
On the earnings call, AT&T EVP and CTO John Stephens said the company is signing up broadband customers in its fiber footprint at a much higher rate than in its non-fiber areas, with broadband penetration rates nearly twice as high in the fiber areas. He also noted that AT&T "doubled the number of IP broadband subscribers in our fiber footprint" last year and that penetration rates are nearing 50% in areas where "we have marketed our fiber service more than 24 months."
In addition, AT&T, like other major broadband players, reported that its broadband subs are increasingly opting for higher speeds and pricier speed tiers. About 65% of all its IP broadband customers have purchased speed tiers between 18 Mbit/s and 1 Gig. And the number of customers taking speeds of 100 Mbit/s or more has more than tripled over the past year.
Despite increasingly hefty subscriber losses for its satellite TV and IPTV services, AT&T officials said they also remain strongly committed to video and intend to proceed with an ambitious upgrade plan for its new OTT video service, DirecTV Now. They spelled out more of their plans to introduce a next-gen version of DirecTV Now this spring and deploy a new "home-centric," thin-client streaming device to support DirecTV Now and other popular OTT video services by the end of the year. (See AT&T Spotlights Next-Gen Video Plans.)
In a new report produced in tandem with SCTE/ISBE, Heavy Reading spells out what cable operators are doing with fiber now, what they plan to do with it in the future and which challenges are the biggest.
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