AT&T's broadband results in Q4 were a mixed bag as the company continued to shed DSL customers even as it expanded the number of customers taking service on the company's expanding fiber footprint.
AT&T Inc. (NYSE: T) shed 32,000 total broadband subs in Q4, adding 6,000 "IP" broadband subs while losing another 38,000 DSL customers. AT&T ended 2018 with 13.72 million IP broadband subs, and just 680,000 DSL subs.
Aided by its fiber buildout, revenues for AT&T's overall broadband business grew about 6% year-over-year.
AT&T ended 2018 with about 11 million residential "locations" passed by fiber, and is on track to boost that to 14 million later this year. With business locations factored in, AT&T is on pace to have its fiber network pass some 22 million locations.
Speaking on today's earnings call, Randall Stephenson, AT&T's chairman and CEO, called the company's fiber build "foundational" to AT&T's 5G deployment.
In 2018, AT&T added more than 1 million broadband customers to its fiber footprint, and about 250,000 in Q4 alone.
AT&T has seen 40% penetration in its fiber markets after 18 months, jumping to about 50% after three years. "There's a lot of growth left in converting and growing total [broadband] customers," said John Stephens, AT&T's senior EVP and CFO.
Update: AT&T's broadband sub results disappoint
Still, the 6,000 IP broadband adds were a "surprisingly weak" and a "shock," given AT&T's fiber footprint expansion, and was well off consensus expectations of 82,000 adds, and below the gain of 95,000 a year ago, MoffettNathanson LLC analyst Craig Moffett said in a research note. The irony was that the 38,000 DSL sub losses were lower than the expected 62,000, and somewhat softened the blow, he said.
"It must be judged a disappointment that AT&T is still losing net broadband subscribers (-32K) given the expansion in their fiber-to-the-home buildout of the past few years," Moffett added.
Looking ahead, AT&T expects to use standards-based 5G as a replacement product for fixed broadband within three to five years, Stephenson said.
AT&T said it's also seeing some success with pay-TV bundles in its fiber footprint. However, the overall pay-TV picture for AT&T was rough in Q4 as customers on promotional and discounted offers churned away.
New pay-TV focus: Profits over promotions
AT&T lost 658,000 total subscribers in Q4, including 403,000 DirecTV satellite TV customers and 267,000 subs for DirecTV Now, the company's OTT-TV service.
With much of its heavy promotional activity behind it (the average revenue per user for DirecTV Now rose by $11 on a sequential basis in Q4), AT&T is now focusing on higher-margin, more profitable video subs as it attempts to get its broader Entertainment Group to an EBIDTA-positive level.
On Jan. 23, Broadband World News hosts a Calix-sponsored webinar that explores several ways CSPs can enhance customer experience and find new business opportunities to avoid devolving into a speed race where nobody wins, not even the customer.
The lack of an accurate broadband map means states and counties are tackling this issue themselves – and sometimes finding big disparities in the data – before spending their residents' money on deploying infrastructure.
Next year many operators must decide whether to invest more in HFC or go all-in to fiber, pick their PON and choose their managed-WiFi path, writes analyst Dan Grossman, who also recommends providers bundle managed WiFi and analytics to best serve residential subscribers -- and operators' own businesses.
Public-private partnerships, investor interest, self-help in rural areas and incumbents' return set the scene for a busy year of broadband deployment in the US countryside in 2020, writes Analyst Dan Grossman.
It wasn't long ago that TV was ranked by subscribers as the most important service in the bundle provided by their communications service provider (CSP). Recent research indicates that for nearly three quarters of subscribers, broadband is now the most important service. Broadcast TV is the most important service to only 15% of North American consumers, replaced by OTT video streaming platforms like Netflix, Amazon Prime and Disney+. In addition, many different competitors are moving aggressively to stake a claim in consumers' homes.
In 2020, CSPs need to fight back by transforming their business models, which are becoming more reliant on a single source of revenue: fixed broadband services.
This webinar will focus on helping CSPs transform their business models by placing a firm focus on delivering a sensational subscriber experience and by offering compelling new services that generate value for subscribers. These actions will reinforce the CSP's strategic position in the home network and position themselves for growth in the next decade.
Key topics include:
Being the first to market with WiFi 6 technology, in response to consumer purchases of new devices over the holidays;
Having the insights needed to proactively resolve issues, often before your subscribers even know that there are issues;
Providing help desk agents with the visibility they need to resolve common subscriber issues more quickly;
Delivering a mobile app, in response to consumer demands for the ability to do some things themselves, rather than having to call technical support; and
Addressing consumer concerns around device security, privacy and control with enhanced security and parental controls.
In this insightful Light Reading radio show, Kurt Raaflaub, Head of Strategic Solutions Marketing, will outline the key service provider challenges, deployment considerations, next-gen Gigabit technologies, and service models to win market share in the rapidly growing MDU market.