AT&T Pushes Nationwide 5G Coverage Plans To End Of 2020

AT&T today reiterated its commitment to provide nationwide 5G coverage next year, but it’s self-imposed deadline has been pushed back from “early 2020” to the end of the year. Moreover, when AT&T says nationwide it’s specifically talking about a 5G network that will cover around 200 million people. More than 328 million people live in the United States today.

“This has been a long time coming,” CEO Randall Stephenson said on the company’s latest earnings call. “We have invested tens of billions of dollars in building this spectrum portfolio. … Our network investments are paying off and we’re not done yet.”

The mobility business, and particularly upgrades the operator is making to its network, is “changing the value proposition” to “one of quality and speed, and delivery of video,” he said, adding that AT&T’s growth is happening organically without aggressive promotions or pricing wars.

“It’s having a real impact that we believe is impacting our ability to gain and retain customers,” said AT&T CFO John Stephens. “It’s going to take a while to make sure we get that story fully understood — it takes a little while to convince people — so we’re optimistic that we’ll see the benefits later in the year.”

AT&T says it doesn’t expect to generate significant revenue from 5G until 2020 and 2021, and it is working on large-scale initiatives with hospitals, factories, and corporate campuses to bolster enterprise 5G efforts. “End of next year we’ll have over 200 million [people] covered on a 5G network. Our plans for 5G are coming along quite well,” Stephens said.

Capital spending during the first quarter of 2019 was down 15.3% year-over-year to $5.18 billion. And while AT&T remains a heavily leveraged conglomerate with multiple businesses outside the purview of its traditional telecom legacy, it’s debt ratio declined 5.2% from the year-ago period to 47.4%.

Indeed much of the debt that AT&T is paying down is derived from its $48 billion acquisition of DirecTV in 2015, and $85 billion acquisition of Time Warner in 2018. “AT&T can no longer be called a telecom company,” analysts at Moffett Nathanson wrote in a new report. “But what is it, exactly? And how do, or how will, the pieces fit together?”

5GE Debate Rages On

AT&T did tout progress of its FirstNet deployment. That network is a nationwide first responder network that AT&T is building under a contract with the federal government.

“Today, our FirstNet build has now passed the halfway mark and is running well ahead of schedule. We now have more than 7,000 agencies signed up across the country with more than 570,000 subscribers and those numbers are growing,” Stephenson said.

Stephenson noted that the FirstNet build is also boosting the carrier’s 5G plans.

“FirstNet has enabled us to accelerate our 5G and fiber buildout. Our 5G service is now in parts of 19 cities and we’ll have 5G coverage nationwide next year,” he said. “We’re the only carrier to offer 5G service to businesses and consumers and we’re well ahead of our competition here.”

Interestingly and unprompted, Stephenson also waded into the debate about its “5GE” network, which is actually an advanced form of its 4G LTE network. “The 5G evolution product that we have out there, as we turn all this spectrum up and put the new technology of [multiple-input multiple-output] and so forth, our competitors hate it but it’s having exactly the effect that you want it to have.”

AT&T earlier this week settled a lawsuit filed by Sprint over claims of false advertising of that enhanced 4G LTE network as 5G. But, AT&T is not relenting on its decision to use the “5GE” moniker going forward.

“It is truly a step change difference in product capability and it’s having exactly the effect that we had hoped,” Stephenson said. However, a recent study by Opensignal found that AT&T’s “5GE” delivers “very much typical 4G speeds and not the step-change improvement which 5G promises.”

Anshel Sag, analyst at Moor Insights & Strategy, says AT&T “cut themselves short by pushing the whole 5GE marketing campaign and strategy.” And while it could hurt the company’s image with customers, “it may not impact their business long term which is probably why they chose to do it.”

AT&T banked $4.09 billion in net income on earnings of $44.82 billion during the quarter. Those numbers marked a 17.8% year-over-year increase in revenue, due primarily to the Time Warner acquisition, and a 12% decline in net income. AT&T ended the quarter with 262,290 employees and $163.9 billion in debt.―SDX Central