As AT&T continues to ramp up its fiber business – reaching 18.5 million passings in Q3 – it aims to leverage its fiber strategy to also grow wireless customers, according to CFO Pascal Desroches.
“In 5-10 years from now I just don’t see consumers accepting anything other than fiber,” he said at a Thursday Morgan Stanley investor conference. “Also I think the power 5G will bring will make wireless relationships even more valuable. And we are able to provide both with our owner’s economics.”
When AT&T offers both fiber and 5G, it sees a “meaningful uplift” in its wireless penetration, Desroches added. Once customers get hooked on fiber service, it becomes “much easier to sell them on” wireless.
“Having that and the perception that fiber brings for them a quality and consumer affinity is just extraordinary,” he said. “It’s a play we really believe in…the returns are much more attractive if you have both customers.”
The operator previously stated it wants to reach 30 million fiber passings by 2025. Desroches noted AT&T is “penetrating very well” with its current fiber builds, echoing CEO John Stankey’s words on the company’s third quarter earnings call.
Desroches chalked up AT&T’s success with fiber to increased consumer awareness and a more hybrid workforce.
“Consumers are getting much more sophisticated about the benefits of fiber,” he explained. “For years cable was good enough, it wasn’t easy to differentiate given the products available. Now with everyone working part-time, at least some of the time from home, the benefits of fiber are coming through and it’s delivered at a more attractive price point.”
On the subject of partnerships, Desroches declined to comment directly on a Bloomberg report that suggested AT&T is seeking a joint venture partner to undertake more fiber builds. But he did posit some situations “where some sort of partnership makes sense.”
For example, AT&T could have a financial partner that brings in capital for projects or a partner who can help the operator reach “an area we probably wouldn’t get to otherwise.” AT&T might also consider a partnership that enables it to “bundle our wireless relationships,” Desroches added.
“You’d have to conclude all those things work and the returns are attractive,” he said. “If things lined up, of course we would look at it.”
On the enterprise front, Desroches pointed out while most of AT&T’s revenues are still in legacy communications services, the operator’s wireline enterprise business is undergoing a “secular decline.” He said he doesn’t expect that downward trend to change anytime soon.
In the meantime, AT&T is “more aggressively” targeting the small and mid-sized business market with its fiber offering.
“Candidly, we have probably not done as good of a job as we should do tackling that market,” said Desroches. “Now with our fiber deployment, more resources, that’s a market we think we can compete very effectively in and take share over time.”