AT&T CEO John Stankey: ‘When our first act is done, we’ll be a more focused, agile and capable domestic network leader’
At AT&T’s analyst and investor day, CEO John Stankey signaled a two-act reinvention for the operator, describing a company more focused on connectivity and value-added software packages than on the entertainment play that characterized its recent past.
For nearly the last two years, AT&T has been slowly distancing itself from its entertainment assets, closing a $43 billion deal to combine WarnerMedia with Discovery, and prior to that, spinning off DirecTV into a stand-alone unit 30%-owned by private equity firm TPG.
Stankey was already alluding to the operator’s changing priorities at the time of the 2021 Discovery announcement, commenting that infusion of cash presents “an opportunity to unlock value and be one of the best capitalized broadband companies, focused on investing in 5G and fiber to meet substantial, long-term demand for connectivity.”
His investor-day message was no different: “When our first act is done, we’ll be a more focused, agile and capable domestic network leader. We’ll be a company with a smaller product portfolio built on the back of fiber in the core metropolitan and suburban areas, combined with a highly capable nationwide wireless network able to extend even greater capabilities in utility than ever before, beyond our core.”
If “retrenching from entertainment” is act one, then act two of AT&T’s reinvention is a focus on developing software and capabilities that lay on top of the operator’s network and optimizing its connectivity value proposition.
“While we like the durability of our asset-intensive products, we desire a better balance of revenues and profits that are generated from more flexible and asset-light approaches that software brings,” said Stankey.
More specifically, he explained that AT&T is looking to create software packages that sit on top of the network, putting value back into the network and allowing the operator to sell managed services or capabilities, all of which, he said, ties back into the “core connectivity” it has already put in place.
“I’m not talking about moving up the stack to try to attack a sales force [where we] try to replace somebody who’s in the application space,” he continued. “We’re talking about moving up the stack to do things with our network that allows us to prefer our connectivity because it will work better with people who are running more sophisticated software on top of that stack, which allows us to stay at a premium position in the market and differentiate in ways that others cannot.”
This new direction involves additional service revenue opportunities around edge solutions developed with Microsoft Azure and Google Cloud and private 5G for businesses, universities and the public sector.
AT&T aims to double its fiber footprint to 30 million-plus locations; that includes doubling business customer locations to 5 million. The expectation is to add 3.5 million to 4 million customer locations per year. The operator also hopes to deploy 120 megahertz of mid-band spectrum, with an anticipated coverage of 200 million people by end of 2023, supplementing its existing 5G footprint of 255 million people in 16,000 cities and towns.
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