Kagan 2022 could be a good year for AT&T – Gulfsouth Towers

January 6, 2022

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AT&T, Verizon and T-Mobile, in fact the entire wireless industry all had plenty of bumps in the road during 2021. While Verizon and T-Mobile have gotten back on track relatively quickly, AT&T has been taking more time to clear its path, spin off their units and get back on the 5G wireless track. The good news for their customers, investors and workers is things are starting to look like 2022 will be the year AT&T finally starts their recovery and to begin rebuilding.

Growth curve for companies always rises, crests and falls

Companies and products all ride the growth wave, which I often discuss. The curve rises, crests then ultimately falls. Sometimes this happens quickly. Other times it can last many years. However, it always happens.

That’s why it is key for companies to both keep the growth wave going for as long as possible, and for them to create the next growth wave. Otherwise, when it crests, they will be in trouble.

We have seen this with countless companies like Blackberry and Motorola in the past. When the next generation smartphones came out, iPhone and Android took all the market share away from these past leaders.

Where AT&T went wrong on the growth wave

AT&T had been on a strong growth wave in wireless for quite a long time. Then they saw growth slowing and previous CEO Randall Stephenson new something had to be done to start the next growth wave.

If not, they risked losing investors, which would reduce their share price and value.

That’s why Stephenson started down the same path as Comcast Xfinity who acquired NBC Universal.

AT&T WarnerMedia followed similar path of Comcast NBC Universal

AT&T acquired DirecTV and what became Warner Media with CNN, Warner Brothers and more. This was an interesting idea at the time. It made sense since Comcast was successfully going down that same path.

However, AT&T put themselves in significant debt to do so. That meant they needed no bumps in the road for them to be successful going forward. That didn’t happen. 2021 had quite a few huge bumps in the road like Covid-19 and the changes in consumer behavior.

2021 was put AT&T into tailspin for several reasons

This was a similar path to previous CEO Ed Whitacre when he led SBC and they acquired AT&T, Cingular and BellSouth around 1984. That and the iPhone and Android led to a growth story over the next decade.

However, 2021 gave every company and in fact all of us plenty of Coronavirus bumps in the road. Something we are still wrestling with today in 2022.

Under so much debt, 2021 put AT&T into a tailspin being unable to pull up to save itself. They could not deal with the incredible levels of new debt creating by acquiring other companies and assets like WarnerMedia.

CEO John Stankey two-pronged approach to save AT&T

New CEO John Stankey promised to turn things around at Ma Bell. He is taking a two-pronged strategy. One, stabilization. Stop the loss. Two, starting the next growth wave.

If he is successful, this will help AT&T stabilize and grow once again. It will also be good for their long-term growth potential.

Stankey spent 2021 working to spin-off the move into the entertainment world the company had spent years building.

This is still not complete, but if successful, it will leave AT&T unencumbered and no longer distracted.

It’s hard to give Stankey and AT&T an accurate grade today for their work since they are in the middle of a long-term turnaround.

AT&T recovery two-step growth track solution

However, based on what I see so far, things are heading in the right direction and that is very good news.

So, this is what I am expecting.

First, AT&T always grew through acquisitions as a real growth powerhouse in telecom and wireless, then years later in the television and entertainment space.

Next, in 2021 under the pressure of incredible debt, Covid-19 struck and threw everything into disarray. This revealed the crisis that had been brewing.

John Stankey became the next AT&T CEO and had a massive job ahead of him. He spent the time since trying to make sense of what AT&T had become, and how to save it.

He is working his two-step plan, stabilize then grow has been underway during the last year.

So far, I like new direction AT&T is heading in 2022

So far, I like the new direction John Stankey is taking AT&T. They are sticking to their core business as wireless explodes with 5G and new opportunities with other industries like telehealth, autonomous vehicles and so much more.

Wireless is still a core element of our future and 5G is the next step in that journey.

The next couple years will be tough for every wireless player. Not just for AT&T. You see, they must invest billions to upgrade the network to 5G, but it will take more time for usage and profitability to grow.

Wireless carriers must invest billions to bring 5G to market

They must go through this process if they want to retain their customer base and attract users from their competitors.

Just remember, this is typical for the wireless industry. This is the way it has always been for wireless carriers as it jumped from 2G to 3G to 4G and now to 5G.

This is just part of the typical wireless upgrade process from one generation to the next.