AT&T Q3 Earnings: Fiber Growth Offsetting Decreasing Business Wireline Revenue

The AT&T business wireline unit remains profitable despite decreasing revenue.

The Dallas-based carrier unveiled its third quarter earnings, which reflect the divestment of AT&T’s WarnerMedia division to Discovery. According to AT&T, the separation of the media and video division caused third-quarter revenue to decrease a little more than 4% year-over-year, from $31.3 billion to $30 billion. The division officially separated in July 2021. AT&T reported its “standalone” (non-video) business as increasing its revenue by a little more than 3% year-over-year. AT&T attributed that to growing mobility revenue (increasing 6% to $20.3 billion) and consumer wireline (growing 1.4% to $3.2 billion).

Business Wireline

On the other hand, business wireline dropped 4.5% year-over-year to $5.7 billion. AT&T cited “lower demand for legacy voice and data services,” as well as product simplification. Moreover, AT&T noted that its government sector reported lower revenue. Nevertheless, AT&T pointed to growth in connectivity services. Moreover, expenses for business wireline declined, making for an operating business wireline income of $882 million and an EBITDA of $2.2 billion. Those costs dropped partly due to a retirement benefit plan change and “lower amortization of deferred fulfillment costs.” On the other hand, higher wholesale network access costs continue to pose a problem.

AT&T’s John Stankey

“We’re investing at record levels to enhance our 5G and fiber connectivity and to deliver the best experience available in the market,” AT&T CEO John Stankey said. “Our results show our strategy is resonating with customers as we continue to see robust levels of postpaid phone net adds and approach 1 million AT&T Fiber net adds for the year.

AT&T recorded 708,000 postpaid phone net adds in the third quarter.

“Our disciplined go-to-market approach is helping drive healthy subscriber growth with high-quality customers,” Stankey said. “As a result, we now expect to achieve wireless service revenue growth in the upper end of the 4.5-5% range. We remain confident in our ability to achieve, or surpass, all our financial commitments for the year, while still investing to bring our customers the industry’s best services.”

Channel

AT&T’s Chris Jones

Channel Futures caught up with Chris Jones, AT&T’s associate vice president of channel sales, AT&T Alliance Channel and ACC Business earlier this month. Jones and his team have spearheaded a four-year effort to grow AT&T’s presence in the technology advisor (agent) channel. That involve an exhaustive process of taking feedback from agents and tech services distributors (TSDs). As a result, he said AT&T has drastically changed its relevance in the channel for the better.

“Our opinion is, we have to earn every opportunity from every partner,” Jones told Channel Futures. “If you can earn one, then you have the right to earn a second one. If you have the right to earn a second one, you can earn a third one. And then it becomes more muscle memory for a partner to want to engage us for an opportunity.”

AT&T this summer gave Randall Porter oversight of sales and partner management for its Partner Exchange, Alliance Channel and ACC Business programs. Moreover, Sarita Rao is overseeing the overall efforts of those three programs, as well as hyperscalers and wholesale.

Porter recently told Channel Futures that AT&T is investing in partner enablement and planning to offer more to pair partners with customers.

“[We will be] getting a lot more intelligent with our data and our leads — tying that to fiber-lit buildings, and then providing that to the right partners based on their capability, focus and geography,” Porter said.

Fiber Venture

Bloomberg News reported on Wednesday that AT&T was seeking to create a joint venture to expand its fiber network. AT&T is reportedly engaging with Morgan Stanley to find an infrastructure partner that could bring in an infrastructure partner that could help fuel a $10 billion-$15 billion project. These early discussions could result in a partnership by year’s end but might delay into 2023, according to Bloomberg.

AT&T reported 338,000 net fiber adds in Q3; that’s its second-best quarter ever for fiber.