AT&T Adds 349K Postpaid Wireless Phones in Q1; CEO Apologizes for Outage
AT&T added 349,000 net postpaid phone customers, which was far better than Wall Street expectations, and saw record low churn in Q1, CEO John Stankey said Wednesday as the carrier reported quarterly results. Stankey apologized for the nationwide wireless outage that hit customers Feb. 22 (see 2402220058). Compared to Verizon, whose shares sunk after it reported results Monday (see 2404220042), AT&T was up 1.88%, closing the day at $16.82.
“I'm upset that we had it,” Stankey said of the outage, on a call with analysts: “It's unfortunate we had it. The entire team feels responsible for it. We know we can do better. We've put in place an awful lot of steps to ensure that we do better moving forward.”
Echoing comments of Verizon CEO Hans Vestberg on Monday, Stankey said he doesn’t believe Congress will reauthorize the affordable connectivity program.
ACP is “probably more likely than not” to sunset, Stankey said. AT&T has started notifying customers, he added. “I think we'll be successful in many instances, in finding ways to continue relationships with customers and ease them into different constructs that make sense for them,” Stankey said.
Like Vestberg, Stankey wasn’t asked about and didn’t comment on the FCC’s pending net neutrality vote. In December, he questioned the need for FCC action (see 2312050069).
There’s little chance the broadband, equity, access and deployment program will influence AT&T’s bottom line this year, Stankey said. “BEAD is a 2025 issue -- it's not a 2024 issue,” he said. There are places “where we're going to be more energized about playing and places where we're going to be less energized … based on how various states are approaching this.”
Stankey questioned the strategy of AT&T’s competitors in offering low-cost 5G-based home internet service. “Wireless networks aren't particularly the best place to take a single-family home that streams hours and hours of video a day and try to serve them with a $50 a month product or service,” he said: “I just don't see that as long-term sustainable … and I've been pretty consistent in saying that.” That’s why AT&T is investing heavily in fiber, he said.
The company has some 71.6 million “high value” postpaid phone subscribers, up 1.5 million from a year ago, Stankey said. “These aren't empty calorie additions.”
On the other hand, AT&T’s results were mixed. It reported $30 billion in revenue for the quarter, versus $30.1 billion a year ago; operating income was $5.8 billion versus $6 billion. Free cash flow of $3.1 billion was up $2.1 billion year over year.
The 349,000 wireless phone subscribers added in Q1 topped the 303,539 average estimate of analysts, but 252,000 new fiber customers were below expectations of 260,000. Postpaid phone churn was 0.72%, which Stankey described as “our lowest first quarter churn ever on record.” AT&T added 110,000 customers for its fixed wireless Internet Air service launched in August, bringing the number above 200,000. FirstNet connections grew about 320,000 over the previous quarter.
Wireless is AT&T’s core business, and the news was mostly good on that front, MoffettNathanson’s Craig Moffett told investors. “For the record, those results were pretty good; post-paid phone net adds slowed, but still beat, on exceptionally low churn,” he said. But Moffett said AT&T’s convergence strategy isn’t scalable. “AT&T’s wired footprint only covers about 45% of the country, and less than half of that is upgraded to fiber. That leaves them with a viable convergence offer in less than a quarter of the country. To state the obvious, that’s not a viable strategy for a company with a national wireless network.”