AT&T CEO: ‘Best-Ever’ Mobility Services Income Leads As Business Wireline Declines

‘I actually think we’re on the front end right now with many businesses now understanding that wireless technology is their next strategic frontier of how they engineer their processes in their company,’ AT&T CEO John Stankey said of the company’s struggling business wireline segment during the carrier’s third-quarter 2023 earnings call.

AT&T is playing up its strength in its wireless and fiber assets to set itself up for sustained “durable” growth, which the carrier giant saw in its third fiscal quarter of the year on the heels of its “best-ever” Mobility Services income result, said CEO John Stankey during the carrier’s third-quarter 2023 earnings call Thursday.

The Dallas-based carrier said its nationwide 5G network now covers more than 190 million people and is on track to reach more than 200 million people with its mid-band 5G spectrum by the end of 2023.

But at the same time, the company’s Business Wireline Services revenue continued to decline, falling 7.9 percent to $5.22 billion compared with $5.67 billion a year ago, which AT&T attributed to lower demand for legacy voice and data services and product simplification, which was partially offset by growth in connectivity services.

AT&T CFO Pascal Desroches in earlier earnings calls this year said that the company didn’t expect Business Wireline revenue to grow in the short term and is looking to 2024 for stabilization. However, Stankey said that when Business Wireless revenue was added to the equation, the financial results for the segment looked much flatter.

“I actually think were on the front end right now with many businesses now understanding that wireless technology is their next strategic frontier of how they engineer their processes in their company,” he said.

[Related: AT&T Simplifies Focus Around Wireless, Fiber As Carrier Addresses Lead-Clad Cable Concerns]

As another path for growth, AT&T specifically called out its partnership with Cisco Systems in which the two companies are helping businesses move to the cloud for their calling needs via Webex Go with AT&T. The two companies in June unveiled an integration between Webex Calling and AT&T’s network that is giving end users a mobile-first, unified collaboration experience through a single mobile number and identity, a useful solution for simplifying connectivity at a time when business and personal lives are blended thanks to hybrid work.

“We feel strongly this is just the beginning of what is possible,” Stankey said of the Cisco partnership.

The carrier said that it serves the largest global companies, government agencies and small businesses with more than 800,000 business buildings in the U.S. lit with fiber from AT&T, reaching more than 3.3 million U.S. business customer locations. AT&T said that more than 10 million business customer locations are on or within 1,000 feet of its fiber footprint.

The carrier’s mobility segment revenue totaled $20.69 billion during the quarter, a 2 percent increase compared with $20.27 billion in the same quarter a year ago. The overall communications business, which includes high-speed internet, video and legacy voice services, climbed slightly to $29.24 billion during the quarter compared with $29.13 billion in the third quarter of 2022.

A big feather in the carrier’s cap this quarter was its Mobility Services revenue, which climbed 3.7 percent to $15.91 billion, up from $15.34 billion a year ago, driven by subscriber growth. The company said it achieved its best-ever Mobility Services operating income during the quarter. Mobility Equipment revenue, on the other hand, declined 3.2 percent from $4.94 billion in third-quarter 2022 to $4.78 billion in third-quarter 2023, which the company said was driven by lower device volumes.

The company reported 468,000 postpaid phone net adds in the third quarter.

Total operating revenue for the third quarter that ended Sept. 30 was $30.35 billion, a modest increase of 1 percent from $30.04 billion in the same quarter one year earlier. Diluted earnings per share during AT&T’s fiscal third quarter was 48 cents, down 40 percent from 80 cents one year ago. AT&T’s revenue beat Wall Street’s expectations during the third fiscal quarter of the year.

AT&T’s stock popped up 6.42 percent in pre-market activity on Thursday.