AT&T Business Wireline To Get A Bump From SMBs, Says CEO

The carrier giant is culling its business wireline portfolio to make way for more mobility and fiber-based offerings to grow revenues in its Business Solutions segment, especially through SMBs, AT&T said during its Q4 2021 earnings call.

AT&T is relying on its strength in mobility, 5G and fiber as the carrier sets its sights on becoming the country’s preeminent broadband provider, according to CEO John Stankey.

While the company is seeing wireless success across both its consumer and business segments, its weakening wireline business is demonstrating that companies are moving away from legacy wireline services and instead are seeking strategic, flexible fiber and LTE services and integrated offerings. In fact, AT&T added more than 1 million fiber subscribers in 2021 for the fourth consecutive year, said Stankey during the carrier’s Q4 2021 earnings call on Wednesday.

The Dallas-based carrier said it intends on growing its business segment by re-orienting toward small and midmarket businesses. “As we expand our fiber reach, we’ll be … stabilizing our business wireline unit by growing connectivity with small to midsized businesses,” Stankey said. “We also plan to use our strong fiber and wireless asset base, broad distribution, and converged product offers to strengthen our overall market position.”

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On the wireless side, AT&T saw 884,000 postpaid phone net adds and 1.3 million postpaid net adds overall in the fourth quarter of 2021. The carrier had 3.2 million postpaid phone net adds -- more customers than AT&T has added in the prior ten years combined for the full year, Stankey said -- and 4.5 million postpaid net adds for the full year.

Business wireline services revenue fell 5.6 percent during fourth-quarter 2021 to $5.91 billion compared with $6.25 billion a year ago, which the carrier attributed to the prior-year increase for pandemic-related connectivity, lower demand for legacy voice and data services, and the decision to deemphasize non-core services. Business wireline services decreased 5.2 percent and equipment sales fell 16.7 percent during the quarter.

AT&T CFO Pascal Desroches said that the company doesn’t expect business wireline revenues to grow in 2022, but that losses will be moderated as AT&T rationalizes it’s low-margin products to set up this portfolio for future success.

Despite the carrier’s plans to target SMBs with its business wireline portfolio, AT&T believes it’s also well-positioned in the enterprise space, Desroches said. “We have the account management infrastructure, consulting expertise, and capabilities to support those businesses through that evolution as converged wireline and wireless solutions become the norm,” he said.

Business wireless services, on the other hand, climbed 8.2 percent to $2.11 billion compared with $1.94 billion a year ago. Overall, AT&T’s Business Solutions segment stayed relatively flat during the last quarter of the year with a slight .9 percent increase to $9.04 billion and a .5 percent bump up for the full-year 2021 to $35.51 billion.

AT&T’s mobility segment revenue totaled $21.15 billion during fourth-quarter 2021, an increase of 5.1 percent compared with $20.20 billion in the same quarter a year ago. For the full year, the mobility segment climbed 7.8 percent. The overall communications business, which includes high-speed internet, video and legacy voice services, climbed 2.4 percent to $30.21 billion during the quarter compared with $29.49 billion in Q4 2020. In mobility, AT&T said its service revenue grew 4.6 percent due to subscriber gains, while equipment revenue climbed 6.2 percent during the quarter as customers purchased higher-priced smartphones.

Diluted earnings per share during AT&T’s fourth quarter, which ended December 31, 2021, was 69 cents, down from $1.95 one year ago. Total revenue was $40.96 billion, a 10.4 percent decrease from $45.69 billion in the same quarter one year earlier. Net income was $5.04 billion.

For the full 2021 year, AT&T posted total operating revenues of $168.86 billion, down 1.7 percent from $171.76 billion in 2020. the carrier reported diluted earnings per share of $2.76 compared to 75 cents in 2020.

AT&T in 2021 closed its sale of satellite television service DirecTV to TPG Capital for $7.1 billion in cash. The money will help AT&T continue its strategic telecom services investment strategy in 2022, the company said. AT&T and television company Discovery Inc. last year came together with a definitive agreement for the carrier to spin off WarnerMedia and for its entertainment, sports and news assets to be combined with Discovery’s nonfiction and international entertainment and sports businesses. AT&T acquired its WarnerMedia business, which came from its blockbuster Time Warner buy, in 2018 for $85.4 billion. However, the company struggled to balance the needs of its core connectivity business with its plans for growing its content side of the house. AT&T said it expects to close the WarnerMedia deal in Q2 2022.