AT&T sets 50 million fibre locations target

And also confirming that the fibre rollout race currently being run at pace by the US's major telecoms carriers is well and truly on.

AT&T shared the new target in a statement issued ahead of its investor day presentation on Tuesday, in which it also talked up its 5G network rollout plans and outlined new earnings and cash flow targets.

"In broadband, the Company is creating even more distance between itself and the competition on what is already the largest fibre broadband network in America," AT&T said.

That type of comment has become the norm in the US in recent weeks and months. Where once the big three telcos sparred relentlessly over their mobile network prowess, the focus has shifted to fibre, spurred on in no small part by M&A activity from the other two. Verizon inked a US$20 billion deal to acquire Frontier Communications in September, while T-Mobile US hooked up with KKR in July to buy fibre operator Metronet, spending $4.9 billion in the process.

That put the heat on AT&T, which has adopted a build rather than buy approach. It was already working towards a goal of hitting more than 30 million consumer and business locations by the end of 2025, and it has given indications at various times over the past year or so that it is looking to get more fibre out there in relatively short order.

"The better-than-expected returns the company is seeing on its fibre investment potentially expands the opportunity to go beyond this target by roughly 10 million to 15 million additional in-footprint locations passed," AT&T said, in September. At that point its fibre footprint stood at north of 28 million consumer and business locations.

So we knew a new fibre target was likely coming. The new 50 million footprint goal will consist of 45 million premises served by AT&T's own network build and 5 million or more from Gigapower, the telco's joint venture with investment company Blackrock. It will also lean on agreements with commercial neutral host providers, it said; that September announcement unveiled deals with four such providers: Boldyn Networks, Digital Infrastructure Group, Prime Fiber, and Ubiquity.

AT&T has also earmarked end-2029 as its target date for shutting down its copper network across the majority of its footprint.

"Over the last four years, we've achieved durable and profitable subscriber growth, generated attractive returns on network investment, and strengthened our balance sheet," said John Stankey, AT&T CEO. "We're putting customers first to become the best connectivity provider in America."

That last sentence is one we would normally gloss over, but, self-aggrandising as it is, this one strikes a chord.

It is three and a half years since AT&T U-turned on its high-spending media ambitions and declared itself a telco once again. And in describing itself as a connectivity provider, it has just underscored how much it has changed in that time.

AT&T is on the verge of shedding what is arguably the last vestige of that old strategy, noting that it expects to finalise the sale of its entire 70% DirecTV stake to TPG in mid-2025.

As such, it has shared new financial targets that exclude the pay-TV business.

It has raised the bottom end of its adjusted earnings per share outlook for 2024 to $2.20-$2.25, and expects to generate free cash flow of $17 billion-18 billion, tracking towards the mid-point of the range.

Capital investment will come in at the high-end of the $21 billion-$22 billion range this year, it said.

Further ahead, AT&T expects capex of around $22 billion per year in the 2025-2027 period, during which time it is looking at consolidated service revenue growth in the low-single-digit range annually, including mobility service revenue growth in the 2%-3% range and consumer fibre broadband revenue growth in the mid-teens.

It is shooting for adjusted EBITDA growth of 3% or better per year and adjusted EPS, excluding DirecTV, of $1.97-$2.07 in 2025, accelerating to double-digit percentage growth in 2027.

As we grow, we expect to return more than $40 billion to shareholders over the next three years through dividends and share repurchases," Stankey said, heralding "a new era of sustained growth at AT&T."

It looks good on paper. Now it's all about the execution.