AT&T’s business has remained resilient overall, but less international travel due to the COVID-19 pandemic continues to drag down roaming revenues in its wireless segment, according to finance chief John Stephens.
“Wireless has been hit by lower service revenues related to roaming, and specifically international with the downturn in international travel,” Stephens, AT&T CFO, said Wednesday morning speaking at the Bank of America investor conference.
Stephens didn’t share specific figures, but the comments echo the same pressure executives cited during second quarter results, when international roaming negatively impacted mobility but was somewhat offset by higher equipment sales.
In Q2, AT&T overall lower revenue included an estimated $2.8 billion of lost or deferred revenue related to COVID. That also included compassion pay, production delays and the absence of TV and movie releases, along with lower advertising as sports programming paused.
The lost international roaming revenue isn’t something carriers are likely to recoup even once travel returns to normal, according to Juniper Research. It remains to be seen when levels might bounce back.
Early on during the pandemic in late March, analysis from Juniper projected that travel disruptions from COVID-19 could cost operators more than $25 billion in lost revenue if it continued for the following nine months.
According to the UN’s World Tourism Organization, data from the first five months of 2020 shows international tourist arrivals were down 56% globally from January through May, versus 2019. Travel restrictions and border closings only started in March and the decline was significantly steeper looking at only April and May.
Still, earlier this year Juniper noted the overall industry hit would be limited since global roaming revenue accounts for about 6% of total operator-billed revenue per year.
Without the impacts of international roaming and waived overage and late fees, AT&T had estimated wireless service revenue would have grown more than 2% in Q2.
Despite the loss from roaming, Stephens on Wednesday said the wireless business has “held up very well” pointing to solid churn and good customer counts, as well as financial performance.
Stephens didn’t give guidance, saying that it’s still a challenging time with limited visibility.
Networks in focus
That said, wireless and networks remain in focus for AT&T, both LTE and 5G.
Since 2017, AT&T’s LTE capacity has increased by 75%, Stephens said. That’s thanks to the addition of LTE-Advanced technologies and AWS, PCS, and Band 14 spectrum – the latter which came with the carrier’s FirstNet public safety contract.
Recent testing by PCMag highlighted that 4G network improvements resulted in significantly higher download speeds for AT&T, outpacing speeds on its 5G service. While the outlet ultimately handed the title of fastest mobile network for 2020 to Verizon, consumer experience testing by Global Wireless Solutions (GWS) gave that crown to AT&T. GWS reported a 108% increase in throughput speed for AT&T over the last three years.
During the investor conference today, Stephens said speeds and other enhancements on the 5G network will continue to improve as dynamic spectrum sharing continues to roll out.
“We’ll also see better experiences as customers start getting 5G devices,” Stephens said.
AT&T’s low-band 5G covers 200 million people, but he acknowledged that 5G device penetration is still not at the high-end yet. “We’ll see as that goes over the next six months to a year.”
Weekly 5G Android device adoption data from M Science shows less than 20,000 5G handsets per week throughout August for AT&T.
In terms of visions for 5G applications, AT&T continues to see enterprise as the early opportunity – something the carrier’s been saying for the last couple of years.
“Business is going to lead this, business applications, and we’re seeing that already,” Stephens said, calling out places like healthcare campuses, automated factories, and venues.
The 5G network is in place before device penetration has hit high levels, so “once the devices get out there you’ll see the applications come very quickly,” he added. He expects emerging entertainment opportunities for consumers including the use of augmented reality and virtual reality.