As AT&T reported second quarter earnings Thursday, CEO John Stankey took the opportunity to counter some commentary that its MVNO deal with Dish isn’t good for the carrier.
“We have been in the wholesale business since as along as I’ve been working for this company, and the wholesale business has been very good to our company,” Stankey said during the earnings presentation.
And AT&T has always been able to strike agreements the carrier believes “are win-win relationships for the parties involved,” he added.
Analysts at MoffettNathanson recently characterized it as a “terrible decision” for AT&T. The firm thinks the deal will enable Dish to compete and be a much bigger disruptor and competitive threat, as it can focus building out high-density areas that are low-cost and high value, while leaving rural areas that are costly to build without big returns to AT&T.
RELATED: Dish signs $5B MVNO deal with AT&T
In Stankey’s view, Dish is going to be successful no matter how things play out.
“When somebody is going to be successful, it’s always nice for us to be successful along with them,” he said, in terms of winning wholesale business. “We think there’s an accretive way to do that that drives a reasonable return back into the business, and again manages the balance of that traffic in the aggregate of the business. And I think we’ve achieved that in this case.”
AT&T likes to keep a balance in terms of the percentage of retail and wholesale traffic on its network, getting as much traffic on the network as possible, Stankey noted. He said AT&T plans to demonstrate it can carry the right kind of traffic for Dish and support it in places where Dish might not have immediate access to infrastructure.
AT&T expects the deal to help boost wireless service revenue starting in 2022 and Stankey said the 10-year commitment should be thought of as more front-end loaded.
He talked about Dish establishing an annual minimum commitment for wholesale revenue but said the carrier aspires to generate more. Much is based on AT&T performing effectively and what Dish ultimately decides to do in the market, Stankey noted. New Street Research previously said that T-Mobile stands to lose at least $500 million and up to $2.5 billion a year in wholesale revenue because of the new MVNO deal.
“I think that we need to demonstrate [to Dish] that we can do well, and ultimately see that grow,” Stankey said of minimum annual commitments. He also believes Dish saw it as a good move because it felt AT&T could be a more capable partner than its current arrangement (ie: T-Mobile) and has business motivations to deepen the relationship with AT&T.
Spectrum as an option and transitioning traffic
One aspect brought up after the MVNO announcement was the potential for AT&T to use Dish spectrum.
Going forward, Stankey said there a lot of options the partners can explore that benefit both, with spectrum being one of them.
“We have a variety of spectrum licenses where our existing radio infrastructure can ultimately deploy and put to use some of their spectrum,” he said, which had been done during the pandemic.
Still, AT&T Communications CEO Jeff McElfresh emphasized that with network investments over the last several years AT&T feels it can handle the capacity and coverage needs without worrying much about its spectrum position.
“Our technology migration that we’ve got experience in and upgrading from 4G to 5G and making those transitions seamless is something I think the Dish organization is looking forward to working with us on,” McElfresh said in terms of shifting Dish’s customers to AT&T’s network.
Traffic will start migrating to AT&T’s network towards the end of this year, according to McElfresh.
Separately, Dish and T-Mobile have had a public back and forth battle about the forthcoming shutdown of T-Mobile’s 3G CDMA network and impacts to Boost Mobile subscribers and business.
AT&T is phasing out its 3G GSM network by February 2022.
On the call, AT&T acknowledged there is a segment of Boost Mobile customers that would need to swap out their device to transition to AT&T’s network.
“Exactly what the pace of that is and when that's necessary and how it occurs and the total numbers of that I think is yet to be played out,” Stankey said.