AT&T CEO John Stankey on Thursday expressed some concern that global supply chain shortages could start impacting network elements for C-band gear.
"Global supply chains are stressed right now across the board. You ask the question, can you do the work? And people will give you comfortable answers,” Stankey said in response to questions about plans for C-band, timing and increased capex on AT&T's first quarter earnings call.
“But I’m a little skittish,” Stankey acknowledged. “We’re seeing dynamics that are occurring in the global supply chain where unexpected things are popping up. And is it possible we could see certain element shortages that start to crop up as everybody’s racing to put stuff up on towers? It may.”
Stankey said that’s part of why he’s cautious about increasing guidance or making changes to C-band plans until there is a little momentum happening.
In its quarterly results, AT&T increased gross capital spending to $22 billion, up from $21 billion. But not all of the additional $1 billion is going toward C-band deployment, as Stankey said the mid-band spectrum for 5G is just one of several aspects of the increase. The carrier's plans for coverage and pace for C-band deployments haven’t changed from what was disclosed roughly a month ago at AT&T’s analyst day.
The carrier plans to turn on the 3.7 GHz mid-band frequencies for 5G in initial markets starting in late 2021. AT&T expects to reach 100 million POPs with mid-band 5G in early 2023, a year later than Verizon and more than two years behind T-Mobile – the latter which has a lead on deploying mid-band with 2.5 GHz.
AT&T also raised vendor financing to $4 billion, up from $2 billion. New Street Research analysts noted they consider vendor financing to be capex but AT&T excludes it from cash and investing items.
“As usual, we’re in that cycle where technology is relatively new,” Stankey said during the earnings call. “Vendors have commitments, we’re waiting on specific units.”
As Ericsson reported Q1 earnings Wednesday, CEO Börje Ekholm said the Swedish vendor was focused on flexibility in its supply chain and despite semiconductor shortages met customer delivery timeframes in the first quarter.
Although AT&T’s pace for deployment is still the same, Stankey said there are things the carrier can potentially do today to prepare parts of the network that might not be turned on until later in 2022. Such as more efficiency to pre-provision infrastructure so towers don’t need to be touched a second time.
“Some of that ordering is a dynamic that we’re trying to drive through,” he added.