AT&T rolled out low-band 5G service in 90 new markets, while its chief executive reiterated committed investment in 5G but acknowledged the carrier’s facing logistical challenges.
In releasing first-quarter earnings Wednesday, AT&T withdrew financial guidance, citing the lack of visibility related to COVID-19 and related recovery.
AT&T CEO Randall Stephenson, speaking on the carrier’s earnings call with investors, said the broad economic impact from the crisis has been swift and there’s no clear consensus on how long the downturn will last.
“Bottom line, we have very little visibility into the broader economic situation, which makes it impractical to provide detailed financial guidance at this time,” Stephenson said.
AT&T had already suspended a planned $4 billion share buyback program, and Stephenson said AT&T would continue to invest in critical growth areas, including 5G, as well as broadband and HBO Max.
With its latest launch today in new markets including Chicago, New Orleans, Sacramento, Seattle and Tampa, the carrier’s low-band 5G is available in 190 markets, covering 120 million people in the U.S.
AT&T COO John Stankey told investors the operator expects to have nationwide coverage this summer, but while 5G deployments are moving forward, he said the carrier continues to deal with workforce and permitting delays.
Wells Fargo analysts led by Jennifer Fritzsche in a Wednesday note to investors cited the “subtle change of language on timing” of AT&T’s nationwide sub-6 GHz 5G launch – previously “mid-2020,” compared to “summer 2020.”
Stephenson stressed that AT&T has the ability to keep investing in key areas, pay down debt and pay out dividends. While the company didn’t announce any spending levels, he said AT&T is committed to completing its FirstNet public safety network build out, and bringing 5G nationwide this summer.
With uncertainty around the ultimate depth and length of negative impacts from the coronavirus crisis, executives indicated obstacles could impact plans.
“It will be a revolving story, but we feel really good about the financial capabilities to continue to invest,” Stephenson said.
When it comes to capital spending, he emphasized that “it’s not just writing checks.” Echoing Stankey’s comments on permits, Stephenson said issues right now have to do with cell site acquisition needed for both FirstNet and further densifying the network. That requires permitting and approvals from government officials, many of whom are under shelter-in-place or stay-at-home orders.
Siting delays for 5G infrastructure, particularly small cells, are not a new issue for the industry, with backlogs at municipalities happening even before the coronavirus wreaked havoc.
Now it is likely a greater challenge, and AT&T’s chief executive acknowledged permitting and logistics related to the carrier’s network investments are hampered.
“So while we have no intention of slowing down on 5G and fiber deployment… reality is that a lot of it is not in our control,” he said, adding the logistical issues would likely result in “downward proclivity” on the carrier’s earlier stated capex targets.
MoffettNathanson analysts in a research note to investors wrote that AT&T’s mobility segment “performed its role admirably in Q1.” Looking ahead though, the firm noted AT&T will have to compete against the New T-Mobile, which, newly armed with 2.5 GHz assets after closing its merger with Sprint, is in a better mid-band spectrum position than AT&T or Verizon.
“Both companies will need to spend money to keep up. Verizon is in a position to do so (we expect them to acquire both Ligado’s L-Band spectrum for uplink and CBand spectrum in the December auction for downlink),” wrote Craig Moffett. “Whether AT&T is in a position to keep pace is unclear.”