AT&T’s first 5G customers use the service for wired LAN replacement

For its first quarter 2019, AT&T reported 80,000 postpaid phone net adds. (Getty Images)

On today’s first quarter 2019 earnings call, AT&T CEO Randall Stephenson said the company’s first 5G customers are businesses that are using 5G as a replacement for their wired local area network (LAN) technology.

“Right now, from 5G what we’re seeing is exclusively businesses,” said Stephenson. “It’s serving as a LAN replacement product.” Business customers are installing a 5G router, but when more devices start showing up on the market with embedded 5G modems, “then you don’t even need the router,” he said. 

Stephenson noted that business customers pay more for higher speeds in AT&T’s fixed line offerings, and the company expects the same to hold true with 5G. Ultimately, the company expects a 5G “pricing regime” that will look similar to its fixed-line pricing regime. But it doesn’t expect that to play out for two to three years.

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In terms of its 5G rollout, Stephenson said, “We’ll have 5G coverage nationwide next year. We’ll offer 5G to both businesses and consumers.”

FirstNet

The AT&T CEO was also very bullish on the company’s FirstNet business for emergency services. FirstNet “has passed the halfway mark,” he said, adding that it serves 7,000 agencies with 570,000 subscribers. And he reiterated his point that FirstNet is helping AT&T speed the build-out of 5G.

RELATED: AT&T claims its FirstNet deployments will also advance 5G

AT&T CFO John Stephens elaborated, “We’re at 53% of our network buildout for FirstNet. For 5G we’re operational in 19 markets today, using that 39GHz mmWave spectrum.”

And, CEO Stephenson said, “Turning up FirstNet is having exactly the impact we hoped it would have. The value proposition is now one of quality and speed and delivery of video.”

He said FirstNet is driving a non-inconsequential impact on subscriber gains. In addition, it’s giving AT&T more penetration in rural communities and allowing the company to take market share. “FirstNet is going to be strategic for us for a number of years,” said Stephenson.

Quarterly numbers

AT&T's consolidated revenues for the first quarter totaled $44.8 billion versus $38.0 billion in the year-ago quarter, up 17.8%, primarily due to the Time Warner acquisition. First-quarter net income was $4.1 billion, resulting in an adjusted earnings per share of $0.86 compared to an adjusted earnings per share of $0.85 in the year-ago quarter.

For its first quarter 2019, AT&T reported 80,000 postpaid phone net adds; and 96,000 prepaid net adds of which 85,000 are phones.

AT&T's largest business segment, Mobility, which includes its wireless business, had revenue of $17.57 billion during the quarter, missing estimates of $17.65 billion.

The company also suffered some video subscriber losses in the quarter.

RELATED: AT&T loses another 83K DirecTV Now subs and 544K pay TV subs in Q1

Its stock was trading down about 4% after the earnings call.

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