AT&T CFO Pascal Desroches didn’t reveal a lot of new details about AT&T’s new open RAN strategy with Ericsson, but he reiterated the belief that it will lead to innovation and efficiencies that otherwise wouldn’t come to pass.
Over the last several years, equipment manufacturers have enjoyed significant business as a result of the mid-band spectrum deployments for 5G, and things are about to slow down for them, Desroches said during a fireside chat at the Oppenheimer 4th Annual 5G Summit.
“This was a great time to use the position that we were in to try to really accelerate the open RAN architecture that we’ve been talking about for so many years,” he said.
Ericsson has committed to open up the architecture and over time, AT&T expects that will drive efficiencies, first and foremost by standardizing some of the basic equipment and architecture, he said. Over time, the expectation is the open architecture will allow others to come in and drive further innovation and efficiencies in the space.
In the near term, “probably not a big impact to our capital investment profile but over time will generate more efficiencies,” he said. He did not discuss how much it will cost to remove Nokia equipment that will be replaced with Ericsson gear.
Similar to what AT&T CEO John Stankey said at an investor conference last week, he said the last couple of years – 2022 and 2023 – have been years of peak capital investment. Next year they expect overall capital investment to be lower, to $21 billion to $22 billion, inclusive of the commitment with Ericsson.
Overall, “I feel really good about the deal. We think it not only benefits us but benefits the entire industry and will drive long-term innovation and efficiencies,” he said.
Q4 sales
He characterized this holiday selling season as no different than last year.
“We are continuing to run our play. We’re trying to be financially disciplined. It all starts for us by making sure we are taking care of our customers,” he said. That includes providing them with a great value proposition and that involves offering the same deals to new and current customers. That has resulted in record low churn, he said.
The way things are going, AT&T expects about 500,000 net new customers for the fourth quarter, he said.
“We feel really good about how we’re executing. Our network is great. We continue to move customers up the ARPU stack,” he said.
He declined to comment specifically on promotional spending dollars but relative to others in the market, “I think it’s fair to say we’ve been much more disciplined and we are opportunistically looking to take the gross adds that are there without being overly promotional,” he said.
One of the key things is the ability to identify segments that are under-penetrated, such as first responders. But there are other parts of the country where markets are under-penetrated such as the Hispanic and Asian markets. He said they’re surgically identifying those areas and putting together offerings that will drive further penetration.