AT&T CFO shares thoughts on MVNOs, convergence

  • AT&T’s CFO said carriers that don’t own their own infrastructure cannot be “scale” players
  • The company’s in a “unique” position because it owns both fixed and wireless networks
  • Fiber revenue is now surpassing declines in copper revenue, he said

AT&T is feeling bullish about its fixed and mobile networks, particularly in comparison to mobile virtual network operators (MVNOs).

At a Bank of America investor conference this week, AT&T CFO Pascal Desroches was asked if he thinks cable’s mobile virtual network operator (MVNO) model has a long-term future.

The MVNO model allows cable operators to stand up a mobile offering without owning their own wireless infrastructure. Typically, the mobile product is bundled with the broadband offering.

“You're going to have to talk to cable about the future of that business,” he said. “But I just simply look at it this way. You cannot be a scale player and using somebody else's network.”

The cost of running that network “will become prohibitive,” said Desroches, and “you're not going to have total control of the experience.”

It’s not so easy for cable companies to convince subscribers to jump on the wireless bandwagon. A recent TD Cowen survey found consumers holding out on cable mobile are primarily doing so because they like their current wireless provider.

Charter and Comcast both use Verizon’s network for their MVNO lines, and as of Q1 have 8.3 million and 6.9 million mobile lines, respectively.

Since AT&T owns both its fixed and mobile networks, Desroches thinks the company’s in “a really unique position.”

“It's taken us a long time but every day we're adding more scale. Our fiber network is getting bigger, and no one else is in a position to deliver the best technology at scale through their own network,” he said.

He added owning both networks allows AT&T to deliver fixed and wireless services at a lower price compared to its competitors.

Also, “our cost per bit over time, because we own both networks, will be lower than our peers,” Desroches said.

The fiber/FWA front

AT&T is aiming to pass 30 million locations with fiber by the end of 2025. As of Q1 2024, it’s hit more than 27 million fiber passings.

There’s more growth to come from fiber, according to Desroches.

“If you look at where we are already, you're already at a point where fiber revenues surpass the decline that we're seeing in copper-based revenues,” he said. “And that's only going to continue.”

As AT&T builds up its fiber footprint and copper “becomes less and less part of the footprint, it's only a matter of time before you're in a position to grow overall net subscribers,” he said.

On the fixed wireless access (FWA) side, AT&T this spring launched Internet Air for Business, complementing its consumer FWA offering.

The company hasn’t put out a target for FWA net additions. But Desroches noted the consumer Internet Air offering allows AT&T to obtain customers that are on legacy internet technology like DSL “until we can get fiber to that location.”

Internet Air is also beneficial for small and mid-sized businesses that don’t have the same consumption patterns as in the home, he said, such as video gaming or streaming video.