AT&T says 30% of FTTH subs are purchasing 1 Gbps speeds

AT&T says more of its customers are purchasing higher speeds of 100 Mbps to 1 Gbps in areas where it has built out FTTH services.

The service provider is ahead of its FTTH build-out schedule with 4 million consumers connected to the network today. This illustrates that the telco is getting closer to its goal to serve 12.5 million locations with fiber-based broadband service.

John Stephens, SVP and CFO of AT&T, told investors during its fourth-quarter earnings call that while not every consumer wants 1 Gbps, a growing base of customers are taking this top tier.  

“Thirty percent of our customers are taking a Gig,” Stephens said.

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But 1 Gbps is just one part of the broadband speed growth trend in AT&T’s FTTH markets.

“After we launch our 100% fiber network in a market, we’re seeing more than half of our broadband customers purchase speeds of 100 Mbps or higher,” Stephens said.

FTTH penetration, bundling rising

Overall, AT&T is seeing that broadband penetration in its FTTH markets has surpassed what exists in its copper-based DSL markets.

“Penetration of broadband is 9 percentage points higher in those markets compared with our nonfiber footprint,” Stephens said.

Broadband is just one element of the fiber market penetration trends. Stephens noted that customers are bundling broadband with DirecTV video and wireless services.

“The real kicker is the vast majority of customers in the fiber markets are taking multiple services from us,” Stephens said. “As our fiber deployment accelerates, we’re excited about this growth opportunity.”

Here’s a breakdown of AT&T’s key metrics:

Broadband and video: AT&T added 136,000 IP broadband subscribers in the fourth quarter but lost 133,000 DSL customers, resulting in total broadband subscriber growth of 3,000. IP broadband subscribers at the end of the quarter totaled 12.9 million.

AT&T said the consumer IP broadband additions offset copper-based DSL subscriber losses.

The service provider added 235,000 new DirecTV satellite video subscribers, signaling the third quarter of gross additions.

AT&T’s Entertainment Group ended the quarter with 25.5 million total video subscribers when including DirecTV Now subscribers and 25.3 million linear video subscribers.

Business services: Due to expected legacy service declines, AT&T’s total fourth-quarter business service revenues were $18 billion, down 1% versus the year-earlier quarter, but up 1.5% sequentially.

In the business wireline segment, declines in legacy products and business investment were partially offset by continued growth in strategic business services. Strategic services revenues were up 8.3% year-over-year and make up 38% of business wireline revenues. Total business wireline revenues were $7.7 billion, down 4.6% year over year.

AT&T noted that growth in mobility and strategic business services helped offset declines in legacy wireline services, the lack of business investment and the second-quarter 2016 sale of certain hosting operations.

75% of AT&T’s business services revenues are wireless and strategic services. Wireless service revenues were up 3.9%.

Financials: AT&T reported consolidated fourth-quarter revenues of $41.8 billion and operating income of $4.2 billion. For full-year 2016, AT&T's consolidated revenues totaled $163.8 billion, up 11.6% from $146.8 billion the previous year, driven by a full year of results from DirecTV and gains in IP services and video.

Wall Street analysts polled by Thomson Financial expect AT&T to weigh in with earnings of 66 cents a share and revenue of $3.04 billion.

In the year-ago fourth quarter, AT&T reported earnings of $0.63 a share and revenue of $42.12 billion.

AT&T has forecast consolidated revenue growth in the low single digits and capital expenditures to be in the $22 billion range.

Shares of AT&T closed at $41.39, up 3 cents, or 0.07%, in Wednesday afternoon trading on the New York Stock Exchange.