AT&T’s McElfresh: Company is hitting “game speed” with fiber build

Despite some supply chain issues earlier this year, AT&T leadership believes the momentum surrounding the company’s fiber build is stronger than ever and that 2022 will be a pivotal year for the company’s wireline business.

Speaking at the Wells Fargo TMT virtual investor conference today, AT&T Communications CEO Jeff McElfresh told investors that the company’s fiber expansion is “rekindling” its consumer broadband business and that he has a high degree of confidence that the company is hitting “game speed” when it comes to the number of homes passed with fiber that it is achieving every month.

In August AT&T warned investors that supply chain issues will prevent the company from reaching its goal of delivering fiber to 3 million new locations in 2021 and revised that goal to 2.5 million. However, the company added that the supply chain glitches were temporary and wouldn’t impact the company’s ability to achieve its long-term goal of delivering fiber to 30 million locations by 2025.

AT&T had approximately 14 million homes passed with fiber as of year-end 2020 and is expected to increase that to 16.5 million homes passed by the end of this year. The company now has 5.7 million fiber customers.

McElfresh said that he believes AT&T has enough “weight” in the industry that it can work with vendors to overcome any supply chain delays.

He also added that he has no concerns about achieving the 30 million locations by 2025 goal based upon the company’s current buildout pace. “I have no concerns about hitting the pace that we need to reach that,” he said.

However, when asked about what AT&T expects in terms of penetration rates in its fiber markets, McElfresh said that he prefers to measure the company’s success by fiber net adds rather than penetration rates because aggregate penetration rates (combining AT&T’s older fiber footprint with its new fiber markets) isn’t a good measurement to reflect the growth the company is achieving.

“What I am focused on more than penetration levels is that we are demonstrating that we can step up our net add performance quarter to quarter.” In the third quarter, AT&T added 289,000 fiber customers which was down year-on-year from 357,000. However, the company also said that 70% of its net adds were new to AT&T.

To help entice consumers to switch to AT&T’s fiber network, McElfresh said that the company has a dedicated fiber team within its consumer wireline business that is working in neighborhoods to sell fiber. He added that they are measuring the number of net adds they can achieve in 30 days, 60 days and 90 days in those local markets and they are seeing those numbers accelerate.