Supply chain constraints cut into AT&T's fiber buildout plan

AT&T may have a top link in the supply chain, but recent disruptions in the supply of fiber have caused the company to trim back its planned fiber-to-the-premises (FTTP) buildout for 2021, according to senior EVP and CFO Pascal Desroches.

Although AT&T had previously guided that it would build out to an additional 3 million homes passed this year, "we're probably going to come in a little bit light of that, probably around 2.5 million," Desroches said Tuesday at the Oppenheimer Technology, Internet & Communications Conference, according to a transcript (PDF).

Figure 1: AT&T tacked on another 246,000 fiber customers in the second quarter of 2021, and expects to add about 1 million fiber subs for all of 2021.
(Image source: AT&T)

"Up through the second quarter, we haven't really experienced any impact from the supply chain disruptions that are happening across the industry," Desroches said. "Since the start of the third quarter, we are seeing dislocation across the board, including in fiber supply."

Susan Johnson, EVP of global connections and supply chain for AT&T, warned in May that the company was wary of how the global chipset shortage might impact its 5G and fiber connectivity business.

Desroches said he doesn't expect the current issue to persist long-term, noting that AT&T has a "preferred place in the supply chain" along with committed pricing. AT&T has not said whether the recent supply chain trend will cut into its plans to expand fiber to another 4 million locations in 2022.

"But I think it's really important context because, if we're feeling the pain on this, I can only imagine what others in the industry are experiencing," Desroches said.

Many others, from service providers to tech vendors, are feeling the pinch.

Plans to step up fiber subscriber pace

AT&T's reduced FTTP buildout guidance for 2021 arrives as fiber broadband emerges as a major growth driver for the operator and could toss a small wrench into plans for the company to step up the pace of fiber subscriber additions toward the back half of 2021.

AT&T added another 246,000 fiber broadband subs in Q2 2021, extending its total to 5.43 million, and said last month it was on pace to add about 1 million net fiber subscribers for all of 2021.

AT&T has estimated that nearly 80% of new fiber subscribers are also new to the company, reversing a previous trend that saw a sizable portion of its FTTP customer net adds coming from upgrades of existing AT&T high-speed Internet customers on older VDSL and DSL platforms.

Speaking on AT&T's Q2 call last month, Desroches asserted that the company's consumer wireline business had reached a "major inflection point" as broadband revenues continue to surpass legacy declines. Meanwhile, AT&T's broadband average revenue per user (ARPU) reached $54.76 in Q2 2021, improving from $51.61 in the year-ago period.

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— Jeff Baumgartner, Senior Editor, Light Reading