AT&T's CEO opines on spectrum and DishAT&T's CEO opines on spectrum and Dish

AT&T's chief executive, John Stankey, said the company may be interested in acquiring more spectrum, including spectrum that might be freed from Dish Network.

"When there's valuable spectrum available, through any form or fashion ... we think that we always want to make those investments for the sustainability of the business," he said Thursday during AT&T's quarterly earnings call.

Stankey was responding to a question about Dish's ongoing troubles on Wall Street. An analyst on AT&T's earnings call described Dish as a "distress security" amid the company's falling shares and uncertain 5G future. The analyst asked Stankey how AT&T might react to Dish's changing situation.

"I'm not going to go into the details of how we think about what the scenarios are and what we can play out, but you can guess that, given the amount of money that's involved and the importance [of spectrum] to the business, we're constantly evaluating things and determining what scenarios might play out and what we might do and what makes sense for the company," Stankey said.

Figure 1: Stankey
(Source: REUTERS / Alamy Stock Photo)

He explained that an injection of additional spectrum into AT&T's operations would allow the company to sidestep the construction of additional cell sites in order to increase its 5G network capacity. "We're constantly evaluating those things," Stankey said. However, Stankey didn't specifically comment on any transaction between AT&T and Dish.

According to the financial analysts at New Street Research, Stankey's comments on Dish were "tough to read" but that the executive "seemed also to say that they [AT&T] would of course be interested in any spectrum that became available."

The satellite TV angle

Stankey also addressed ongoing speculation of a possible merger of the Dish and DirecTV satellite businesses – a transaction that Dish's Charlie Ergen has described as inevitable.

"I've never really commented on my point of view of what the calculus is on the combination of DirecTV and Dish, and I don't expect to do that today," Stankey said. "It's just not something that we typically speculate on. And I think Charlie has been the one that largely has commentary on that. He's certainly entitled to do that."

Stankey's comments are noteworthy considering Dish owns a vast amount of spectrum that it's currently deploying into its nascent but growing 5G network. AT&T, meanwhile, is racing to build out its own midband 5G network following its purchase of more than $30 billion worth of spectrum across two recent FCC spectrum auctions.

AT&T and Dish have already partnered on a 5G MVNO agreement, a deal that also potentially paves the way for some kind of network cooperation between the two. However, federal regulators would undoubtedly frown on any kind of merger between the nation's third and fourth largest nationwide wireless network operators.

Incoming customers

In its first quarter report, AT&T said it added 424,000 net new postpaid phone customers, which are the kinds of customers that investors track closely. The figure was mostly in line with what Wall Street analysts expected.

AT&T officials said the company continues to gain "quality" customers. They noted that AT&T so far isn't yet seeing any major decline in demand for wireless services. That's noteworthy considering widespread expectations of a coming slowdown in the overall growth of new customers in the US wireless industry.

"At this stage, it doesn't look like the industry is slowing by as much as we expected," said the financial analysts at New Street Research in a note to investors Thursday after AT&T reported its first quarter results. However, they pointed out that T-Mobile and Verizon haven't yet reported their own quarterly results.

Warnings and concerns

Nonetheless, as noted by Reuters, shares in AT&T, Verizon and T-Mobile all declined Thursday after AT&T reported its quarterly results.

Importantly, AT&T generated $1 billion in free cash flow in its quarter, but that was down 64% from last year, as noted by the Wall Street Journal. The operator explained that the falloff was due to the timing of some of its capital investments.

"What we're seeing is in line with our expectations," Stankey said during AT&T's earnings call. "I take comfort in the state of our business."

AT&T officials reiterated the company's overall financial guidance for 2023. They also hinted that the company might exceed its goal to cut $6 billion in costs by the end of this year.

From AI to AR

Interestingly, AT&T executives said the company is preparing for the arrival of new technologies, whether that's artificial intelligence (AI) or augmented reality (AR).

For example, Stankey said that AT&T continues to add AI technology into its operations. He pointed to the company's recent partnership with chipmaker Nvidia to use AI technology to improve the efficiency of its technicians' trips to the field. He said AT&T is also using AI to chart a better path for its customers through the company's customer service setup.

As for AR, Stankey said that AT&T has been working to upgrade its network to standalone (SA) 5G technology in order to offer faster and more flexible data services to AR devices. Further, he said that AT&T's network, as well as other 5G networks, ought to be "scaled" by the end of this year for new AR devices.

His comments are noteworthy considering widespread expectations of new AR glasses from Apple later this year.

Stankey also suggested that such devices would be "nice add-ons to family plans." Such commentary potentially indicates that AT&T is looking to AR glasses as a new revenue stream. The company already charges an extra $10 per month to customers who connect smartwatches to their existing wireless account.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano