AT&T CFO likens Amazon mobile rumor to 'Seinfeld'

AT&T CFO Pascal Desroches dumped another bucket of cold water on the recent report that Amazon has talked to AT&T, as well as T-Mobile, Verizon and Dish Network, about forging deals that would enable Amazon to pitch cheap or free mobile services to Amazon Prime subs.

AT&T has already denied it's in such talks. Desroches doubled down on that Tuesday at the Bank of America C-Suite TMT Conference in London.

"It's sort of like those of you who watch 'Seinfeld,'" Desroches said when asked about the rumor. "It's a show about nothing. This was a rumor about nothing."

He also echoed analyst sentiment that there's little business reason for Amazon to pursue such a mobile play.

"Why would Amazon do this?" Desroches asked. "Amazon has high penetration – let's say more than 80% of US households. Would they really enter into a variable pricing construct for an incremental 10%?"

He also wondered why Amazon would also want to play ball with Dish, given that Dish remains "unproven" in mobile and is still building out a network. "Dish is a partner, and we really appreciate the partnership. But there is nothing to the rumors that have been discussed," Desroches said.

Cable's mobile gains 'not coming at our expense'

Desroches also weighed in on US cable's move into the mobile market, holding that AT&T's "porting ratios" relative to cable as an industry hasn't changed in the 12 to 18 months.

"Their share gains are not coming at our expense," he said. "Cable will do what they do, but I think they largely are playing in a different pool than we are."

But AT&T does stand to gain a bit from the cable industry's ramp into mobile. AT&T's biggest tie-in with cable, so far, is its newly signed MVNO deal with the National Content & Technology Cooperative, an organization that represents hundreds of small and midsized cable operators.

Fiber expansion remains a top priority

Desroches also touched on AT&T's fiber buildout activities, labeling the company the "largest provider in the US, and we are adding more [fiber subscribers] than anybody else."

In Q1 2023, AT&T added 272,000 new consumer fiber subs, ending the period with 7.48 million. However, AT&T's subscriber pace was a bit behind the +291,000 expected by analysts.

Desroches is also bullish about Gigapower, an AT&T/BlackRock joint venture that is initially building fiber to 1.5 million locations outside of AT&T's legacy wireline footprint. Gigapower recently identified several markets that will be part of the initial buildout.

"There's no reason why we would stop there" at 1.5 million fiber locations, Desroches said. "For the foreseeable future, our priorities will be to invest at incremental dollars into fiber," he said.

AT&T, he pointed out, also intends to extend its fiber reach by participating in the $42.45 billion Broadband Equity, Access and Deployment (BEAD) program.

Ahead of state-level BEAD allocations expected to be announced later this month, AT&T announced today that it has expanded its fiber-to-the-premises (FTTP) network to more than 130,000 customer locations through other grant programs, including the American Rescue Plan Act.

"With BEAD funding on the way, we should continue to stay motivated in replicating this success to expand internet access to more communities across the country," Erin Scarborough, president of broadband and connectivity initiatives at AT&T, said in a blog post that outlined several of AT&T's public-private fiber broadband projects.

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— Jeff Baumgartner, Senior Editor, Light Reading