AT&T Handset Sales Down by $50M Per Month – CFO

AT&T has taken a $50 million-per-month sales hit in the first couple of months of this year due to the growing reluctance of its mobile customers to upgrade their smartphones, the operator's CFO noted at a financial conference on Tuesday.

Talking at the Deutsche Bank Media, Internet and Telecom Conference, AT&T CFO John Stephens stated that sales of mobile devices in the first two months of this year totaled $2.3 billion, down by $100 million compared with the first two months of 2018. "Customers continue to hold [onto] their handsets longer," stated Stephens, according to this Seeking Alpha transcript, noting also that device prices have been increasing.

But the trend hasn't come as a surprise: AT&T noted "some really modest handset upgrade rates" throughout 2018, and the operator had already accounted for lower year-on-year device sales in its financial guidance and profit forecasts.

The operator is also expecting dollar currency exchange rates to impact reported revenues from foreign operations during the first quarter of this year, which will be reported on April 24. (See AT&T's CFO Provides Q1 Update.)

You're invited to attend Light Reading's Big 5G Event! Formerly the Big Communications Event and 5G North America, Big 5G is where telecom's brightest minds deliver the critical insight needed to piece together the 5G puzzle. We'll see you May 6-8 in Denver -- communications service providers get in free!

At the Deutsche Bank conference, the CFO also commented on 5G and the ongoing virtualization of AT&T's network:

  • The evolution from 4G/LTE to the controversial 5G E (5G evolution) to actual 5G will provide customers "with a great experience and that's got to be the focus," but, importantly, it will also "bring our cost per megabit down significantly."

  • Stephens also noted that AT&T is improving its cellular capacity management and efficiency with carrier aggregation techniques and is expecting great efficiencies from installing software-upgradeable 5G-ready equipment on its cell towers. "When the 5G software comes out and we want to turn our … network into a 5G network, we can do it from a … software upgrade, we don't have to climb [the tower] again."

    AT&T CFO John Stephens updated on handset trends, 5G insights and virtualization progress.
    AT&T CFO John Stephens updated on handset trends, 5G insights and virtualization progress.

  • 5G innovation and revenue growth is expected to come from enterprise customers, noted the CFO. "We are convinced that business will lead in the innovation around 5G, whether it's in automated factories, whether it's healthcare opportunities, whether it's in a variety of IoT applications … will be grabbed on to by business and we believe that'll be the first set of revenue growth and innovative applications that we'll see."

  • AT&T's virtualization program is progressing: "We are north of, well north of, 55% of our network already virtualize[d], already turned into software," noted the CFO. His colleague Sorabh Saxena, president of business operations for AT&T Business Solutions, recently told Light Reading that the operator "is on track to meet its goal of virtualizing 75% of the network by next year." That target dates back to late 2014, when John Donovan, then senior executive VP of technology and operation and now CEO of AT&T Communication, drew what he called a "line in the sand" for network virtualization.

    — Ray Le Maistre, Editor-in-Chief, Light Reading

  • HOME
    Sign In