AT&T today announced its Q3 2021 earnings results through which it provided updates on its consumer-facing fiber broadband business and trends for its subscribers, as well as supply chain impediments to its ongoing fiber deployment.
AT&T Consumer Wireline – Q3 2021
Within AT&T’s Consumer Wireline business unit, the company generated $2.29bn of revenue from broadband services in Q3 2021, an increase of 1.1% quarter-over-quarter. During the quarter, AT&T added only 6k net broadband and DSL subscribers, bringing its total broadband and DSL subscribers to 14.2 million. However, AT&T’s broadband operating trends differ materially between fiber and non-fiber / DSL connections.
Broadband and DSL Subscribers – Net Adds/Losses
During Q3 2021, AT&T gained 289k fiber broadband subscribers, lost 261k non-fiber broadband subscribers, and lost 22k DSL subscribers. Notably, AT&T states that 70%+ of its net new fiber subscriber additions are new AT&T broadband customers.
Fiber Broadband Subscribers
AT&T ended Q3 2021 with 5.7 million fiber broadband subscribers, an increase of 1.04 million subscribers year-over-year. Indeed, this represents a 22% gain in fiber broadband subscriber count, as compared to AT&T’s 4.7 million fiber broadband subscribers as of Q3 2020. Additionally, AT&T notes that 3.4 million of its fiber broadband subscribers (i.e., ~60%) are taking 1 gigabit per second connections.
Overall, AT&T now has a fiber broadband penetration rate of 37%, on the ~15.5 million customer locations that the company passes with fiber. Importantly, AT&T has increased its fiber broadband penetration rate from 33% in Q3 2020.
As a reference point, Verizon’s Fios business registered 6.5 million consumer fiber customers as of Q3 2021.
AT&T’s broadband average revenue per user (ARPU) reached $55.16 as of Q3 2021. Indeed, this represents a 5.2% increase year-over-year from ARPU figures of $52.43 at Q3 2020. AT&T notes that increases to ARPU reflect fiber subscriber growth and customer take-up of higher speed/pricing tiers.
Fiber Deployment and Subscriber Targets
In 2021, AT&T plans to increase its fiber broadband footprint by an additional 2.5 million customer locations – downwards guide. Furthermore, the company will increase its target in 2022, to cover 4 million additional customer locations with fiber during the year. Ultimately, AT&T indicates that its fiber deployment pacing can reach 5 million homes passed per year.
Overall, these near-term plans form part of AT&T’s strategy to expand its fiber broadband footprint to cover 30 million customer locations by year-end 2025.
AT&T has previously guided to 1 million fiber broadband net customer additions for full-year 2021. Indeed, the company is on-pace to hit this target, having added 770k subscribers during the nine-months to September 30, 2021.
Supply Chain Impediments to Fiber Deployment
AT&T highlighted certain supply chain factors that are currently slowing the pace of its fiber deployments and connections to customers. Specifically, these supply chain impediments include:
- Hardware: supply shortages of chipsets for AT&T’s Wi-Fi gateway, which combines the functions of a router and modem to deliver in-home Wi-Fi connections
- Fiber Components: AT&T’s fiber suppliers have been delayed in delivering pre-fabricated components for the ‘last-mile’ of AT&T’s fiber network. Specifically, the company references delays from its manufacturers of pre-spliced connectors, which join an optical node with a distribution neighborhood. Indeed, these connectors ultimately link customer homes into AT&T’s larger distribution network