Dell’Oro: Telecom Capex Growth to Slow in calendar years 2022-2024

Dell’Oro Group forecasts that telco capex growth will taper off in 2023 and 2024 after increasing 9% year-over-year in nominal USD terms and on track to advance 3% in 2022.

The market research firm states that the top fifty carriers in the world collectively generated combined annual revenue and investments of well over $1.4 T this past year.  They estimate that these carriers account for roughly 80% of worldwide capex and revenue.

Dell’Oro’s Telecom Capex bi-annual reports (previously called Carrier Economics bi-annual reports) track the revenue and capital expenditure (capex) trends for these fifty-plus carriers.

“Telco investments, in general, have shown remarkable resilience to external factors including Covid-19 containment measures, supply chain disruptions, and economic uncertainties,” said Stefan Pongratz, Vice President and analyst with the Dell’Oro Group.  “Surging wireless investments in the US taken together with non-mobile capex expansions in China will keep the momentum going in 2022,” continued Pongratz.

Stefan believes carrier revenue and capex trends can to some degree explain telecom equipment manufacturer revenue trends. The highly granular information provided in this report will enable carriers, system and component vendors, equity researchers, and regulatory bodies to assess growth opportunities and to observe performance practices in the telecom sector.

Additional highlights from the March 2022 3-year Telecom Capex forecast report:

  • Global capex growth is expected to moderate from 9 percent in 2021 to 3 percent in 2022, before tapering off in 2023 and 2024.
  • The coupling between carrier investments and manufacturing infrastructure revenues is expected to prevail over the short-term—capex and telecom equipment are on track to advance 3 percent and 4 percent in 2022, respectively.
  • Short-term output acceleration is expected to be relatively broad-based, with investments growing in China and the US. At the same time, challenging comparisons in the US are expected to drag down the overall capex in the outer part of the forecast.
  • Following a strong showing in 2021, capex growth prospects across Europe will be more muted in 2022.

Editor’s Note:

MTN Consulting estimates a nearly $325B annualized global capex in 2021, or nearly double the webscale total of $175B.  The ratio of capex to revenues, or capital intensity, reached 17.2% in 2021, the highest level since 2015.

Excluding China/HK-based companies (which haven’t finished reporting), the top 10 biggest telco capex spenders in 2021 were AT&T, DT, Verizon, NTT, Comcast, Vodafone, Orange, Charter, America Movil, and Telefonica. The biggest capex gains in 2021 were seen at America Movil (+$2.54B versus 2020 total), Telecom Italia (+$2.49B), Verizon (+$2.09B), AT&T (+$1.93B), Deutsche Telekom (+$1.74B), BT (+$1.63B), and Rakuten ($1.47B). The DT jump is inflated slightly by its Sprint acquisition, which closed in April 2020.

MTN’s  latest official global capex forecast is for $328B in 2022, a bit higher than 2021. “We are maintaining this target for now, but there is a high level of uncertainty and considerable downside risk.”  No forecast beyond 2022 was provided.

 About the Report

The Dell’Oro Group Telecom Capex Report provides in-depth coverage of more than 50 telecom operators highlighting carrier revenue, capital expenditure, and capital intensity trends.  The report provides actual and 3-year forecast details by carrier, by region by country (United States, Canada, China, India, Japan, and South Korea), and by technology (wireless/wireline).  To purchase this report, please contact by email at [email protected].

About Dell’Oro Group

Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications and enterprise networks infrastructure, network security and data center IT markets.  Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions.  For more information, please contact Dell’Oro Group at +1.650.622.9400 or visit www.delloro.com.

Addendum from Light Reading:

China is already showing signs of slowing its 5G investment – China Telecom plans to reduce 5G investment by nearly 11% to 34 billion yuan (US$5.34 billion) this year, reported Light Reading’s Robert Clark in March. China Mobile has budgeted 110 billion yuan (US$17.3 billion) for spending on 5G networks in 2022, a 3.5% decline.

In the US, Dish Network is among service providers upping their 5G investments this year. Dish spent $1 billion on 5G-related capex in 2021 and plans to spend $2.5 billion in 2022 , reported Light Reading’s Jeff Baumgartner in February.

On the other hand, IDC doesn’t expect telecom capex to drop until 2024:

“COVID-19 has shown no long-term negative effects on telecommunications capex. IDC expects 2021 capex will grow versus 2020 and show no decline until at least 2024. If anything, COVID-19 has led to communications service providers increasing their network investments to sustain increase demand for connectivity and the speeds associated with it.” said Daryl Schoolar, IDC research director, Worldwide Telecommunications Insights.

References:

Worldwide Telecom Capex Growth to Taper Off in 2023, According to Dell’Oro Group

Telecom Capex

https://www.lightreading.com/5g/telco-capex-could-level-out-in-2023-delloro-reports/d/d-id/776610?

MTN Consulting: : 4Q2021 review of Telco & Webscale Network Operators Capex

Telco capex jumps 10% in 2021 to hit $325B

https://www.idc.com/getdoc.jsp?containerId=US48465621

 

MTN Consulting: : 4Q2021 review of Telco & Webscale Network Operators Capex

by Matt Walker

Webscale revenues surge 25% to $2.1 trillion in 2021; capex of $175B drives global data center demand.

Introduction:

Revenues for the webscale sector of network operators ended 2021 at $2.14 trillion. That’s up 25% from 2020, and nearly 3x the total recorded in 2011. One reason for this is a dramatic uptick in cloud services revenues: cloud revenues for the top 3 (AWS, GCP and Azure) climbed 42% YoY, to $120.3B (per MTN Consulting). Still, this accounts for less than 6% of total webscale sector revenues. Larger factors behind 2021’s growth include: digital ad revenues for Alphabet and Facebook (Meta); ecommerce sales  at Amazon, JD.Com, and Alibaba; and, 5G device revenue sales at Apple. The webscale sector is now comfortably larger than telecom, which recorded just under $1.9 trillion in 2021 revenues.

Here’s the profile for Amazon:

Capex- Telcos vs Webscalers:

On a capex basis, telecom remains far ahead, with nearly $325B in 2021 annualized capex, or nearly double the webscale total of $175B.  Excluding China/HK-based companies (which haven’t finished reporting), the top 10 biggest telco capex spenders in 2021 were AT&T, DT, Verizon, NTT, Comcast, Vodafone, Orange, Charter, America Movil, and Telefonica. The biggest capex gains in 2021 were seen at America Movil (+$2.54B versus 2020 total), Telecom Italia (+$2.49B), Verizon (+$2.09B), AT&T (+$1.93B), Deutsche Telekom (+$1.74B), BT (+$1.63B), and Rakuten ($1.47B). The DT jump is inflated slightly by its Sprint acquisition, which closed in April 2020.

However, webscale is gradually bridging the capex gap with telcos:  webscale capex spiked 30% YoY in 2021, versus an approximate 10% rise for telco capex. Capex in 4Q21 for webscalers was $50B, up 23% YoY. Webscalers also invest heavily in R&D, and have bleeding-edge requirements for the technology they deploy in their network. That has led them to drive the creation of many new innovations in network infrastructure over the last few years. These span semiconductors, optical transmission and components, intent-based routing, network automation, and other areas.

Facebook (Meta) is perhaps the most influential of all webscalers due in part to its openness and support for the OCP and TIP organizations.

Asia Pacific records best recent revenue growth in 2021

Regionally, the strongest growth in 2021 was in Asia Pacific, where revenues grew 29% YoY. The more mature Americas region lagged, with growth of just over 21% YoY. That pushed Americas down to about 44% of global webscale revenues, from 45% in 2020. Asia Pacific follows, with a 36% global revenue share, then Europe (17%) and MEA (3%). The Americas still account for the majority of webscale capex, with the US at the center. For instance, both Alphabet and Facebook (Meta) say well over 70% of their “long-lived assets” are in the US. Going forward, the non-US portion should rise as the cloud providers within the webscale market build out their global data center footprints. In January 2022, for example, AWS launched its first data center in Jakarta, Indonesia, and is planning a new region in Mexico.

Profitability still relatively high, but weaker than 2020:

Using a standardized definition of free cash flow (cash from operations less capex), the webscale sector’s FCF was $347.4B in 2021, or 16.2% of revenues. That is down significantly from a 19.7% margin in 2020. This ratio is still high relative to many sectors, however. The decline is due largely to a webscaler choice to accelerate capex during the COVID dislocation; that should pay off over the long run. Oracle, for instance, saw its FCF drop from 30.8% in 2020 to 17.2% in 2021, due mainly to its rapid cloud expansion. Nonetheless, Oracle says it will continue capex at a roughly $1B per quarter run rate, as it aspires to be the fourth major cloud provider with global scope. Amazon is actually the worst hit company in terms of FCF margin drop, due directly to its enormous 2021 capex outlays: Amazon’s FCF in 2021 was -3.1%, from 6.7% in 2020. Amazon, however, says its 2022 infrastructure (AWS) capex will likely rise.

Cash on hand, including short-term liquid investments, amounted to $747B for the webscale sector at the end of 4Q21, down 2% from the end of 2020. Total debt increased by 7%, to $518B. As a result, net debt (debt minus cash) in Dec. 2021 was -$228B for the webscale sector, from -$280B in December 2020. The companies with the biggest stockpiles of cash (and equivalents) are Alphabet ($139.6B), Microsoft ($125.4B), Amazon ($96.0B), and Apple ($63.9B). Facebook has just $48B, but no debt at all. Apple, IBM, and Oracle all have significantly more debt than cash.

Top 8 webscalers remain the biggest spenders, but Oracle and Twitter also important

This webscale tracker considers a “Top 8” group of companies as being, traditionally, the most influential in the market’s overall technology development and investments. These include three Chinese Internet companies (Alibaba, Baidu and Tencent), the world’s leading smartphone provider (Apple), the world’s biggest social media company (Facebook), and the leading three cloud providers: Alphabet, Amazon, and Microsoft. Ranking webscalers based on their share of tech capex, Amazon tops the list easily, accounting for 27.0% of network/IT capex in 2021. Amazon is followed by Alphabet (16.2%), Microsoft (14.0%), Facebook (10.0%), Tencent (6.3%), Apple (5.0%), Alibaba (4.1%), Oracle (2.9%), Baidu (2.1%), IBM (1.7%), HPE (1.5%), and Twitter (1.3%). Amazon’s recent capex surge is well known, and has supported expansion of the company’s AWS footprint and service offerings. Oracle has been quieter but its capex  growth is equally impressive, from a smaller base: 2021 capex was $3.1B, up 70% from 2020. Twitter, a new addition to our webscale coverage, spends more on network/IT capex as a percentage of revenues (over 19%) than all other webscalers, due to ongoing software development and construction of its first owned data center.

The facilities these webscale players are building can be immense. For instance, Microsoft started construction recently on two new data centers in Des Moines Iowa, each of which costs over $1B and measures over 167K square meters (1.8 million square feet). These two are part of a cluster in the area, as is often the case; Microsoft already has three facilities around Des Moines. Facebook is working on a project in DeKalb, Illinois, roughly half the size at 84.2K square meters, costing US$800M and spreading across 500 acres of land. This construction project was announced in 2020 but won’t complete until 2023. These are just two examples of the many big facilities in the works in the webscale sector.

Who benefits from webscale capex?

The network spending of big webscalers is centered around immense, “hyperscale” data centers and undersea cable systems that support network traffic from the tech companies’ online retail, video, and social media platforms, along with cloud services. Webscale network operators (WNOs) may also own access networks, typically using fiber, microwave or mmWave, and even fixed satellite. WNOs exploring outer space for providing connectivity include Amazon, Apple, Alphabet, Facebook, and Microsoft.

A broad set of vendors are benefiting from WNO capex spending – from semiconductor players selling into the data center market (Intel, AMD, Nvidia, Broadcom, etc), to optical components & transport vendors selling into data center interconnect markets (e.g. Infinera, II-VI, Lumentum/Neophotonics), to contract manufacturers of white box/OCP servers (e.g. Wistron and Quanta). Cisco, for instance, recorded approximately $4.0B in 2021 sales to the webscale sector, up from about $2.1B in 2020. The construction industry also sees webscale as important, as much of their capex is for development of data center properties.

Network investment outlook:

Our current forecast calls for $187B of webscale capex in 2022, and further growth in the out-years until capex hits about $252B in 2026. For now, we are maintaining these targets. Despite a modest slippage in profitability, cash/debt and top-line growth in 4Q21, the sector retains many strengths which won’t go away overnight. Cloud services revenue growth remains strong, as does profitability for most players. Moreover, 2022 capex guidance from the major webscalers suggests modest growth; a summary follows:

  • Amazon: 4Q21 earnings call confirmed that network/IT (“infrastructure” for AWS) is about 40% of total, consistent with MTN Consulting assumptions. Other components are fulfillment/logistics and transportation. For future capex, it says “we’re still working through some of our plans for 2022, but it’s coming into focus a bit. We see the CapEx for infrastructure going up…we’re adding regions and capacity to handle usage that still exceeds revenue growth in that business. So we feel good about making those investments.”
  • Facebook (Meta): still calling for 2022 capex, including principal payments on finance leases, in the range of $29-34 billion (2021 actual: $19.2 billion). Says capex is driven by investments in data centers, servers, network infrastructure, and office facilities, and next year’s figure “reflects a significant increase in our AI and Machine Learning investments, which will support a number of areas across our Family of Apps.”
  • Alphabet: projects a “meaningful increase in CapEx” for 2022, due to both technical infrastructure (mainly servers) and office facilities, where the company says it is “reaccelerating investment in fit-outs and ground-up construction.”
  • Microsoft: expects 1Q22 capex to decline sequentially versus 4Q21, a change from the prior year period when 1Q21’s total capex was up 22% versus 4Q20. Does not provide any longer-term guidance. Its pending acquisition of Activision Blizzard is likely a factor in future plans, for two reasons. First, the deal consumes a lot of cash, and second, absorbing Activision would likely come with some changes in data center strategy. Currently Activision does not have any of its own data centers, rather, it rents colocation space in third-party facilities. The combined company will clearly want to see benefits from Microsoft’s data center footprint.
  • Oracle: expects capex to continue in the roughly $1B per quarter range through the end of its current fiscal year (May 2022).
  • Tencent: no concrete guidance but has hinted at Facebook-like investments in the “metaverse,” says it has a lot of the building blocks needed, for example, “a lot of gaming experiences…very strong social networking experience…engine capability, we have AI capability, we have the capability to build a large server architecture that can serve a huge number of concurrent users. We are very experienced in managing digital content economies as well as real-life digital assets.”
  • Apple: nothing concrete on capex specifically, but in April 2021 it announced “$430 billion in contributions to the US economy include direct spend with American suppliers, data center investments, capital expenditures in the US, and other domestic spend…”
  • Alibaba: no concrete guidance but 4Q21 call said it will continue to “invest in expanding its international infrastructure,” saying it now provides cloud services in 25 regions globally and that it is “committed to serving the real economy for the long term and the digitalization of all industries”. At its Apsara conference in October 2021, the company unveiled several new proprietary products, including Yitian 710 server chip, the X-Dragon architecture, Panjiu cloud-native server series, Alibaba AI and big data platform and a new generation of PolarDB database. It has global aspirations for its IaaS and PaaS services.
  • Baidu: hasn’t addressed capex recently but on 4Q21 earnings call cited strong cloud demand growth, and said it is “trying to retain rapid revenue growth for 2022 and beyond,” which will require infrastructure investments.
  • Twitter: its capex appears to be moderating now that it has (largely) completed construction of its new data center.

While we are maintaining the forecast outlook as published in Dec 2021, Amazon is a wildcard. It provides no specific guidance, and is clearly the market leader. Its quarterly outlays will be watched carefully. Even if its total capex does moderate, it is possible that the network/IT % of total will rise.

Implications for carrier-neutral market segment:

Webscalers with cloud operations are building out their data center footprints, and most webscalers are deploying more complex functionality into their networks (video, gaming, AI, metaverse). However, webscalers do have some financial pressures, and more important have an increasingly rich range of options for how they expand. The carrier-neutral segment (CNNO) of data center players is investing heavily in larger, more hyperscale-friendly and energy efficient facilities. Further, the sector is consolidating with help from private equity. MTN Consulting expects webscalers to continue to lean heavily on these third-parties for expansion in 2022 and beyond. As a result, data center CNNOs like Digital Realty, Equinix and its JV partners, QTS/Blackstone, CyrusOne/KKR/GIP, American Tower/CoreSite, and GDS will become more attractive to vendors as they invest more in network technology of their own.

References:

Webscale Network Operators: 4Q21 Market Review

Telco capex jumps 10% in 2021 to hit $325B

 

 

MTN Consulting: Network Infrastructure market grew 5.1% YoY; Telco revenues surge 12.2% YoY

MTN Consulting: Network operator capex forecast at $520B in 2025

 

Will AT&T’s huge fiber build-out win broadband market share from cablecos/MSOs?

AT&T added 235,000 fiber connections in the first quarter, ending the period with nearly 5.2 million total fiber customers. AT&T says they have a total of around 15 million fiber and non-fiber customers, so fiber access is approximately 1/3 of total customers now.

The company recently announced it plans to build fiber to 3 million new customer locations this year and 4 million next year. AT&T plans to double the number of locations where it offers fiber Internet, from approximately 15 million to about 30 million, by 2025. To do that, AT&T is planning to increase its annual capital expenses from $21 billion to around $24 billion.

AT&T’s new focus on connectivity over content is a direct result of its spinning off Warner Media to Discovery, as we chronicled in this IEEE Techblog post. Thaddeus Arroyo, head of AT&T’s consumer business, made that crystal clear at a recent BoA investor event:

“We expect capital expenditures of about $24 billion a year after the Warner Media discovery transaction closes. That’s an incremental investment that’s going to go to fiber to 5G capacity and 5G C-band deployment.

We have another great opportunity, the one we continue to talk around fiber. So as part of this capital, we’re going to be investing in fiber expansion to meet the growing needs for bandwidth that require a much more robust fiber network regardless of the last mile serving technology. Fiber is the foundation that fuels our network. Expanding our fiber reach serves multiple services hanging off at each strand of fiber. It includes macro cell sites, small cell sites, wholesale services, enterprise, small business, and fiber that’s extended directly into our customers’ homes and into businesses.

We plan to reach 30 million customer locations passed with fiber by the end of 2025. That’s going to double our existing fiber footprint. And investing in fiber drives solid returns because it’s a superior product. Where we have fiber we win, we’re improving share in our fiber footprint, and the penetration rates are accelerating and growing, given our increased financial flexibility. We’re comfortable in our ability to invest and achieve our leverage targets that we outlined of getting to 2.6% at close and below 2.5% by the end of 2023.”

Mo Katibeh, the AT&T executive responsible for fiber and 5G build-outs, added on via a recent post on LinkedIn:  “We are building MORE Fiber to MORE homes and businesses. And we’re talking A LOT of fiber – MILLIONS of new locations every year, planning to cover 30 MILLION customer locations by the end of 2025! And you know what comes with all that investment in America? JOBS. Our AT&T Network Build team is GROWING..”

Previously, Katibeh wrote on LinkedIn : “Contributing to a large portion of the $105B Capital spend between 2016 and 2020 – our team is building out AT&T #Fiber to MILLIONS of new customer locations in 2021, as well as augmenting America’s best mobility network with more capacity, more speed – and more #5G (you know I love 5G!).”

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So with all that said, will AT&T’s fiber build-out keep pace with cable companies/MSOs DOCSIS networks?

Tom Rutledge, Charter’s CEO, made a brief comment about plant upgrades on the earnings call (note – Dave Watson made similar comments on the Comcast earnings call):

“We’re continuously increasing the capacity in our core and hubs and augmenting our network to improve speed and performance at a pace dictated by customers in the marketplace. We have a cost-effective approach to using DOCSIS 3.1, which we’ve already deployed, to expand our network capacity 1.2 gigahertz, which gives us the ability to offer multi-gigabit speeds in the downstream and at least 1 gigabit per second in the upstream.”

According to Leichtman Research Group, the top cable companies had 68 million broadband subscribers, and top wireline telecom companies had 33.2 million subscribers at the end of 2019.

“Based on the currently available information, cable stole wired broadband market share in Verizon and AT&T markets as well. Oy vey!” said Jim Patterson of Patterson Advisory Group in his May 2, 2021 newsletter.  “Think about Comcast and AT&T as having roughly the same number of homes passed (AT&T probably closer to 57 million homes versus the nearly 60 million shown for Comcast),” he added.  Patterson noted that top cable companies Comcast, Charter and Altice managed to capture 86% of broadband customer growth in the U.S. in the first quarter of this year.

“(AT&T) fiber connections simply aren’t growing fast enough to keep up,” wrote colleague Craig Moffett of MoffettNathanson in a recent note to clients.  Here’s more:

To be sure, there are questions about the extent to which these deployments will overlap cable (or will instead be focused on unserved rural communities), and the extent to which labor and supply chain contraints might limit acheivability of announced targets. Still, taken together, these deployments suggest that, after a precipitous decline in new fiber construction in 2020, planned fiber deployments do, indeed, rise over the next two years; we expect that both 2021 and 2022 will represent new all-time peaks in total number of fiber homes passed. Typically, the competitive impact from overbuilds is felt with some lag, suggesting the impact on cable operators will peak in 2024/2025.

At the same time, we expect that federal stimulus to accelerate broadband market growth in 2021 and 2022, perhaps significantly, with new household formation, in particular, driving upside to 2021 and 2022 forecasts.

Longer term, however, Cable operators will have to contend with more fiber overbuilds, as TelCos increasingly see both more favorable economics for fiber deployment and increasingly acknowledge that their copper plant faces imminent obsolescence without it. The forecasts for fiber deployment in this note suggest that 2021 will be a record for fiber construction – assuming labor and materials capacity can accommodate the TelCos’ own forecasts – and 2022 will step up higher still. After that, deployments are expected to abate, at least to a degree.

“Cable can upgrade its plant quickly and at low cost to offer at least 4.6Gbit/s down and 1.5Gbit/s up, well beyond current fiber offerings. They can do this before the move to DOCSIS 4.0, which is still years off,” wrote the financial analysts at New Street Research in a recent note to investors.   The result, according to the New Street analysts, is that fiber providers like AT&T won’t necessarily be able to dominate the fiber market with a 1 Gbit/s FTTH/FTTP connection and take market share from cable incumbents.

“Cable will face new fiber competition in more of its markets over the next few years; however, there is little to no prospect of fiber delivering a service in those markets that cable can’t easily match or beat,” New Street concluded.

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“Looking back and being a little critical, we probably allowed the cable companies to execute and to take share in that market in a significant way,” AT&T CFO Pascal Desroches said at a recent Credit Suisse investor event.

AT&T executives have said that the company’s fiber investment ultimately will generate internal returns of around 15%. Desroches said that return on investment will be due to a variety of factors. Fiber “supports not only consumer needs, it supports needs for our enterprise businesses as well as needs for potentially our reseller business. So being able to look across and integrate the planning for fiber deployment such that it not only serves consumer needs, but it serves these other market adjacencies as well is something that we haven’t been very good at historically, That’s why we’re really bullish and we believe we’re going to be able to execute really well here,” AT&T’s CFO concluded.

 

References:

https://www.lightreading.com/opticalip/is-atandts-fiber-investment-good-idea/d/d-id/770468?

https://investors.att.com/~/media/Files/A/ATT-IR-V2/events-and-presentations/bank-of-america-transcript-6-16-21.pdf

https://www.linkedin.com/feed/update/urn:li:activity:6813211481950318592/

https://investors.att.com/~/media/Files/A/ATT-IR-V2/events-and-presentations/final-credit-suisse-transcript-6-15-21.pdf

MTN Consulting: Network operator capex forecast at $520B in 2025

Executive Summary:

Telco, webscale and carrier-neutral capex will total $520 billion by 2025 according to a report from MTN Consulting..  That’s compared with $420 billion in 2019.

  • Telecom operators (telco) will account for 53% of industry Capex by 2025 vs 9%  in 2019;
  • Webscale operators will grow from 25% to 39%;
  • Carrier-neutral [1.] providers will add 8% of total Capex in 2025 from 6% in 2019.

Note 1. A Carrier-neutral data center is a data center (or carrier hotel) which allows interconnection between multiple telecommunication carriers and/or colocation providers.  It is not owned and operated by a single ISP, but instead offers a wide variety of connection options to its colocation customers.

Adequate power density, efficient use of server space, physical and digital security, and cooling system are some of the key attributes organizations look for in a colocation center. Some facilities distinguish themselves from others by offering additional benefits like smart monitoring, scalability, and additional on-site security.

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The number of telco employees will decrease from 5.1 million in 2019 to 4.5 million in 2025 as telcos deploy automation more widely and spin off parts of their network to the carrier-neutral sector.

By 2025, the webscale sector will dominate with revenues of approximately $2.51 trillion, followed by $1.88 trillion for the telco sector and $108 billion for carrier-neutral operators (CNNOs).

KEY FINDINGS from the report:

Revenue growth for telco, webscale and carrier-neutral sector will average 1, 10, and 7% through 2025

Telecom network operator (TNO, or telco) revenues are on track for a significant decline in 2020, with the industry hit by COVID-19 even as webscale operators (WNOs) experienced yet another growth surge as much of the world was forced to work and study from home. For 2020, telco, webscale, and carrier-neutral revenues are likely to reach $1.75 trillion (T), $1.63T, and $71 billion (B), amounting to YoY growth of -3.7%, +12.2%, and 5.0%, respectively. Telcos will recover and webscale will slow down, but this range of growth rates will persist for several years. By 2025, the webscale sector will dominate with revenues of approximately $2.51 trillion, followed by $1.88 trillion for the telco sector and $108 billion for carrier-neutral operators (CNNOs).

Network operator capex will grow to $520B by 2025

In 2019, telco, webscale and carrier-neutral capex totaled $420 billion, a total which is set to grow to $520 billion by 2025. The composition will change starkly though: telcos will account for 53% of industry capex by 2025, from 9% in 2019; webscale operators will grow from 25% to 39% in the same timeframe; and, carrier-neutral providers will add 8% of total capex in 2025 from their 2019 level of 6%.

By 2025, the webscale sector will employ more than the telecom industry

As telcos deploy automation more widely and cast off parts of their network to the carrier-neutral sector, their employee base should decline from 5.1 million in 2019 to 4.5 million in 2025. The cost of the average telco employee will rise significantly in the same timeframe, as they will require many of the same software and IT skills currently prevalent in the webscale workforce. For their part, webscale operators have already grown from 1.3 million staff in 2011 to 2.8 million in 2019, but continued rapid growth in the sector (especially its ecommerce arms) will spur further growth in employment to reach roughly 4.8 million by 2025. The carrier-neutral sector’s headcount will grow far more modestly, rising from 90 million in 2019 to about 119 million in 2025. Managing physical assets like towers tends to involve a far lighter human touch than managing network equipment and software.

Carrier Neutral Data Center Image

Example of a Carrier Neutral Colo Data Center

RECOMMENDATIONS:

Telcos: embrace collaboration with the webscale sector

Telcos remain constrained at the top line and will remain in the “running to stand still” mode that has characterized their last decade. They will continue to shift towards more software-centric operations and automation of networks and customer touch points. What will become far more important is for telcos to actively collaborate with webscale operators and the carrier-neutral sector in order to operate profitable businesses. The webscale sector is now targeting the telecom sector actively as a vertical market. Successful telcos will embrace the new webscale offerings to lower their network costs, digitally transform their internal operations, and develop new services more rapidly. Using the carrier-neutral sector to minimize the money and time spent on building and operating physical assets not viewed as strategic will be another key to success through 2025.

Vendors: to survive you must improve your partnership and integration capabilities

Collaboration across the telco/webscale/carrier-neutral segments has implications for how vendors serve their customers. Some of the biggest telcos will source much of their physical infrastructure from carrier-neutral providers and lean heavily on webscale partners to manage their clouds and support new enterprise and 5G services. Yet telcos spend next to nothing on R&D, especially when compared to the 10% or more of revenues spent on R&D by their vendors and the webscale sector. Vendors who develop customized offerings for telcos in partnership with either their internal cloud divisions (e.g. Oracle, HPE, IBM) or AWS/GCP/Azure/Alibaba will have a leg up. This is not just good for growing telco business, but also for helping webscale operators pursue 5G-based opportunities. One of the earliest examples of a traditional telco vendor aligning with a cloud player for the telco market is NEC’s 2019 development of a mobile core solution for the cloud that can be operated on the AWS network; there will be many more such partnerships going forward.

All sectors: M&A is often not the answer, despite what the bankers urge

M&A will be an important part of the network infrastructure sector’s evolution over the next 5 years. However, the difficulty of successfully executing and integrating a large transaction is almost always underappreciated. There is incredible pressure from bankers to choose M&A, and the best ones are persuasive in arguing that M&A is the best way to improve your competitiveness, enter a new market, or lower your cost base. Many chief executives love to make the big announcements and take credit for bringing the parties together. But making the deal actually work in practice falls to staff way down the chain of command, and to customers’ willingness to cope with the inevitable hiccups and delays brought about by the transaction. And the bankers are long gone by then, busy spending their bonuses and working on their next deal pitch. Be extremely skeptical about M&A. Few big tech companies have a history of doing it well.

Webscale: stop abusing privacy rights and trampling on rules and norms of fair competition

The big tech companies that make up the webscale sector tracked by MTN Consulting have been rightly abused in the press recently for their disregard for consumer privacy rights, and overly aggressive, anti-competitive practices. After years of avoiding increased regulatory oversight through aggressive lobbying and careful brand management, the chickens are coming home to roost in 2021. Public concerns about abuses of privacy, facilitation of fake news, and monopolistic or (at the least) oligopolistic behavior will make it nearly impossible for these companies to stem the increased oversight likely to come soon from policymakers.

Australia’s pending law, the “News Media and Digital Platforms Bargaining Code,” could foreshadow things to come for the webscale sector, as do recent antitrust lawsuits against Facebook and Alphabet. Given that webscale companies are supposed to be fast moving and innovative, they should get out ahead of these problems. They need to implement wholesale, transparent changes to how they treat consumer privacy and commit to (and actually follow) a code of conduct that is conducive to innovation and competition. The billionaires leading the companies may even consider encouraging fairer tax codes so that some of their excessive wealth can be spread across the countries that actually fostered their growth.

ABOUT THIS REPORT:

This report presents MTN Consulting’s first annual forecast of network operator capex. The scope includes telecommunications, webscale and carrier-neutral network operators. The forecast presents revenue, capex and employee figures for each market, both historical and projected, and discusses the likely evolution of the three sectors through 2025. In the discussion of the individual sectors, some additional data series are projected and analyzed; for example, network operations opex in the telco sector. The forecast report presents a baseline, most likely case of industry growth, taking into account the significant upheaval in communication markets experienced during 2020. Based on our analysis, we project that total network operator capex will grow from $420 billion in 2020 to $520 billion in 2025, driven by substantial gains in the webscale and (much less so) carrier-neutral segments. The primary audience for the report is technology vendors, with telcos and webscale/cloud operators a secondary audience.

References:

Network operator capex to hit $520B in 2025

Carrier Neutral Colocation Data Centers

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January 8, 2021 Update:

Analysys Mason: Cloud technology will pervade the 5G mobile network, from the core to the RAN and edge

“Communications Service Providers (CSPs) spending on multi-cloud network infrastructure software, hardware and professional services will grow from USD4.3 billion in 2019 to USD32 billion by 2025, at a CAGR of 40%.”

5G and edge computing are spurring CSPs to build multi-cloud, cloud-native mobile network infrastructure
Many CSPs acknowledge the need to use cloud-native technology to transform their networks into multi-cloud platforms in order to maximise the benefits of rolling out 5G. Traditional network function virtualisation (NFV) has only partly enabled the software-isation and disaggregation of the network, and as such, limited progress has been made on cloudifying the network to date. Indeed, Analysys Mason estimates that network virtualisation reached only 6% of its total addressable market for mobile networks in 2019.

The telecoms industry is now entering a new phase of network cloudification because 5G calls for ‘true’ clouds that are defined by cloud-native technologies. This will require radical changes to the way in which networks are designed, deployed and operated, and we expect that investments will shift to support this new paradigm. The digital infrastructure used for 5G will be increasingly built as horizontal, open network platforms comprising multiple cloud domains such as mobile core cloud, vRAN cloud and network and enterprise edge clouds. As a result, we have split the spending on network cloud into spending on multiple cloud domains (Figure 1) for the first time in our new network cloud infrastructure report. We forecast that CSP spending on multi-cloud network infrastructure software, hardware and professional services will grow from USD4.3 billion in 2019 to USD32 billion by 2025, at a CAGR of 40%.

https://www.analysysmason.com/research/content/comments/network-cloud-forecast-comment-rma16/

Synergy Research: Hyperscale Operator Capex at New Record in Q3-2020

Hyperscale cloud operator capex topped $37 billion in Q3-2020, which easily set a new quarterly record for spending, according to Synergy Research Group (SRG). Total spending for the first three quarters of 2020 reached $99 billion, which was a 16% increase over the same period last year.

Synergy Research Group’s latest data found that cloud service provider capex that was specifically targeted at data centers in the first three quarters increased by 18% compared to 2019.

The top-four hyperscale spenders in the first three quarters of this year were Amazon, Google, Microsoft and Facebook. Those four easily exceeded the spending by the rest of the hyperscale operators.  The next biggest cloud spenders were Apple, Alibaba, Tencent, IBM, JD.com, Baidu, Oracle, and NTT.

SRG’s data found that capex growth was particularly strong across Amazon, Microsoft, Tencent and Alibaba while Apple’s spend dropped off sharply and Google’s also declined.

Capex Q320

Much of the hyperscale capex goes towards building, expanding and equipping huge data centers, which grew in number to 573 at the end of Q3. The hyperscale data is based on analysis of the capex and data center footprint of 20 of the world’s major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking and e-commerce. In aggregate these twenty companies generated revenues of over $1.1 trillion in the first three quarters of the year, up 15% from 2019.

“As expected the hyperscale operators are having little difficulty weathering the pandemic storm. Their revenues and capex have both grown by strong double-digit amounts this year and this has flowed down to strong growth in spending on data centers, up 18% from 2019,” said John Dinsdale, a Chief Analyst at Synergy Research Group. “They generate well over 80% of their revenues from cloud, digital services and online activities, all of which have seen COVID-19 related boosts. As these companies go from strength to strength they need an ever-larger footprint of data centers to support their rapidly expanding digital activities. This is good news for companies in the data center ecosystem who can ride along in the slipstream of the hyperscale operators.”

Separately, Google Cloud announced it is set to add three new ‘regions,’ which provide faster and more reliable services in targeted locations, to its global footprint. The new regions in Chile, Germany and Saudi Arabia will take the total to 27 for Google Cloud.

About Synergy Research Group:

Synergy provides quarterly market tracking and segmentation data on IT and Cloud related markets, including vendor revenues by segment and by region. Market shares and forecasts are provided via Synergy’s uniquely designed online database tool, which enables easy access to complex data sets. Synergy’s CustomView ™ takes this research capability one step further, enabling our clients to receive on-going quantitative market research that matches their internal, executive view of the market segments they compete in.

Synergy Research Group helps marketing and strategic decision makers around the world via its syndicated market research programs and custom consulting projects. For nearly two decades, Synergy has been a trusted source for quantitative research and market intelligence. Synergy is a strategic partner of TeleGeography.

To speak to an analyst or to find out how to receive a copy of a Synergy report, please contact [email protected] or 775-852-3330 extension 101.

References:

https://www.srgresearch.com/articles/hyperscale-operator-capex-sets-new-record-reaches-100-billion-in-first-three-quarters

AT&T Earnings Down; Cost Cutting & Lower CAPEX for Remainder of 2020, 5G Uncertainty?

As expected,  AT&T reported first quarter (Q1) 2020 revenues down 4.6 percent to $42.8 billion.  The mega telco/media company continued to lose pay-TV subscribers while its WarnerMedia division suffered from the Covid-19 outbreak’s impact on the film and TV industry.

AT&T estimates the coronavirus pandemic reduced EPS 5 cents in the first quarter, which otherwise would have been in line with analyst expectations. Adjusted EPS fell to $0.84 from $0.86 a year ago, but would have increased to $0.89  without the extraordinary virus effect. The adjusted operating profit margin reached 21.2 percent in Q1, down slightly from 21.4 percent a year ago.

  • Telecom business revenues were down 2.6 percent to $34.2 billion, while adjusted EBITDA rose 2.1 percent to $12.8 billion.
  • AT&T Wireless grew service revenues 2.5 percent.
  • Revenues continued lower at the Entertainment group as AT&T lost another 1.035 million pay-TV subscribers in the quarter.
  • Mobile subscriber growth slowed to 27,000 postpaid net adds (+163,000 with phones), and the broadband base fell by another 73,000 customers in the three months.

AT&T Official Site - Unlimited Data Plans, Internet Service, & TV

Highlights from today’s AT&T earnings call transcript:

In Mobility, service revenue grew by 2.5% in the quarter. EBITDA of $7.8 billion grew by more than $500 million or 7%, and EBITDA margins expanded by 280 basis points. COVID did impact our top line revenue numbers in the quarter by about $200 million due to lower equipment and roaming revenues. Our subscriber counts for wireless, video and broadband this quarter exclude customers who we agreed not to terminate service for non-payment. For reporting purposes, we are treating those subscribers has disconnects. Even with that, our industry-leading network and FirstNet drove postpaid phone net adds of 163,000. Postpaid phone churn was down 6 basis points to 0.86% and our 5G deployment continues. We now cover more than 120 million people in 190 markets, and we expect we’ll be nationwide this summer.

In our Entertainment Group, cash generation remains a focus. We added 209,000 AT&T Fiber subscribers and now serve more than 4 million. We continue to drive ARPU growth in both video and IP broadband. In fact, premium video ARPU was up about 10% as we continue to focus on long-term value customers. We launched AT&T TV nationally late in the quarter and subscriber growth was in line with our expectations even with COVID impacts. Premium video net losses again improved sequentially.

Business Wireline performance was solid, with EBITDA and EBITDA margins remaining stable. Revenues were consistent with recent trends as declines in legacy products were partially offset by growth in strategic and managed services. Business Wireline continued to be an effective channel for our Mobility sales. Including wireless, total business revenues grew 1.7%.

………………………………………………………………………………………………………..

The negative coronavirus financial impact was palpable at WarnerMedia, which lost around $1 billion in revenue year-on-year and over $500 million in adjusted EBITDA. The unit suffered from the suspension of key events such as the NCAA basketball tournament and new cinema releases, a slowdown in advertising due to the reduced economic activity and a halt to most production activities.

Operating cash flow totaled  $8.9 billion in the quarter, and capital expenditure (CAPEX) reached  $5.8 billion, leaving free cash flow of USD 3.9 billion. Net debt was at about 2.6x EBITDA at the end of the quarter.

AT&T said its liquidity position and balance sheet remained strong and it had already adjusted capital spending plans and suspended its share buybacks. It will continue investing in critical growth areas like 5G, fiber broadband and HBO Max, while maintaining its dividend commitment and paying down debt,

AT&T President & COO John Stankey said during AT&T’s earnings call:

Our 5G deployment continues, although we continue to navigate workforce and permitting delays. We expect nationwide coverage this summer. We also continue to be opportunistic with our fiber build beyond the 14 million household locations we reach today.

Stankey said the operator would encourage customers to install their own equipment and would shift customers to its fiber network. He also said the operator would use artificial intelligence (AI) and other capabilities to reduce initial “truck rolls” (technician visits to customer locations) and to eliminate the need for a second visit.

“These efficiencies will enhance our ability to continue to invest in our key growth initiatives,” including HBO Max and 5G, Stankey said of AT&T’s cost-cutting program.

Regarding CAPEX, before the coronavirus pandemic, AT&T said it would spend around $20 billion on CAPEX throughout 2020, which is significantly lower than the $23 billion it spent in 2019 and the $22 billion that most Wall Street analysts had expected AT&T to spend in 2020.  AT&T CEO Randall Stephenson gave mixed messages on CAPEX plans for the remainder of the year on today’s earnings call:

“It’s not just writing checks for CAPEX. There’s people out doing things,” he said, explaining that some technicians may not be able to visit cell sites due to the spread of COVID-19, while some local officials may not be able to issue cell site construction permits.

“While we have no intention of slowing down on 5G and fiber deployment, the reality is that a lot of it is not in our control,” Stephenson said. “So there’s probably going to be – relative to the targets we gave you in CAPEX – some downward proclivity on that number, just because of the logistical issues we’re running into.”

AT&T declined to provide any financial guidance for the remainder of 2020 due to the pandemic. The operator/media giant spent roughly $5 billion on CAPEX during its most recent quarter, slightly above some Wall Street estimates.

AT&T’s management said the company had begun a cost-cutting program that the operator hopes will trim $6 billion from its budget by 2023. The huge cost cutting effort may include layoffs. Stankey didn’t specifically mention that word, but instead said the operator would enact a “headcount rationalization,” a term that could include layoffs as well as reductions by not hiring replacements for workers who retire or leave. That program, he said, would reduce the operator’s labor expenses by 4%, or roughly $1.5 billion, by the end of 2020. He added that the reduction would target employees in AT&T’s call centers, management structures and distribution strategy. AT&T employed roughly 252,000 people at the end of September.

CEO Stephenson made the following illuminating comments during the call:

In Mobility, the most immediate impacts are the reduction of roaming revenues as well as a reduction in late fees. The waiving of late fees is a commitment to our customers during these difficult economic times and roaming should gradually increase as people start to travel more. The first quarter impact of these items was approximately $50 million, with virtually all of it in the second half of March. We’re augmenting our digital sales team to mitigate the impact of store closures on equipment and service revenues, but we’re still forecasting lower wireless gross adds and upgrades. In fact, equipment revenues were down nearly 25% year-over-year in March. As a result of COVID, we anticipate an increase in bad debt expense across the various businesses, and accordingly, have recorded a $250 million incremental reserve in anticipation of that.

In our Entertainment Group, we anticipate increases in premium TV subscriber cord-cutting as well as lower revenues from commercial locations such as hotels, bars, and restaurants. Labor unit costs will increase temporarily from the 20% boost in pay we’re providing our frontline employees.

At WarnerMedia, content production has been placed on hiatus. Theatrical releases have been postponed and we’re seeing lower advertising revenues and lower costs from sports rights. This crisis has shown the value of premium streaming entertainment and we anticipate strong demand for HBO Max when it launches next month.

Fiber and broadband are more important than ever and we saw a pickup in demand for both in the quarter. We’re also seeing higher demand for VPN bandwidth and security. We do expect a negative impact on small business, which makes up about 15% of our total business wireline revenues. A detailed schedule of the COVID impacts is included in our investor briefing.

………………………………………………………………………………………………………………………………………………………………..

Lightreading’s Mike Dano made the following comments on AT&T’s 5G deployments and CAPEX in a blog post:

One Wall Street analyst wondered if AT&T is moving its 5G goal posts slightly for 2020. Jennifer Fritzsche at Wells Fargo pointed out that AT&T executives now promise nationwide low band 5G by “summer” 2020. In contrast, during previous calls they had said the operator would reach that target by the “middle” of 2020.

AT&T’s low band 5G offering works on its 850MHz spectrum and doesn’t provide speeds that are much faster than its 4G LTE network. The operator also operates faster 5G services in millimeter wave (mmWave) spectrum in parts of roughly 30 cities, but AT&T executives have remained conspicuously silent on that effort.

Verizon, in contrast, has promised to expand its own mmWave 5G network to an additional 30 cities this year.

AT&T’s 2020 CAPEX warning, on its network in general and on 5G specifically, has been echoed by some other players in the industry.

“COVID-19 and actions taken by governments to slow down the spread are making our service delivery and supply harder due to lockdowns and travel restrictions in many countries,” Ericsson CEO Börje Ekholm said earlier on Wednesday. Ericsson sells 4G and 5G equipment to a wide range of global operators, including AT&T. “In addition, while we have seen no material effects on our demand situation, it is prudent to believe that the slowdown in the general economy may lead some operators to delay investment programs.”

Ekholm said some operators are accelerating their investments in 5G and 4G capacity, pointing to providers in China specifically.  Those comments dovetail with concerns of a 5G slowdown in Europe, largely due to decisions by some officials there to delay 5G spectrum auctions.

“We’re having to understand better what will happen as we exit the COVID pandemic in terms of [5G] investment,” noted EXFO CEO Philippe Morin in response to a question about how the pandemic might affect US operators’ 5G spending, according to a transcript of his remarks. He made his comments during his company’s recent quarterly conference call with investors. EXFO sells network testing equipment, including for 5G, to mobile network operators globally.

“In certain other countries in Europe, we’ve seen actually some of the [5G] spectrum auctions to be delayed as the countries have to deal with the virus,” Morin continued. “So, we’re going to – this is part of the discussions we’re having and dialogs we are having with our customers to better understand how – once we emerge out of the crisis, how the investments and where are the priorities are going to be.”

Stephenson acknowledged that it’s “pretty difficult” to predict what’s going to happen next as Americans and the rest of the world fight COVID-19. He said the world’s smartest economists disagree about what’s going to happen in the next quarter, much less the rest of the year.

AT&T’s CFO John Stephens said that mobile service remains an essential expense to most people. “The last thing that people don’t want to pay is probably their cellphone bill,” he said.

Indeed, in its most recent quarter – which suffered from the initial effects of widespread stay-at-home orders – AT&T reported postpaid phone net customer additions of 163,000, ahead of most Wall Street expectations. AT&T executives said the operator’s mobility business would help bolster its troubled media operation.

“The bottom line here is that Mobility performed its role admirably in Q1,” wrote the analysts at Wall Street research firm MoffettNathanson of AT&T’s financial performance, in a note to investors Wednesday.

However, AT&T executives warned that if an economic recession deepens wireless users may look to reduce their spending by paying less for their service or holding onto an existing phone longer rather than upgrading to a new phone.

References:

AT&T Inc (NYSE: T) Q1 2020 Earnings Call Transcript

https://www.lightreading.com/5g/atandt-ceo-warns-of-downward-proclivity-in-network-spending/d/d-id/759080?

https://www.lightreading.com/services/atandt-starts-$6b-cost-cutting-program/d/d-id/759075?

…………………………………………………………………………………………………………………………………….

UPDATE:

April 24 (Reuters) – AT&T Inc said Friday that Chief Operating Officer John Stankey will take over as chief executive officer, effective July 1.  The announcement was made during AT&T’s annual meeting.

AT&T Earnings Down; Cost Cutting & Lower CAPEX for Remainder of 2020, 5G Uncertainty?

As expected,  AT&T reported first quarter (Q1) 2020 revenues down 4.6 percent to $42.8 billion.  The mega telco/media company continued to lose pay-TV subscribers while its WarnerMedia division suffered from the Covid-19 outbreak’s impact on the film and TV industry.

AT&T estimates the coronavirus pandemic reduced EPS 5 cents in the first quarter, which otherwise would have been in line with analyst expectations. Adjusted EPS fell to $0.84 from $0.86 a year ago, but would have increased to $0.89  without the extraordinary virus effect. The adjusted operating profit margin reached 21.2 percent in Q1, down slightly from 21.4 percent a year ago.

  • Telecom business revenues were down 2.6 percent to $34.2 billion, while adjusted EBITDA rose 2.1 percent to $12.8 billion.
  • AT&T Wireless grew service revenues 2.5 percent.
  • Revenues continued lower at the Entertainment group as AT&T lost another 1.035 million pay-TV subscribers in the quarter.
  • Mobile subscriber growth slowed to 27,000 postpaid net adds (+163,000 with phones), and the broadband base fell by another 73,000 customers in the three months.

AT&T Official Site - Unlimited Data Plans, Internet Service, & TV

Highlights from today’s AT&T earnings call transcript:

In Mobility, service revenue grew by 2.5% in the quarter. EBITDA of $7.8 billion grew by more than $500 million or 7%, and EBITDA margins expanded by 280 basis points. COVID did impact our top line revenue numbers in the quarter by about $200 million due to lower equipment and roaming revenues. Our subscriber counts for wireless, video and broadband this quarter exclude customers who we agreed not to terminate service for non-payment. For reporting purposes, we are treating those subscribers has disconnects. Even with that, our industry-leading network and FirstNet drove postpaid phone net adds of 163,000. Postpaid phone churn was down 6 basis points to 0.86% and our 5G deployment continues. We now cover more than 120 million people in 190 markets, and we expect we’ll be nationwide this summer.

In our Entertainment Group, cash generation remains a focus. We added 209,000 AT&T Fiber subscribers and now serve more than 4 million. We continue to drive ARPU growth in both video and IP broadband. In fact, premium video ARPU was up about 10% as we continue to focus on long-term value customers. We launched AT&T TV nationally late in the quarter and subscriber growth was in line with our expectations even with COVID impacts. Premium video net losses again improved sequentially.

Business Wireline performance was solid, with EBITDA and EBITDA margins remaining stable. Revenues were consistent with recent trends as declines in legacy products were partially offset by growth in strategic and managed services. Business Wireline continued to be an effective channel for our Mobility sales. Including wireless, total business revenues grew 1.7%.

………………………………………………………………………………………………………..

The negative coronavirus financial impact was palpable at WarnerMedia, which lost around $1 billion in revenue year-on-year and over $500 million in adjusted EBITDA. The unit suffered from the suspension of key events such as the NCAA basketball tournament and new cinema releases, a slowdown in advertising due to the reduced economic activity and a halt to most production activities.

Operating cash flow totaled  $8.9 billion in the quarter, and capital expenditure (CAPEX) reached  $5.8 billion, leaving free cash flow of USD 3.9 billion. Net debt was at about 2.6x EBITDA at the end of the quarter.

AT&T said its liquidity position and balance sheet remained strong and it had already adjusted capital spending plans and suspended its share buybacks. It will continue investing in critical growth areas like 5G, fiber broadband and HBO Max, while maintaining its dividend commitment and paying down debt,

AT&T President & COO John Stankey said during AT&T’s earnings call:

Our 5G deployment continues, although we continue to navigate workforce and permitting delays. We expect nationwide coverage this summer. We also continue to be opportunistic with our fiber build beyond the 14 million household locations we reach today.

Stankey said the operator would encourage customers to install their own equipment and would shift customers to its fiber network. He also said the operator would use artificial intelligence (AI) and other capabilities to reduce initial “truck rolls” (technician visits to customer locations) and to eliminate the need for a second visit.

“These efficiencies will enhance our ability to continue to invest in our key growth initiatives,” including HBO Max and 5G, Stankey said of AT&T’s cost-cutting program.

Regarding CAPEX, before the coronavirus pandemic, AT&T said it would spend around $20 billion on CAPEX throughout 2020, which is significantly lower than the $23 billion it spent in 2019 and the $22 billion that most Wall Street analysts had expected AT&T to spend in 2020.  AT&T CEO Randall Stephenson gave mixed messages on CAPEX plans for the remainder of the year on today’s earnings call:

“It’s not just writing checks for CAPEX. There’s people out doing things,” he said, explaining that some technicians may not be able to visit cell sites due to the spread of COVID-19, while some local officials may not be able to issue cell site construction permits.

“While we have no intention of slowing down on 5G and fiber deployment, the reality is that a lot of it is not in our control,” Stephenson said. “So there’s probably going to be – relative to the targets we gave you in CAPEX – some downward proclivity on that number, just because of the logistical issues we’re running into.”

AT&T declined to provide any financial guidance for the remainder of 2020 due to the pandemic. The operator/media giant spent roughly $5 billion on CAPEX during its most recent quarter, slightly above some Wall Street estimates.

AT&T’s management said the company had begun a cost-cutting program that the operator hopes will trim $6 billion from its budget by 2023. The huge cost cutting effort may include layoffs. Stankey didn’t specifically mention that word, but instead said the operator would enact a “headcount rationalization,” a term that could include layoffs as well as reductions by not hiring replacements for workers who retire or leave. That program, he said, would reduce the operator’s labor expenses by 4%, or roughly $1.5 billion, by the end of 2020. He added that the reduction would target employees in AT&T’s call centers, management structures and distribution strategy. AT&T employed roughly 252,000 people at the end of September.

CEO Stephenson made the following illuminating comments during the call:

In Mobility, the most immediate impacts are the reduction of roaming revenues as well as a reduction in late fees. The waiving of late fees is a commitment to our customers during these difficult economic times and roaming should gradually increase as people start to travel more. The first quarter impact of these items was approximately $50 million, with virtually all of it in the second half of March. We’re augmenting our digital sales team to mitigate the impact of store closures on equipment and service revenues, but we’re still forecasting lower wireless gross adds and upgrades. In fact, equipment revenues were down nearly 25% year-over-year in March. As a result of COVID, we anticipate an increase in bad debt expense across the various businesses, and accordingly, have recorded a $250 million incremental reserve in anticipation of that.

In our Entertainment Group, we anticipate increases in premium TV subscriber cord-cutting as well as lower revenues from commercial locations such as hotels, bars, and restaurants. Labor unit costs will increase temporarily from the 20% boost in pay we’re providing our frontline employees.

At WarnerMedia, content production has been placed on hiatus. Theatrical releases have been postponed and we’re seeing lower advertising revenues and lower costs from sports rights. This crisis has shown the value of premium streaming entertainment and we anticipate strong demand for HBO Max when it launches next month.

Fiber and broadband are more important than ever and we saw a pickup in demand for both in the quarter. We’re also seeing higher demand for VPN bandwidth and security. We do expect a negative impact on small business, which makes up about 15% of our total business wireline revenues. A detailed schedule of the COVID impacts is included in our investor briefing.

………………………………………………………………………………………………………………………………………………………………..

Lightreading’s Mike Dano made the following comments on AT&T’s 5G deployments and CAPEX in a blog post:

One Wall Street analyst wondered if AT&T is moving its 5G goal posts slightly for 2020. Jennifer Fritzsche at Wells Fargo pointed out that AT&T executives now promise nationwide low band 5G by “summer” 2020. In contrast, during previous calls they had said the operator would reach that target by the “middle” of 2020.

AT&T’s low band 5G offering works on its 850MHz spectrum and doesn’t provide speeds that are much faster than its 4G LTE network. The operator also operates faster 5G services in millimeter wave (mmWave) spectrum in parts of roughly 30 cities, but AT&T executives have remained conspicuously silent on that effort.

Verizon, in contrast, has promised to expand its own mmWave 5G network to an additional 30 cities this year.

AT&T’s 2020 CAPEX warning, on its network in general and on 5G specifically, has been echoed by some other players in the industry.

“COVID-19 and actions taken by governments to slow down the spread are making our service delivery and supply harder due to lockdowns and travel restrictions in many countries,” Ericsson CEO Börje Ekholm said earlier on Wednesday. Ericsson sells 4G and 5G equipment to a wide range of global operators, including AT&T. “In addition, while we have seen no material effects on our demand situation, it is prudent to believe that the slowdown in the general economy may lead some operators to delay investment programs.”

Ekholm said some operators are accelerating their investments in 5G and 4G capacity, pointing to providers in China specifically.  Those comments dovetail with concerns of a 5G slowdown in Europe, largely due to decisions by some officials there to delay 5G spectrum auctions.

“We’re having to understand better what will happen as we exit the COVID pandemic in terms of [5G] investment,” noted EXFO CEO Philippe Morin in response to a question about how the pandemic might affect US operators’ 5G spending, according to a transcript of his remarks. He made his comments during his company’s recent quarterly conference call with investors. EXFO sells network testing equipment, including for 5G, to mobile network operators globally.

“In certain other countries in Europe, we’ve seen actually some of the [5G] spectrum auctions to be delayed as the countries have to deal with the virus,” Morin continued. “So, we’re going to – this is part of the discussions we’re having and dialogs we are having with our customers to better understand how – once we emerge out of the crisis, how the investments and where are the priorities are going to be.”

Stephenson acknowledged that it’s “pretty difficult” to predict what’s going to happen next as Americans and the rest of the world fight COVID-19. He said the world’s smartest economists disagree about what’s going to happen in the next quarter, much less the rest of the year.

AT&T’s CFO John Stephens said that mobile service remains an essential expense to most people. “The last thing that people don’t want to pay is probably their cellphone bill,” he said.

Indeed, in its most recent quarter – which suffered from the initial effects of widespread stay-at-home orders – AT&T reported postpaid phone net customer additions of 163,000, ahead of most Wall Street expectations. AT&T executives said the operator’s mobility business would help bolster its troubled media operation.

“The bottom line here is that Mobility performed its role admirably in Q1,” wrote the analysts at Wall Street research firm MoffettNathanson of AT&T’s financial performance, in a note to investors Wednesday.

However, AT&T executives warned that if an economic recession deepens wireless users may look to reduce their spending by paying less for their service or holding onto an existing phone longer rather than upgrading to a new phone.

References:

AT&T Inc (NYSE: T) Q1 2020 Earnings Call Transcript

https://www.lightreading.com/5g/atandt-ceo-warns-of-downward-proclivity-in-network-spending/d/d-id/759080?

https://www.lightreading.com/services/atandt-starts-$6b-cost-cutting-program/d/d-id/759075?

…………………………………………………………………………………………………………………………………….

UPDATE:

April 24 (Reuters) – AT&T Inc said Friday that Chief Operating Officer John Stankey will take over as chief executive officer, effective July 1.  The announcement was made during AT&T’s annual meeting.

Investment Analysts: Soft Telecom Capital Spending (CAPEX), but 5G in China to Grow 25% in 2020

Investor’s Business Daily reports that Goldman Sachs‘ Rod Hall and Bank of America‘s Tal Liani issued separate notes Tuesday and Wednesday which came to the same conclusion: Despite the ultra hyped 5G buildup, they see overall telecom capital spending remaining soft in 2020.

Hall said, “Telco capital spending trends look set to be muted with China being the only driver of growth,” in his note, issued Tuesday. He sees 5G growth in China of 25% this year, but predicts only a 2% hike in global telecom capital spending.

Hall added: “The carrier environment is challenged globally by flat or declining revenue streams with 5G thus far offering limited or no additional revenue opportunities.”

BofA’s Liani concurred in his Wednesday note. He sees global telecom capital spending up only 1% to 2% in 2020, despite 5G network build-outs. The 5G build-out may fail to impress U.S. wireless customers over the next 12 months, he adds.  “Contrary to the belief that the U.S. is an early leader with 5G, we see potential for users to be disappointed with either lack of coverage or lack of improvement, or both,” Liani said.  Here is an excerpt of his January 8, 2020 note to clients:

5G becomes mainstream, but the U.S. will likely lag:

5G traction remains front and center for 2020, and we expect the first phase of a major smartphone refresh cycle in 2H20, with all major vendors launching 5G devices. In 2019, we saw initial network build-outs, and we expect the device/semiconductor ecosystem to catch up in 2020, supporting and enabling ubiquitous 5G devices. However, some regions may lag behind, particularly the US where a lack of quality 5G spectrum injects delays vs. certain parts of Europe, China, Korea and Japan where mid-band spectrum is more readily available. Our top pick related to this theme is Qualcomm as the semi provider benefits from 5G devices and the China launch.

Verizon Communications and AT&T likely will lower spending on existing fourth-generation networks, says Goldman Sachs’ Hall. They’ll also pare back spending on wireline networks.  “Although U.S. 5G deployments should advance in 2020 our U.S. telecom team expects wireless capex to be roughly flat in 2020 as 5G increases are mostly offset by slowing non-5G spending,” Hall said.

Makers of electronic chips, network gear and fiber-optic technologies should gain from the 5G build-out, analysts say. Other5G stocks to watch will be tied to the deployment of “small cell” antennas, radio access network equipment as well as cloud computing infrastructure.  Goldman Sachs favors fiber-optic play Corning. It’s cautious on gear makers Nokia and Ericsson.

Liani said Apple’s expected launch of 5G iPhones in late 2020 could be a game-changer. However, he says consumers may be disappointed in the 5G network coverage and 5G speeds provided by VerizonAT&TT-Mobile US and Sprint.  That’s because not enough mid-band radio spectrum is available yet for 5G services, Liani said.

He calls Qualcomm one of the best 5G stocks to buy because it’s dependent on smartphone sales, not core network upgrades. Qualcomm‘s customers include Apple and Chinese smartphone makers.

In 2020, we see potential for mass device availability to usher in the first meaningful device upgrade cycle for 5G,” Liani added. “In 2021 and 2022, we expect the network equipment investments to potentially pick up once again as 5G usage accelerates and new applications emerge. Most importantly, however, spectrum availability drives both network upgrades and likely customer satisfaction with the new 5G networks.

Let’s close with an interesting graph from Dell’Oro Group which shows very little growth in telecom equipment/services through 2023:

 

Related image

Reference:

https://www.investors.com/news/technology/5g-stocks-telecom-capital-spending/

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Addendum:  BoAML – Hardware vendors bow to the white box:

Hardware standardization and white box networking continue and drive changes in IT equipment purchasing behavior. Hardware vendors are increasingly being forced to react to three major realities:

1) public cloud capex represents the majority of growth and some companies (e.g. Cisco) find it hard to penetrate,

2) software is taking the forefront, with vendors of traditional networking gear, like ADC, switching, or routing, facing significant pricing pressure and a new breed of competitors, and

3) the value is also pushed to semiconductors, with Cisco’s SiliconOne semiconductor strategy and the proposed acquisition of Acacia designed to address the associated risk and opportunity

Lastly, the trends of software-defined networking, white boxes, and cloud migration come together to support our fifth major trend for 2020: the shift to software-defined branch/campus offices. In our view, this trend began with SD-WAN, continued with Cisco’s Catalyst 9k introduction, and comes fully together with the acceleration of WiFi 6.

 

Dell’Oro: Worldwide Capex Forecast to Rise 2017 – 2020 Despite Flat Carrier Revenues with only 2% from IoT

According to a recently published report from Dell’Oro Group, worldwide newtork operator capex is forecast to rise from 2017 through 2020 despite flat carrier revenues. The most notable increases come from AT&T, Sprint, Megafon, Orange, Etisalat, and Deutsche Telekom.

“We have adjusted our overall three-year CapEx expectations upward to reflect a more optimistic investment view than we had originally envisioned in both the US and Chinese markets,” Stefan Pongratz, a senior analyst at Delloro, said in a blog post online.  The increase in global CapEx is being driven by increased spending in the US, as the country tries to position itself at the front of the queue for 5G deployment.

“After three consecutive years of declining capex, short-term and near-term market expectations have shifted up,” Pongratz said.

“Here in the US, we maintain the view that conditions are stabilizing and both capex and capital intensity will continue to trend upward. There are multiple factors that support our renewed optimism for capex in the US:

  • We are seeing our first signs of US Federal tax reductions translating into increases in capex with a clear boost in AT&T’s 2018 capex projections.
  • We see Sprint investing again
  • FirstNet investments are set to commence in 2018
  • Larger data plans are propelling capacity investments

And lastly, overall carrier revenue trends are stabilizing,” continued Pongratz.

However, total capex spending in China [Figure 1. below] is still expected to decline year-on-year in 2018 and stay flat in 2019 before returning to growth in 2020.

Currency adjusted operator revenues are projected to remain flat between 2017 and 2020, with operators expected to struggle to find new revenue streams to offset slower smartphone revenue growth.

While the IoT has long-term revenue generation possibilities, there is expected to be limited benefit over the next few years. Dell’Oro estimates that carrier IoT revenues will account for just 2% of total mobile revenues by 2020. Preliminary IoT connection pricing trends for 2017 are cause for concern, with downside risks to the IoT carrier revenue forecast, should price trends prevail.  Please see Figure 2. below for Dell ‘Oro forecast of IoT Carrier revenue growth through 2020.

About the Report
The Dell’Oro Group Carrier Economics Report provides in-depth coverage of more than 50 carriers’ revenue, capital expenditure, and capital intensity trends.  The report provides actual and forecast details by carrier, by region, by country (United States, Canada, China, India, Japan, and South Korea), and by technology (wireless/wireline).  The report also discusses further capex accelerating factors such as preparation for 5G and inhibiting factors such as the flat revenue trend. The report assumes operators will struggle to identify new revenue streams.

To purchase this report, please contact Matt Dear at +1.650.622.9400 x223 or email [email protected].

About Dell’Oro Group
Dell’Oro Group is a market research firm that specializes in strategic competitive analysis in the telecommunications, networks, and data center IT markets.  Our firm provides in-depth quantitative data and qualitative analysis to facilitate critical, fact-based business decisions.  For more information, contact Dell’Oro Group at +1.650.622.9400 or visit www.delloro.com.

AT&T at DB Investor Conference: Strategic Services, Fiber & Wireless to Drive Revenue Growth

At the Deutsche Bank Media, Telecom and Business Services Conference, John Stephens, senior executive vice president and chief financial officer, AT&T discussed the company’s plans for 2018 and beyond.  Mr. Stephens said AT&T remains confident that it is on the right track to get its wireline business services back to positive growth as more customers transition to next-generation strategic services like SD-WAN and Carrier Ethernet. However, the drag from legacy services will continue to be an issue for the near term.  He then outlined the company’s priorities for 2018, which include closing its pending acquisition of Time Warner and investing $23 billion in capital to build the best gigabit network in the United States.

On the entertainment side of the business, AT&T plans to launch the next generation of its DIRECTV Now video streaming service in the first half of 2018. The new platform will include features like cloud DVR and a third video stream. Additional features expected to launch later in 2018 include pay-per-view functionality and more video on demand.  Note that DIRECT TV Now can operate over a wireline or wireless network with sufficient bandwidth to support video streaming.  Stephens said during the interview:

“……Giving us this opportunity to come up with a new platform later in this first half of this year, the second-generation plant for giving customers Cloud DVR, additional ability to pay per view and most sporting events and movies, and all kinds of other capabilities is what we’re seeing here, that’s what we want to do with regard to that entertain business and transitioning and we’re confident that we’re on the right track and it’s going quite well.”

The company’s 2018 plans also include improved profitability in its wireless operations in Mexico and, after the Time Warner acquisition closes, deployment of a new advertising and analytics platform that will use the company’s customer data to bring new, data-driven advertising capabilities within premium video. And, as always, AT&T remains laser-focused on maintaining an industry-leading cost structure.

AT&T’s investment plans include deployment of the FirstNet network, America’s first nationwide public safety broadband network specifically designed for our nation’s police, firefighters, EMS and other first responders.

“We were 56 out of 56, 50 states, 5 territories and the districts, probably all choose to put their public safety network, their FirstNet, their first responder network with AT&T, so that’s thrilling for us, that gives us the full funding of the program, it gives us the full authority to be the public service provider for the country, we’re really proud of that, and only because of the business aspects that’s serving our fellow citizens and being able to participate in the honorable job of saving lives and protecting people. So we’re really jazzed up about that.

Secondly, our plans were made last year for how to build out, and we’ve now been given the authority and the official build plans, approved build plans from the FirstNet authority. We spend last year investing in the core network, I think if people filed us in the fourth quarter; they said we actually got a $300 million reimbursement from the FirstNet authority for the expenditures we incurred last year. So the relentless preemption, the prioritized service refers to prices for police and fire and handling some emergency medical personal; all of that’s been done and now we’re out deploying the network, not only the 700 but also our AWS and WCS, our inventoried network that we now get to put into service on a very economic basis because we can do one tower client, we have the crane out there once, we have the people out there once and they’ve put all three pieces of spectrum at it once.”

The company will also enhance wireless network quality and capacity and plans to be the first to launch mobile “5G” service in 12 cities by the end of the year. AT&T announced in February that Atlanta, GA; Dallas and Waco, TX. will be among its first “5G” markets.

“We think about 5G is 5G evolution and I say that because it’s really important to put it all in perspective. So we think FirstNet, put WCS, AWS with 700 band 14 [ph], and use carrier aggregation and you use forward [indiscernible]; we’ve done that kind of test without the 700, we did that in San Francisco, we got 750 mag speeds in the City of San Francisco on this new network, this new 5G evolution; it’s using the LTE technology, it’s using the existing network but all this new technology. So if you think about that evolution now, when you lower that network hub, those 750 theoretical speeds might go down to 150 or 100 or somewhere down but tremendous speed even on a loaded network; so that’s the first step, we’re doing that now extensively and we’re going to do more of that as we build the first step that work out and put the 700 band in. So that’s the first step for us in this evolution.

Second, people might not think about this way but for us absolutely critical is the fiber bill. We’re taking a lot of fiber out to the Prime [ph], we’re taking a lot of fiber out to business locations, currently we have about 15 million locations with fiber between business and consumer, and by July next year, we’ll have about 22 million, about 8 million business, about 14 million to the Prime if you will, for consumers. So fiber is the key, and it’s a key not only delivering to the home or to the business but for the backhaul support. So if you’re an integrated carrier like we are and you’re building this fiber to go to the home, you’re going to pass the tower, you’re going to get fiber to that tower, you’re going to pass the business location, shopping mall, strip center, you’re going to build out to those.

So 5G is the second stage, we’ve got to think all the inter-gig this is the ability to deliver broadband overall electrical power lines, we’re testing that, we’ll see how that goes, that’s another step. If you think about using millimeter wave to do backhaul for small cells in really congested areas, we have high traffic volumes, you want to take a lot of traffic off, we have tested that, we have used millimeter wave to do that, we can do that. If you think about millimeter wave to do fixed wireless; so from the ally to my home, we have tested that we have the capability to do that, the challenges on that is where do you take it from the ally, where do you offload it, give it on to the network at what those costs are, but we can do that.

Lastly, you will see us put 5G into the core network. All of those things that were going to have to be measured by one of the chipsets ready for the handsets, we expect the chipsets might be next year, handset will come after that but we’re looking at the historically slow upgrade timeframe for phones. We had a couple of quarters last year that the upgrade rates were about 4%, that would equate the 25 quarters before your phone base turned over in an extreme example; so suggesting that things are going to be in the core network, it’s going to take a while, we’ll have pucks [ph] out by the end of the year, that will help but you have to have balance with regard to this.

When you think about those business cases, you think about those augmented reality and virtual reality and robotics and autonomous cars and things on the edge, those are going to be really important, that’s where the business cases will take us but we’ve got a long way to go before we get there. As we build FirstNet, we have been good fortunate being able to so to speak build the network house and leave the room for our 5G capability so that when it’s ready, we can just plug it in to do it with software defined network design, we had a great advantage for that but we’re going to have to make sure we have all of the equipment, not only switching equipment, the radio, the antenna but also the handset equipment before we start — if you will over-indexing on the revenues opportunities, they will be there, we will lead in the gigabit network.

We’ll have the best one because what FirstNet provides us and what the technology developments have allowed us and we will use 5G in that network but I want to be careful about how we think about when it’s going to be — you’re going to have a device in your hand and walking around on a normal kind of usage basis using 5G.”

Stephens said that AT&T reaches about 15 million customer locations with fiber. This includes more than 7 million consumer customer locations and more than 8 million business customer locations within 1,000 feet of AT&T’s fiber footprint. He expects this to increase to about 22 million locations by mid-2019.

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For 2018, AT&T expects organic adjusted earnings per share growth in the low single digits, driven by improvements in wireless service revenue trends, improving profitability from its international operations, cost structure improvements from its software defined network/network function virtualization efforts and lower depreciation versus 2017.

Like earlier quarters, the challenges in the fourth quarter for AT&T came from  declines in legacy services like Frame Relay and ATM. The company noted that fourth-quarter declines in legacy products were partially offset by continued growth in strategic business services. Total business wireline revenues were $7.4 billion, down 3.5% year-over-year but up sequentially.

Stephens said that more AT&T customers are adopting next-gen services, creating a new foundation for wireline business revenue growth.

“What’s happened is our customers have embraced the strategic services,” Stephens said. “Strategic services are over a $12 billion annual business and are over 42% or so of our revenue and are still growing quickly.”

Indeed, AT&T’s fourth-quarter strategic business services revenues grew by nearly 6%, or $176 million, versus the year-earlier quarter. These services represent 42% of total business wireline revenues and more than 70% of wireline data revenues and have an annualized revenue stream of more than $12 billion. This growth helped offset a decline of more than $400 million in legacy service revenues in the quarter.

Stopping short of forecasting overall wireline business service revenue growth, Stephens said that AT&T will eventually see a point where strategic services will surpass legacy declines.

“As we get past this inflection point where strategic services are growing at a faster than the degradation of legacy, we can get to a point where we are growing revenues,” Stephens said. “We’re not predicting that but we see the opportunity to do that.”

To achieve these business services revenue goals, AT&T’s business sales team is taking a two-pronged approach: retaining legacy services or converting them to strategic services.

While wireline business services continue to be a key focus for AT&T, the service provider is not surprisingly looking at ways to leverage its wireless network to help customers solve issues in their business.  The wireless network can be used to support a business customer’s employee base while enabling IoT applications like monitoring of a manufacturing plant or a trucking fleet.  Stephens expanded on the role of IoT to close out the interview:

“…you (‘ve) got to realize that if you build this FirstNet network out, things like IoT, things like coverage for business customers, things like the ability to connect factories that are automated, the robotics that have to have wireless connectivity to a controlled center for business customers, all improves dramatically and with that comes this opportunity to sell these wireless services. When you’re in — with the CIO and you can solve his security business, you can solve his big pipe of strategic services but you can also solve some wireless issues that his HR guy has for his connectivity for his employees, you can solve some issues that his engineering department has because they want to get real-time information about how their products are working out, whether it’s a car or a jet engine or a tractor, how it’s working in the field in real-time or you can give them new product and services demand for their internal sources like their pipelines or their shipping fleet.

This IoT capability can solve a lot of issues, you can make that CIO as the success factor for all his related peers, that’s a great thing to great solutions approach to business and that’s what we’re trying to do. Our team is trying to provide solutions for the business customers and we think having those two things together are really important.”

References:

https://seekingalpha.com/article/4153857-ts-t-management-presents-deutsche-bank-media-telecom-business-services-conference-transcript

https://www.businesswire.com/news/home/20180306006770/en/John-Stephens-ATT-CFO-Discusses-Plans-2018

https://www.fiercetelecom.com/telecom/at-t-says-strategic-services-wireless-will-drive-business-services-revenue-growth 

https://techblog.comsoc.org/2018/02/21/att-mobile-5g-to-launch-in-3-u-s-cities-vs-itu-r-wp-5d-imt-2020/

https://techblog.comsoc.org/2018/01/14/att-mobile-5g-will-use-mm-wave-small-cells/