A lot of things are coming together for AT&T to propel the carrier into the new year, with progress in 5G, FirstNet and the integration of Time Warner (now WarnerMedia), John Donovan, AT&T Communications CEO, told an analyst event last Thursday, in New York City, which discussed the company’s strategy and outlook for 2019.
AT&T now has LTE-License Assist Access (LAA) technology — with theoretical peak speeds of up to 1 Gbps — in 31 markets, which will serve as part of the carrier’s foundation for 5G (up from the 24 markets it promised last summer). “LTE-LAA capability will be an important foundation for 5G, which has the most potential of any technology that I have ever seen,” Donovan said.
5G and FirstNet will serve as drivers of growth in the coming year of the Mobility business unit at AT&T, which represents nearly half of its adjusted EBITDA and about 40 percent of its revenues.
AT&T has added 2.7 million subs in the last four months, increased service revenue and it believes it has the business model to sustain it.
“We have had a remarkable year,” Donovan said. “We have turned the corner on growth, adding smart phone subs and spectrum. In some cases, 50 percent more incremental spectrum.”
FirstNet Ahead of Schedule
As AT&T builds out FirstNet, it is using its “one-touch” program to deploy all of its fallow spectrum, adding capacity as well as performance and speed.
“Barely a year into the FirstNet rollout and we are six months ahead of schedule. We have deployed that network over a third of the square-mile coverage area that we are expected to cover. We have had 3600 agencies sign up and we have 250,000 subscribers,” Donovan said.
“FirstNet has helped us drive capacity and footprint for salability into the first responder community. Plus, it has had a tremendous impact on network quality for all of our subscribers,” Donovan said.
5G Moving Fast
Concerning the 5G protocol, AT&T’s network will have full capability, full backward compatibility and interoperability in parts of 12 cities by year-end, with expansion into 19 cities next year. Additionally, a series of 5G smart phones will be added in 2019.
“We expect the momentum of 2018 in wireless to continue into next year,” he said. “The network advantage helps with financial performance but gives us the decided advantage for our evolution into 5G. The key elements of the 5G infrastructure are being laid down today.” AT&T’s 5G Evolution will be in 400 markets by the end of the year, as well, providing 400 Mbps data speeds.
The early opportunities for 5G use are going to be in enterprise, according to Donovan. AT&T has already made two enterprise announcements. One is Samsung’s robotic manufacturing plant in Austin, Texas, where 5G is being deployed on the campus to enable the robotic manufacturing. And, in July, AT&T made investment in mixed-reality virtual and augmented startup Magic Leap.
“We are seeing a lot of demand from enterprise customers blurring between line between the traditionally wide area network mobile with the local network, which has traditionally been wired,” he said.
The carrier is looking at expanding into use cases in verticals, such as retail, education, healthcare, finance and public safety. It will take what it learns and apply it over to its offering to consumers.
“This is just the tip of the iceberg for 5G as an enterprise technology,” Donovan said. “We are going to take advantage of what we are doing in the enterprise space and have those solutions transfer over to [consumer] 5G.”
Warner Media Integration
AT&T expects WarnerMedia synergies to reach a run rate of $2.5 billion by the end of 2021. About $1.5 billion will be cost synergies, including marketing, procurement and corporate overhead. The remaining $1 billion will be revenue synergies expected from additional sales opportunities, lower subscriber churn and higher advertising. The company expects to reach a run rate of about $700 million by the end of 2019, increasing to $2 billion by the end of 2020 and ramping to $2.5 billion by the end of 2021.