AT&T Business Solutions' Q2 revenues dip on legacy declines as wireless advances

July 27, 2023
AT&T’s second quarter business service results were tempered by a decline in wireline revenues due to ongoing legacy service declines and continual gains in the wireless segment.

The telco’s business segment revenues were $5.3 billion, down 5.6% year over year due to what AT&T said was lower demand for legacy voice and data services and product simplification, partly offset by growth in core connectivity services. Alternatively, Business Solutions wireless service revenues grew 9.1%.

Operating expenses were $4.9 billion, down 4.3% year over year due to ongoing operational cost efficiencies, including lower personnel, lower wholesale network access costs, one-time cost benefits and lower marketing expenses.

While AT&T’s consolidated revenues were up 1% in the second quarter, which was driven by wireless service revenue and fiber revenues, business wireline declines were a drag on its results.

Pascal Desroches, CFO of AT&T, said “these increases were partially offset by an expected decrease in low margin mobility equipment revenues and a decline in business wireline.”

Wireless, FirstNet gains

Wireless was a big contributor to revenue in AT&T Business Solutions unit. During the quarter, connections grew by about 350,000 sequentially, including over one-third of this growth from postpaid phones.

The service provider also reported that it made progress with FirstNet, adding over 350,000 customers during the second quarter.

“What we've accomplished with FirstNet is truly remarkable,” Desroches said. “Not long ago, this was an under-penetrated segment of our customer base. But by committing to delivering a best-in-class network and tailored solutions for first responders, we've become the unquestioned industry leader by exclusively serving the public safety community with five million FirstNet connections in just five years.”

He added that “we believe there is runway to continue this growth.”

SD-WAN, Ethernet dominance continues

Despite the lower wireline business revenues, AT&T continues to be a dominant player in the next-gen Ethernet and SD-WAN market segments.

One of the key drivers of AT&T Business’ dominance in these segments is the on-net and near-net reach of its fiber network.

AT&T Business currently has lit 750,000 U.S. business buildings with fiber, enabling high- fiber connections to more than 3 million U.S. business customer locations. Also, over ten million business customer locations are on or within 1,000 feet of its fiber network.

Dedicated Internet Access (DIA) remains the performing service across the six Ethernet segments tracked by Vertical Systems Group. The research firm said that it is tracking declining or no significant growth for the other five segments, including Ethernet Private Lines, Ethernet Virtual Private Lines, E-Access to VPN, Metro LAN, and WAN VPLS.

AT&T also ranks first on VSG’s SD-WAN 2022 U.S. Carrier Managed SD-WAN and the Global Provider Carrier Managed SD-WAN LEADERBOARDs. AT&T rose from second place on the SD-WAN LEADERBOARD displacing Orange Business.

For related articles, visit the Business Topic Center.

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About the Author

Sean Buckley

Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.

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