AT&T continues to be bullish about its fiber-to-the-home (FTTH) ambitions.

During the second quarter, AT&T added more than 1 million total consumer and business locations reached with fiber for a total of 38.6 million.

The company remains on track to reach over 40 million total fiber locations by the end of 2026 and more than 60 million by the end of 2030.  

AT&T reported 646,000 total consumer and business Advanced Connectivity internet net adds, including 367,000 fiber and 279,000 fixed wireless subscribers for the second quarter.

John Stankey, CEO and chairman of AT&T, told investors during its second-quarter earnings call that it has set an aggressive fiber build-out schedule. 

“This will be our largest year ever for fiber expansion, with plans to reach 8 million new locations, including over 4 million locations acquired from Lumen,” he said.

Scaling converged fiber/wireless opportunities

AT&T’s aggressive fiber build-out strategy is giving the telco a platform to drive growth in its converged wireline/wireless customer base.

“As I've said in the past, where we have fiber, we win,” Stankey said. “With fiber and wireless, I expect that as we expand our funnel of new fiber locations, we'll drive strong growth in our converged customer base and financial results.”

The service provider’s converged offerings are creating customer stickiness.

“When customers consolidate their internet access with us, we see lower churn, outstanding brand affinity and higher lifetime values,” Stankey said.

While AT&T does carry most of its customers’ internet traffic over its network, it expects to reach more locations with its network that it does not today into next year.

In the new territories AT&T entered as the result of its Lumen asset acquisition, it has spent the last six months setting up operations to support what Stankey said will “support a faster pace of growth and network deployment in customers as we accelerate the branded rollout of AT&T Fiber.”

“We're already utilizing our existing distribution and converged offers to tap into pent-up demand in these under-penetrated areas, which is translating into improved growth,” he said.

Stankey added that it is not just merely adding new fiber customers. AT&T’s converged gross customer additions in rose 45% in the new Lumen territories compared to February when it completed the deal.

“Our convergence playbook is taking hold here, just as it has in our traditional footprint, creating a clear runway to deepen customer relationships and accelerate growth in converged accounts as we complete our integration activities and scale the pace of fiber expansion,” he said.

Legacy tipping point

Being a traditional ILEC, AT&T is moving forward with shedding its legacy copper network infrastructure.

In June, the FCC gave AT&T the green light to discontinue legacy copper voice service for over half of its wire centers in California.

“We appreciate the leadership of FCC Chairman Carr and the commission for recognizing the urgency to modernize the nation's communications infrastructure and upgrade customers to more reliable service,” Stankey said. “Last month, the FCC gave us permission to discontinue legacy copper voice service at about 60% of our wire centers in California, so we can upgrade our customers to AT&T Phone Advanced, fiber, and wireless.”

However, its path to shut down its copper network in California has faced legal challenges. A federal judge recently ruled that California can keep enforcing rules that require AT&T to offer basic phone service to new customers in its wireline territory.

AT&T, according to an Ars Technica report, sued California in May with the goal of ending the state’s Carrier of Last Resort (COLR) rules that require it to offer telephone service to any potential customer in its territory. AT&T asked for a preliminary injunction that would prevent California from enforcing the COLR rules while the litigation continues.

AT&T has filed a petition with the FCC asking them to preempt California’s COLR mandates and related requirements, including tariffing and Lifeline participation rules.

Except for California, AT&T has gained relief from COLR obligations in 20 of the 21 states in its wireline service territory.

“Looking more broadly at our efforts to discontinue copper network services and operations nationwide, we continue to make great progress on our exit plans,” Stankey said. “We have approval to discontinue legacy services in over 30% of our wire centers, which will be effective by late 2026. By the end of the year, we expect a couple hundred wire centers to have zero customers.”

About two years ago, AT&T launched a plan to shut down its copper network infrastructure by the end of the decade.

Stankey said that “we've now reached the tipping point, and that goal is firmly in sight.”

All of this comes as AT&T like other ILECs saw legacy revenues decline 26% year-over-year and EBITDA declined about 46% as it accelerates the process of shutting down its  copper network and migrate customers to fiber and wireless services.

“The retirement of our legacy network is a critical piece of our transformation into a scaled provider of advanced connectivity,” Stankey said. “As we complete our network modernization and other transformation initiatives, we expect that by the end of the decade, we will have the best-performing network with a highly competitive cost structure.”

Fiber, wireless drive revenues

Driven by growth in Advanced Connectivity fiber and wireless revenues, with fiber revenues including the impact of our first-quarter acquisition of Lumen’s mass markets fiber business, AT&T’s second quarter revenues were $31.6 billion, up 2.5% year-over-year.

As a result of an uptick in fiber net adds, AT&T’s advanced home internet service revenues grew by more than 27% year-over-year.

Pascal Desroches, CFO of AT&T, said the “improved fiber net adds come as we accelerate our fiber deployment and center our go-to-market strategy around our converged offers, as well as our acquisition of fiber assets from Lumen in the first quarter.”

Despite the fiber uptick, fiber ARPU declined 1.3% year-over-year, which the company said reflects the full-quarter impact of its Lumen acquisition, whose subscribers have lower ARPU.

Apart from the customers it acquired from Lumen, AT&T’s Fiber ARPU was nearly flat year-over-year, which Desroches said, “reflects our focus on growing converged customer accounts that enjoy discounted pricing but typically stay with us longer and increase their spending over time.”

He added that “we expect our focus on convergence to drive continued strong net additions in advanced home internet and postpaid phone subscribers during the third quarter and continued growth in converged customers.”

Like earlier quarters, AT&T is seeing more consumers sign up for wireless service where it is rolling out fiber broadband services.  

In the second quarter, the service provider added 147,000 consumer postpaid wireless accounts, which Desroches said: “is our best result in more than three years.”

“We believe this is a direct result of our converged go-to-market strategy, which is driving improved growth in new customer accounts that choose AT&T for wireless and home internet,” he said. 

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