Corning’s CEO says it is well positioned to address FTTH growth
Key Highlights
- Corning’s multiyear agreements with AT&T and Verizon support ambitious fiber expansion plans through the end of the decade and beyond.
- AT&T added 442,000 fiber subscribers in the third quarter, while Verizon added 155,000 net fiber broadband connections.
- Regional provider Shentel reported record Glo Fiber customer additions and 32.2% year-over-year revenue growth in its expansion markets.
- Corning’s third-quarter Optical Communications sales climbed 44% to $2.38 billion, while net income increased 80% year over year.
- Corning expects fourth-quarter core sales of $5.2 billion to $5.3 billion and core EPS of $0.96 to $1.00.
Corning sees ongoing fiber broadband buildouts by Tier 1 and other providers as an ongoing growth opportunity for its Optical Communications segment, having secured major deals with both AT&T and Verizon.
Seeking to break through cable’s broadband stronghold, traditional telcos like AT&T and Verizon, along with an emerging crop of competitive carriers, have been expanding their fiber reach into more markets through a mix of targeted builds, acquisitions, and partnerships.
Wendell Weeks, CEO of Corning, told investors during its third-quarter call that the company cites FTTH and data center interconnect (DCI) as two of its largest opportunities for its Optical Communications division.
“Fiber-to-the-home (FTTH) will remain a growth driver,” Weeks said. “I think you will certainly see deployments by the large carriers in that space.”
He added, “We're very well positioned for that.”
Carriers ramp FTTH
Corning’s enthusiasm about the telco fiber broadband market is well founded.
In September, AT&T and Corning entered into a multi-year agreement valued at more than $3 billion.
This agreement with Corning comes as AT&T sets a new build path in both its traditional wireline footprint and in new territories through its Gigapower venture and its acquisition of Lumen's FTTH assets.
“We announced an agreement with Global Infrastructure Partners, a part of BlackRock, and CPP Investments to form a JV that includes Gigapower and the fiber assets we acquired from Lumen,” said John Stankey, CEO of AT&T, during its third-quarter earnings call. “To accelerate fiber deployment outside of our traditional operating territories, we also reached a multi-year agreement with Corning to supply the fiber we need to support our goal of reaching 60 million-plus fiber locations by the end of this decade.”
Likewise, Corning’s agreement with Verizon will enable the service provider to pass 40-50 million passings with fiber, both inside its traditional wireline territory and in new areas it has entered through partnerships and acquisitions, including Frontier and its out-of-territory plans via its agreement with Eaton Fiber.
“Last month, we announced a multi-year, multi-billion-dollar agreement with Corning for more than 80 million miles of fiber through 2032, supporting both our fiber broadband expansion and the long-haul backbone that AI hyperscalers need,” said Dan Schulman, Verizon's CEO, during its third-quarter earnings call. “Taken together, this opportunity significantly extends our addressable market, our revenues and our profits, and we will talk about how it helps to drive our 2027 growth on our next earnings call.
Even before AT&T and Verizon meet their respective future deployment goals, the two telcos gained new fiber broadband subscribers during the third quarter, continuing to surpass the lead the cable industry once enjoyed when the telcos mainly offered slower-speed, copper-based DSL service. This trend continued into the third quarter.
AT&T added 442,000 fiber subscribers during the third quarter while Verizon added 155,000 net fiber broadband connections. The service provider now maintains 17.4 million total broadband connections, with more than half of new fiber customers choosing 1-gigabit-plus download speeds.
While Tier 1 telcos will continue to take the lion's share of the fiber broadband market, Tier 2 players like Shentel are making notable progress with FTTH.
During the third quarter, Shentel’s Glo Fiber expansion markets revenue grew 32.2% year over year to $28.2 million. The service provider added 8,600 Glo Fiber data customers, a record quarter for net additions, and ended the quarter with about 109,000 data customers, up 32% year over year.
Like AT&T and Verizon, Shentel continues to grow its fiber broadband base, offering plans from 200 Mbps to multi-gigabit speeds of 8 Gbps.
“While many traditional cable operators are navigating broadband subscriber declines, we continue to add customers at a strong pace,” said Ed McKay, Shentel's CEO. “More than half of our revenue now comes from our growing fiber businesses, and with our major network expansion substantially complete by year-end, we believe we are uniquely positioned to convert that growth into expanding margins and positive free cash flow starting in 2027.”
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Here’s other news on Corning:
· Corning’s CEO maintains the view that optical scale-up will ramp in 2028
· Corning’s CEO says data center scale-up and scale-out represent a $10B revenue stream
· Corning’s Q1 $1.8B optical sales get boosted from Gen AI
· Corning’s CEO says there’s enough fiber in the world to meet demand
· Corning sees growth opportunities in the hyperscaler data center’s scale-up segment
· Corning’s CEO: Data Center Interconnection will be a $1B opportunity
Optical takes revenue lead
Corning’s third-quarter revenues were led by Optical Communications, with third-quarter sales up 44% to $2.38 billion.
Net income was $532 million, up 80% year over year, delivering what the company said was “record profitability.”
Enterprise Networks sales grew 84%, with Gen AI product sales up more than 100% year over year.
Edward Schlesinger, Corning's CFO, said, “As Optical Communications penetrates the scale-up portion of the network, our revenue opportunity will increase dramatically.”
Likewise, Enterprise grew sales 84% year over year, with Gen AI product sales growing more than 100% year over year and outpacing GPU unit growth.
Schlesinger said Enterprise growth was “driven by the rapid and broader adoption of our innovations and enabled by our steady capacity additions.”
“At the launch of Springboard, our Enterprise sales run rate was $1.4 billion,” he said. “Since that time, we've quadrupled Enterprise sales to a $6 billion run rate. As Optical penetrates the scale-up portion of the network, our revenue opportunity will increase dramatically.”
Corning grew overall third-quarter core sales 19% year over year to $5.08 billion – which it said is the strongest growth since the launch of its Springboard program.
Looking at the fourth quarter, Corning expects core sales to grow about 19% year over year to a range of $5.2 billion to $5.3 billion and core earnings per share (EPS) to grow about 36% year over year to a range of $0.96 to $1.00.
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About the Author
Sean BuckleySean Buckley
Sean is the Editor-in-Chief of Lightwave. He establishes and executes Lightwave's editorial strategy across its website, email newsletters, events, and other information products. Before coming to Lightwave in July 2023, he served as editor of Broadband Communities. Earlier, he served as senior editor of FierceTelecom and the editor of the former Telecommunications Magazine. He got his start in the optical industry in 1998 when he became the editor of enterprise and optical networks at Information Gatekeepers. He has a BA in English from the University of Massachusetts, Boston, and lives in Dracut, Mass, with his wife, two sons, and his cat, Dove.
