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In two-act reinvention, AT&T ‘steps back’ from entertainment, focuses on connectivity, software

AT&T CEO John Stankey: “When our first act is complete, we will be a more focused, agile and capable national network leader”

At AT&T’s Analyst and Investor Day, CEO John Stankey pointed to a two-act reinvention for the operator, describing a company more focused on connectivity and value-added software packages than entertainment gaming that characterized its recent past.

For nearly two years, AT&T has been slowly moving away from its entertainment assets, striking a $43 billion deal to combine WarnerMedia with Discovery, and before that turning DirecTV into a 30% privately owned standalone unit. TPG company.

Stankey was already hinting at the operator’s shifting priorities at the time of the Discovery 2021 announcement, commenting that the cash injection presents “an opportunity to unlock value and be one of the fastest growing broadband companies better capitalized, focused on investment in 5G and fiber to meet substantial needs”. , demand for long-term connectivity.

His Investor Day message was no different: “When our first act is done, we will be a more focused, agile and capable home network leader. We will be a company with a smaller product portfolio built on the back of fiber in central metropolitan and suburban areas, combined with a high-performance nationwide wireless network capable of extending even greater service capabilities than ever before. audiences, beyond our hearts.

If “retiring from entertainment” is the first act, the second act of AT&T’s reinvention is to develop software and capabilities that rely on the operator’s network and optimize its connectivity value proposition.

“While we appreciate the sustainability of our asset-intensive products, we want a better balance of revenue and profit from more flexible and lean approaches that software brings,” Stankey said.

Specifically, he explained that AT&T was looking to create software packages that rely on the network, returning value to the network and allowing the carrier to sell managed services or capabilities, which he said, are all linked to the “basic connectivity” that it has already put in place.

“I’m not talking about going up the stack to try to attack a sales force [where we] try to replace someone who is in the application space,” he continued. “We’re talking about moving up the stack to do things with our network that allow us to prefer our connectivity because it will work better with people running more sophisticated software on top of that stack, which allows us to stay at a premium position in the market and differentiate themselves in ways that others cannot.

This new direction entails additional service revenue opportunities around cutting-edge solutions developed with Microsoft Azure and Google Cloud and private 5G for enterprises, universities and the public sector.

AT&T aims to double its fiber footprint to more than 30 million locations; which includes doubling commercial customer locations to 5 million. The goal is to add 3.5 to 4 million customer locations per year. The operator also hopes to deploy 120 megahertz of midband spectrum, with an expected coverage of 200 million people by the end of 2023, supplementing its existing 5G footprint of 255 million people in 16,000 cities and towns.