CEO change at AT&T but company is still moving ahead on 5G, edge investments
After 13 years at the helm of AT&T, Randall Stephenson is stepping down as CEO of the telecom giant as of July 1, 2020. Stephenson had earlier announced that he would be leaving the role but been expected to stay on in the position until the end of the year. The news comes two days after quarterly earnings that fell short of Wall Street’s forecast.
AT&T posted first quarter revenue of $34.2B and operating income of $8.2B but withdrew earnings guidance due to economic uncertainty around the impact of COVID-19.
Impact on investment in 5G, edge computing
On an earnings conference call earlier this week, Stephenson said the company would be “cautious about how we’re deploying capital spending.” The company spent roughly $5B during the quarter on various projects, including 5G infrastructure. That amount may see some downward movement due to the logistics of construction because of delays to permitting and shelter in place rules, executives said.
Stephenson said the company is still committed to a 5G nationwide service by summer. The company announced on April 22 that it had almost doubled the number of markets in which it offers its 5G network though most of the new cities announced they will only get access to AT&T’s low-band 850MHz network. The company’s faster “5G+” service uses millimeter wave spectrum to offer faster download speeds but is currently only available in “parts of 35 cities” according to the announcement.
Analysis
Most of the revenue issues with AT&T currently reside in its retail wireless business (customers have limited access to retail outlets and less discretionary income to buy new equipment) as well as its consumer video services offerings like DirecTV.
Incoming CEO John Stankey has served as the company’s president and COO and is likely to focus more on bolstering the consumer business rather than slamming the brakes on investment in 5G infrastructure, which includes edge computing service capabilities. Such technologies hopefully are still seen as being fundamental to enabling net new service revenues. To pull back to far on investment now would significantly curtail AT&T’s chances of being a significant player in the edge computing market and result in ceding ground to cloud providers like Amazon’s AWS and Microsoft Azure.
Jim Davis, Principal Analyst, Edge Research Group
Article Topics
5G | AT&T | AWS | earnings | edge computing | MEC | Microsoft
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