AT&T COO Jeffrey McElfresh outlined a strategy focused on network convergence, combining fiber and wireless assets to drive growth and efficiency. He highlighted the recent closing of the Lumen transaction, which added 4 million fiber passings, bringing the current total to 36 million with a target of over 40 million by year-end. McElfresh reaffirmed financial guidance, including wireless service revenue growth and EBITDA expansion, supported by cost-saving initiatives like copper decommissioning. He emphasized that AT&T’s modernization efforts will result in a lower capital intensity and industry-leading cash flows by the end of the decade.

Key Takeaways

• Fiber Expansion: AT&T currently has 36 million fiber passings, plans to exit the year with 40 million, and targets "over 60 million" by 2030.
• Lumen Transaction: The recently closed deal added over 4 million passings; this footprint is currently "25% penetrated" compared to AT&T’s national average of 40%.
• Wireless Growth Guidance: Management guided to "2% to 3% wireless service revenue growth through 2028," driven largely by volume and convergence.
• EBITDA Targets: AT&T expects "3% to 4% EBITDA growth this year ramping to 5%-plus by 2028."
• Cost Management: The company is executing against a "$4 billion cost target out to 2028," aided by network modernization.
• Copper Decommissioning: AT&T aims to decommission the majority of its copper network by the "end of 2029"; currently, "about 85%" of wire centers have permission to discontinue sales.
• Network Modernization: The wireless network rip-and-replace program is "about halfway through" with another 18 months to completion, which is expected to lower future capital intensity.
• Inflation Impact: Despite inflationary pressures, cost per fiber passing has inflated "no more than 2%" over the last couple of years.

Q&A

Benjamin Swinburne (Morgan Stanley): What gives you confidence you can deliver on growth targets in a mature, heavily competitive wireless and broadband environment?

• Jeffrey Scott McElfresh: AT&T is executing a "disciplined, investment-led strategy to drive convergence," which results in the lowest churn profiles and highest NPS; the company has "all the building blocks," including the recent Lumen transaction to expand the growth funnel.

Benjamin Swinburne (Morgan Stanley): How does AT&T approach convergence to drive growth without devolving into discounting or a price war?

• Jeffrey Scott McElfresh: The company competes on "performance and value," not promos; converged customers maintain the "most attractive LTVs," allowing AT&T to deliver strong growth and margins while maintaining capital returns.

Benjamin Swinburne (Morgan Stanley): Where are the opportunities to gain market share to meet the "2% to 3% wireless service revenue growth" guidance?

• Jeffrey Scott McElfresh: Opportunities exist in underpenetrated segments like value-conscious consumers and small business; specifically, the Lumen footprint offers a chance to drive wireless attachment in a base that is only "25% penetrated" with fiber versus AT&T’s 40% average.