Verizon Communications Inc. and T-Mobile US Inc. are going head-to-head in two key areas as both expand their mid-band 5G networks and their related fixed wireless offerings.
T-Mobile on April 20 said it reached 1 million fixed wireless customers one year after launching the service commercially. The service, which rides on the back of T-Mobile's 5G network, now covers a total of 40 million homes nationwide.
Verizon has also said it expects to rapidly grow its fixed wireless subscriber base following the Jan. 19 launch of its C-band spectrum, a portion of mid-band spectrum considered essential for 5G delivery, balancing speed and range. The C-band launch has helped Verizon expand its 5G Ultra Wideband service to 100 million people by January 2022, and the company aims to reach at least 175 million people by year-end 2022.
"T-Mobile has a head start, but Verizon is being more aggressive with its service offerings now that it has deployed mid-band C-block spectrum to complement its [millimeter-wave] deployment plans," wrote Lynnette Luna, an analyst with Kagan, a media research group within S&P Global Market Intelligence.
Verizon had 78,000 fixed wireless net additions in the fourth quarter of 2021, almost three times the number of wireline broadband net additions in the same period. Verizon's wireline broadband offerings include both fiber-based Fios and legacy copper-based DSL offerings.
"We believe that Verizon's fixed wireless access offering will drive the next leg of broadband growth, increasing our market share and reach," Verizon CEO Hans Vestberg said in January.
AT&T Inc. has been less aggressive on 5G-based fixed wireless than its competitors, primarily investing in fiber and using fixed wireless in markets where fiber does not make sense, according to Luna. AT&T expects a larger mid-band 5G deployment later this year but has offered little detail on how it plans to do so. AT&T plans to expand its fiber footprint to more than 30 million locations by adding 3.5 million to 4 million locations per year. Additionally, AT&T aims to increase its business customer locations to 5 million while also gaining share in the consumer broadband market.
Jeff Moore, principal at Wave7 research, a wireless research company, said he is interested in learning more about AT&T's plan to keep up with competitors with more aggressive approaches to fixed wireless.
"My thinking is that there will be continued acceleration [from T-Mobile and Verizon] and that it will be impressive. My related question is: When will AT&T get more strongly involved in fixed wireless?" he said.
AT&T has had the added pressure and distraction of finalizing the spinoff of its WarnerMedia division. The split was completed April 8, and investors will look for more details on its strategy during the upcoming earnings call.
"With the close of this transaction, we expect to invest at record levels in our growth areas of 5G and fiber, where we have strong momentum," AT&T CEO John Stankey wrote in a release.
At close, AT&T received $40.4 billion in cash and WarnerMedia's retention of certain debt. Additionally, shareholders of AT&T received 0.24 of a share of the newly created Warner Bros. Discovery Inc. stock for each share of AT&T common stock they held at close.
Upon the close of the WarnerMedia sale, New Street Research raised its target price for AT&T to $26 per share.
"We now expect free cash flow to increase by $4 billion in 2024 as management expects to cut total capital expenditures from $24 billion to $20 billion that year following the C-Band rollout," New Street Research analyst Jonathan Chaplin wrote in a note.
The sale will allow AT&T to focus on its core communications business, including its wireless network.
Over the past several quarters, wireless carriers and cable operators such as Charter Communications Inc. and Comcast Corp. have posted record postpaid phone net additions. Analysts say government subsidies and aid as a result of the pandemic allowed customers to hold onto and add wireless lines. As pandemic aid dwindles and inflation impacts consumer spending habits, customers may look to reduce bills by turning off extra lines.
"Postpaid phone adds have been high while Xfinity Mobile and Spectrum Mobile were also reporting record postpaid adds. Given a minor population increase, I'm interested to find out how much of this growth is sustainable and how much of it is linked to government checks," Moore said.
AT&T is set to announce earnings April 21, and Verizon will follow on April 22. T-Mobile is set to report April 27.
