AT&T maintains guidance, says cost targets 'well in hand'
Brandon Bell

AT&T (NYSE:T) has faced the same macro slowdown as rivals - and speaking at an investor conference, it mostly joined other presenting companies in making no real change to 2023 guidance as it weighed the ongoing effects on the macroeconomy.
"We don't know how to predict what's going to happen," Chief Operating Officer Jeff McElfresh said at a Morgan Stanley conference. "But I am confident we've proven we know how to manage through any kind of turbulence that we see there as we experienced in 2022. And all of that basically factored into the guidance that we offered in the fourth-quarter earnings."
The company looks at metrics including intake quality, credit and credit levels daily, and "so far, we don't see anything that's going to change the way we are going about our operating plan for 2023," which guides modestly to 4%-plus wireless service revenue growth.
Asked about the gains that cablecos like Charter (CHTR) and Comcast (CMCSA) are making with their virtualized wireless offerings, McElfresh noted the companies are "enjoying some success" but "we look at having owner's economics in both the fiber and wireless businesses."
"And certainly cable at some point is going to have to tackle the cost of continuing to service a growing wireless customer base, and the handset evolution and cycling of that. So I think they've got potentially some margin questions coming," McElfresh said.
"I like the position that we sit in - where we're building fiber and competing head-up with cable, we're winning," he said.
On fiber, "where we're building, we are seeing better [penetration] rates than we expected," McElfresh said. "We are seeing strong [average revenues per user] on our fiber product for about $10 above that on our non-fiber broadband customers, and intake ARPUs are even stronger than that. So we like the ARPU mechanics in the fiber business very much."
Meanwhile, AT&T has really led with fiber, but there are "many" uses of fixed wireless, he said.
That includes even temporary offerings of a fixed wireless broadband solution; in an area that will "take a year or two" to bring fiber in, "you may see us transition a customer today onto a fixed wireless product that we might backfill that footprint with fiber at a later date." But "as we have stated, we will not be a large-scale fixed wireless service provider. That's not the solution for solving for bandwidth needs."
And updating on cost savings, McElfresh noted that in Q4, the company was achieving its $5B-$6B cost takeout target. That can be a "black box" for investors, so he added that "about a quarter came out of our network, a quarter came out of our customer-facing operations and distribution, and about half ... is coming from what I might call support, back office or parent and overhead. We have the $6B target well in hand."
The company has cut 30,000 jobs in its communications business, and about 7,000 in Q4 alone, he said.