Business wireless is up, but business wireline is another story.
Business wireline revenues are slumping for the telcos in their latest quarterly earnings. Both carriers reported a year-over-year decrease. However, leaders from both companies they are gaining momentum with small and medium-size businesses.
AT&T’s business wireline revenues totaled $5.9 billion, a 5.2% drop from a year ago. The company cited “pandemic-related connectivity and lower demand for legacy voice and data services.” On the other hand, operating expenses dropped 2.4% to $5 billion. EBITDA slipped 8.3% to $2.3 billion.
Pascal Desroches, AT&T’s senior vice president and chief financial officer, shared an optimistic view of the numbers.
“The business did see some difficult year-over-year comparison, given pandemic-related benefits experienced last year. We have been very aggressive in proactively rationalizing our portfolio of low-margin products. This creates incremental pressure on our near-term revenues. But at the same time, it allows us to focus on our core network and transport services products. It will take several quarters for us to work through this initiative. But as we lap the beginning of this process that began late last year, we should see improving revenue trends in business wireline.”
Desroches explained that AT&T plans to focus more of its enterprise services around core connectivity offerings, such as wireless and fiber.
CEO John Stankey agreed.
“Our customers are growing. Our revenues are growing, and we continue to take costs out of the business. So over time, it’s going to translate to improvement in not only top line, but we will see profit growth,” Stankey said.
AT&T Communications CEO Jeff McElfresh pointed to the strides AT&T needs to make in the midmarket. He said SMB customers are underrepresented in the AT&T client base. He vowed that AT&T will move shares its business wireline unit to be more “transactional-based,” “down-market” and fiber-driven.
“… these [SMB] customers are more inclined to use shared broadband served up by fiber. And our business-class services that we sell to our top-end enterprise accounts are a bit more bespoke and specific networks that are not necessarily attractive to the midmarkets,” McElfresh said.
AT&T’s business wireless unit did see growth in the third quarter, increasing 5.2% year from the year-ago quarter in terms of wireless services revenue.
AT&T’s fierce rival faces a similar prognosis. Verizon’s total business revenue declined 1.7% year-over-year to $7.7 billion.
“Wireline revenues continue to be pressured by secular trends, while also facing elevated year-over-year comps due to 2020 COVID spending,” executive vice president and chief financial officer Matthew Ellis told investors on Wednesday.
Ellis said the company continues to “compete effectively” in enterprise wireline. However, he said Verizon is focusing on “value-driving activities.”
“Last year during COVID, we saw a little bit of a step-up in some of the chord voice data revenue that we hadn’t seen in quite a while. We are now lapping that, and those volumes are returning to their pre-pandemic trends,” Ellis said. “The other thing is we’ve stepped out of some of the wholesale international voice business that had revenue, but not significant margins associated with it.”
Business wireless services, however, increased 4.9% to $3 billion. Verizon cited public sector and SMB as key growth markets. However, CEO Hans Vestberg said public sector gains are beginning to temper as virtual education demands decrease. At the same time, he said SMBs are showing signs of growth.
Executives repeatedly pointed to Verizon’s mobile edge compute (MEC) solutions as a key opportunity. Vestberg also pointed to fixed wireless access as a solid opportunity for the Verizon Business Group.
AT&T and Verizon both announced plans earlier this year to divest their media units. Verizon is selling its Yahoo media division to Apollo Global Management, and AT&T is selling its WarnerMedia division. The sale of WarnerMedia should close in the middle of 2022, and Verizon has already completed its sale.
Both deals reflect the movement of both companies to reprioritize connectivity as the lifeblood of their businesses.
“This is an opportunity to unlock value and be one of the best capitalized broadband companies, focused on investing in 5G and fiber to meet substantial, long-term demand for connectivity,” John Stankey said earlier this year.
Video: MSP 501 Awards Gala at the Channel Partners Conference & Expo
Channel Partners Hope for Value in 8×8’s ‘Fire Sale’ Fuze Acquisition
Salesforce’s Tiffani Bova on How to Grow Sales in 2022
How to Unlock Your Channel Potential in the New Year
Agent Commissions at Risk: Here’s How You Can Fight It
Pax8: Cloud Spending Not Slowing Down in the New Year
SolarWinds Hires HP, NetApp Vet as VP of Partner Sales
Armis Funding Round Pushes Company’s Valuation to $3.4 Billion
Please log in again. The login page will open in a new tab. After logging in you can close it and return to this page.