AT&T CFO Pascal Desroches warned investors supply chain issues would likely prevent the operator from reaching its goal of delivering fiber to 3 million new locations in 2021.
Speaking during an Oppenheimer conference, Desroches said that up through the second quarter AT&T “hadn’t really experienced any impact” from global supply chain disruptions, thanks in part to its status as a “preferred” customer. But he noted “since the start of the third quarter we are seeing dislocation across the board, including in fiber supply.”
Desroches estimated that as a result “we’re probably going to come in a little bit light” of the 3 million target set earlier this year, “probably around 2.5 [million].” He added AT&T doesn’t expect the shortages to impact it over the long term, but said highlighting its struggle was “really important for context because if we’re feeling the pain of this, I can only imagine what others in the industry are experiencing.”
From Frontier (new article)…
Last week, Frontier increased its deployment targets, stating it plans to rollout fiber to 600,000 new locations in 2021, up from an original goal of 495,000. Speaking at a Cowen investor conference on Thursday, Frontier’s chief network officer Veronica Bloodworth stated it is “not experiencing supply chain issues” and has taken several steps to protect itself from labor and materials shortages as its build progresses.
“Materials and supply is one area you could run into a constraint, we don’t have that currently,” she said. “We have diversified our supplier base, we’ve put commitment contracts in place…and we’ve changed our inventory on hand appropriately to make sure that we are insulated against supply chain issues.”
From Lumen (CenturyLink), Windstream and Consolidated…
Lumen’s Head of Mass Markets Maxine Moreaux made similar comments in an earlier Cowen session. “We have not seen any issues,” she said, adding “we have diversification not only in equipment and fiber but also in labor.” Like Frontier, Lumen recently said it plans to accelerate its fiber investments.
Likewise, a Windstream representative told Fierce it has “secured all of the supplies necessary to meet our current build plans.”
Jennifer Spaude, SVP of investor relations and corporate communications at Consolidated, told Fierce it remains on track to achieve a target of upgrading 300,000 passings to fiber in 2021, adding “our partners are confident they can supply us with sufficient equipment to maintain our operational pace.” However, she acknowledged “inventory is limited on next-generation chips that deliver multi-gigabit speeds” and it is “evaluating alternative CPE” which can be used if necessary.
A third party gives some perspective on the differences…
Asked to weigh in on AT&T’s predicament, Dell’Oro VP and optical transport market analyst Jimmy Yu noted some players locked in supply agreements long ago. “Verizon (luckily) had a supply agreement in place a few years ago that assured supply with Corning. I don’t think AT&T did. Hence, AT&T doesn’t have a secured supply like Verizon,” he told Fierce.
Yu added neither Lumen nor Frontier “are investing in access (fixed and mobile) at the same pace as AT&T and Verizon. So, those two operators will not have the same demand level as AT&T.”