AT&T Looks to Get Back to Being a Phone Company Again
(Bloomberg) -- As its five-year quest to become a modern media giant comes to an end, AT&T Inc. is refocusing on its original mission: being a telecom company.
A week after announcing a plan to carve out its WarnerMedia operations and combine them with Discovery Inc., AT&T Chief Executive Officer John Stankey spoke to investors and analysts about rebuilding the company’s “connectivity franchise” -- and its brand. The effort includes investing more heavily in its 5G and fiber-optic networks, as well as improving customer service.
“We’re still, you know, a little obtuse as to what the AT&T brand stands for, and we are about ready to do some things that are going to improve that,” Stankey said during an investment conference Monday.
The company is cutting costs of $1.75 billion to $2 billion annually and that process isn’t over, Stankey said. “We need to fit down this business to be more focused and agile.”
AT&T shares were down 0.2% to $29.94 at 12:44 p.m. in New York. The stock is down 7.1% since May 14, prior to the announcement of the Discovery deal.
That transaction will unwind an $85 billion Time Warner acquisition that AT&T announced in 2016 and completed in 2018 -- after overcoming antitrust objections. The deal loaded up the company with debt, and AT&T struggled to see much payoff from having media and telecom operations under one roof.
Now Stankey is slimming down the company. In addition to the Discovery deal, AT&T agreed in February to offload its DirecTV operations after years of losing satellite-TV customers.
Meanwhile, its core wireless and landline operations have suffered a few dings. AT&T dropped to No. 3 among the top U.S. wireless carriers after T-Mobile US Inc. acquired Sprint Corp. last year. And the company drew some flak for killing its DSL home internet service in October, a decision that left some customers with fewer broadband options.
Stankey said his objective now is to be “the best core connectivity provider.” But how the company does that isn’t yet clear.
Stankey said he is going to brainstorm with top management over the next three days to come up with ways to capitalize on “this connectivity franchise” by finding new businesses or “verticals” to layer on top of the network service.
“It’s time to think about an AT&T that can truly be a scale broadband provider for all customers everywhere in the United States, where it makes sense to do that,” he said.
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