Led by AT&T (T), telecom firms are suddenly ramping up fiber-to-the-home, or FTTH, broadband services to take on cable TV companies. AT&T stock has forged a new entry point, as investors mull its FTTH buildout and 5G wireless strategy.
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After underperforming in 2020, AT&T stock has forged a flat base, with an entry point of 31.99 on a weekly chart.
At a recent investor day, AT&T discussed plans to build out FTTH services to more homes. AT&T plans to build out FTTH services to 3 million homes in 2021.
Starting in 2022, AT&T signaled that it could ramp up FTTH buildouts to 4 million homes annually. At that pace, AT&T’s FTTH services could reach 50% of its service footprint in a few years, Cowen analyst Gregory Williams said in a report to clients.
The Cowen analyst says rural phone companies Windstream (WINMQ), Frontier Communications and Consolidated Communications (CNSL) are also ramping up FTTH buildouts.
Williams said that “2021 is setting up to be a record year for FTTH builds.” He estimated telecom FTTH services currently reach about 37 million U.S. households, or roughly 29% of the market.
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Williams said FTTH services could reach 68 million by 2025 if AT&T and the rural phone companies speed up deployment.
“If this were to occur, it would pose a formidable threat” to cable TV companies such as Charter Communications (CHTR), Comcast (CMCSA) and others, he said.
One reason rural phone companies are speeding up FTTH deployments is that Verizon Communications (VZ) and T-Mobile U.S. (TMUS) aim to provide fixed 5G wireless broadband services to homes. Like Verizon and T-Mobile, AT&T recently bought midband 5G radio spectrum in a government auction.
AT&T hasn’t committed to selling fixed 5G broadband services to homes. Instead, AT&T has targeted business customers with fixed 5G wireless broadband services. Also, it is deploying 5G mobile services for smartphone customers.
AT&T stock rose 1.4% to near 30.50 in early trading on the stock market today. AT&T stock holds a Relative Strength Rating of only 21 out of a best-possible 99.
Despite its 7% dividend, AT&T stock dropped 26% in 2020 as investors focused on its high debt and the outlook for the WarnerMedia business. AT&T recently spun off its DirecTV video business into a new company in a deal with private equity firm TPG.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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