Welcome viewers and listeners to episode 211 of the G2 on 5G,
the latest insight scoop on everything 5G.
We cover six topics in about 20 minutes,
and it's brought to you by More Insights and Strategy.
I'm Will Townsend, and joining me again this week
is fellow analyst, Amalus Dmachan-Sag.
Let's get started with my first topic,
and I want to talk about AT&T earnings.
They posted recently their 4Q and year end.
And the big thing to note here on the call
was the company ran over a million fiber ads for 2020.
That's a pretty astronomical figure by any measure.
And I also had the opportunity to speak with Jennifer Robertson.
She leads the mass markets consumer group for AT&T,
both broadband and community.
And we spoke about that as well as a number of other things,
such as the AT&T guarantee, AST space mobile,
the relationship there, garden, low earth,
satellite connectivity, and the value of convergence.
And what I'll state about convergence
is that the company also reported
that their conversion strategy, in other words,
selling both mobility and fiber in broadband in general,
and spreading UA together, is driving simplification.
And they saw nearly a two point increase
in the number of customers that take advantage
of their converge services.
That's up to 40% by the end of 2024.
I wrote a Forbes article about this,
so I'm going to do a gratuitous plug.
That was posted late yesterday.
So if you want to go deeper into my conversation
with Ms. Robertson, check that out.
What do you think about all of that with AT&T, my friend?
I think we've been talking about AT&T
trying to improve the user experience
and the customer experience.
I'm not really sure that has translated
to improved numbers yet, because it feels
like it's been fairly recent.
It has, but I will mention, and I mentioned this
in the article, from a business service perspective,
AT&T's received really high marks from JD Power
over the last three years.
Now, when you look at the net promoter scores
for AT&T's consumer business,
they are fairly low relative to their competitors.
But what Ms. Robertson shared with me
is that those NPS scores are beginning to trend
in the right direction.
So there's positive outlook there,
but you're absolutely right.
Yeah, and I think really what this is,
AT&T's focus on the network
and building a good network that is capable
and offers a good experience,
that to me is actually what's paying dividends,
because they're no longer distracted
by all these side bets.
And I think all the carriers just focusing on the network
has really resulted in better revenues and better profits.
Obviously, T-Mobile was the first
because they were the most behind,
but they'd never taken their eye off the ball
on the network.
And Verizon had to really reconsider their approach
and teammates and modifications,
but both Verizon and AT&T who were very distracted
by their media plays.
And I think both of them divesting from those
have resulted in better earnings
and better customer satisfaction.
I couldn't agree more.
The investment that AT&T in particular has made
in its network infrastructure over the last five years
is in the tens of billions of dollars.
And there's an over investment you could stay
from what they're doing with Fiverr.
It's a long-term plan to build a franchise.
And I've spent time with CEO John Stanky
and he's talked about that,
that it's a tremendous investment up front.
And he joked with me and said that
the next person that takes over for him
should be sending John a gift basket,
a fruit basket every Christmas
because of all of the investment
and forward thinking that John is deployed there.
Yeah, I couldn't agree more.
Investing in the network creates...
I was gonna add that I think AT&T's success in Fiverr
is what I believe Grove, Verizon to go out
and acquire Frontier after they had already sold off
all their Fiverr assets to Frontier.
Exactly, and then T-Mobile,
their attitude with Fiverr for years
was that it was a commodity and look what they're doing now,
what they're doing ventures
and their investment as well.
Yeah, because Fiverr is sentimental to backhaul.
Yeah, couldn't agree more.
Hey, let's talk more about AI.
Verizon made an announcement recently
with their AI Connect platform.
You wanna talk about that
and I definitely have some opinion
about that announcement too.
Yeah, you and I both were on the pre-greed for that, I think.
And yeah, I just think that it's a really clear indication
that Verizon is trying to differentiate itself
and continuing to look for ways to be different
from its competitors while also leaning on its strengths.
I think we all know that one of Verizon's biggest strengths
is they have a lot of edge compute
and that they have the opportunity
or they're in the locations
where a lot of their business customers are as well.
So they're really well-positioned
to enable edge compute for enterprises and hyperscalers
but also utilizing their Fiverr network
to enhance the experience
for whoever needs compute at the edge.
And I really got the feeling that this is them doubling down
on their edge compute strategy
and working with NVIDIA,
and Volter, and Google Cloud, and Meta
to accelerate their AI deployments.
And what's interesting is that NVIDIA is specifically helping
with GPU-based edge platforms
for Verizon private 5G network.
So that's very much a business focus.
And I just think that Verizon's really leaning
into what they're capable of on business
and enabling Google and Meta
who already have a lot of compute in the cloud
to get closer to their...
and utilizing Verizon's Fiverr network to get there.
Whether they use Verizon's compute or not,
I think that's up in the air.
But it's really interesting because I think
that they've been struggling to find an application
for edge compute and AI is definitely it.
And I think this is a conversation I had when I was at MIT
last weekend speaking at MIT Reality Hack.
I think AI is a urgent force for XR technologies
because having all this GPU compute at the edge
can also be done for rendering.
It doesn't only have to be done for AI.
Yeah, yeah, I agree with you.
This is leaning into a strength that Verizon has.
But on the surface when I looked at it,
and I think you and I had a quick conversation
after our debrief with that team.
Some of it was ho-hum for me.
It at times felt like some of the functionality
that they were positioning was meat competition
relative to others in the space.
I will tell that everyone has to have an AI story.
And one of the things that I talk about in the Forbes article
is what AT&T is doing with modern AI
to reimagine operations and customer support.
I have talked about what T-Mobile announced last year
with respect to leveraging gen AI to do that.
It's gotten me thinking that I'm going to pull together
an analysis on a global view of network operators
that are leveraging gen AI
to not only provide business-oriented services
like Verizon wants to do with their Verizon I connect,
but also to leverage it internally
to again improve operational performance
and delight customers.
Yeah, I think it would be interesting to see what happens.
I would add that I think you're right that in some way
this very much feels like a follow-on to some other announcements,
especially the GP-related stuff.
What's interesting is they didn't really talk about AI
to run the network as much as they were using
talking about AI to be a feature of the network.
So I think that they're starting to lean more into standalone
as a component of this,
because they talked about an intelligent and programmable network,
which is a standalone network.
Yeah, I think you're right.
I think they're lagging a little bit,
but I think this is a huge improvement for them
in terms of just a clear communication
and leaning into what they are good at.
Yeah, I would agree with that.
Yeah, let's go to my second topic,
and I want to talk about Ericsson,
and we're going to continue the earnings drumbeat here.
They reported four key earnings,
and most notable was their barely explosive growth
in North America's 54% market growth.
Now, when you look at the aggregate,
probably flat, no surprise there.
It's been a challenge, especially with RAN,
and that deployment has occurred,
and now core infrastructure is the emphasis
to get to exactly what you were just talking about,
deploying 5G standalone.
But yeah, at the end of the day,
Ericsson is executing in North America.
We've talked about how both Ericsson and Nokia
have created federal sales teams to go focus on that area.
You and I talked about the possibility
of the Trump administration sort of poking the fires again
with OpenRAN and the need to domesticate
the mobility supply chain and that sort of thing.
I think it's an interesting development
for Ericsson in North America.
Now, the challenge will be can they sustain this, right?
And how the people grow on a global basis going forward.
I'm personally looking forward to Mobile World Congress.
Well, I'll get to spend some time with Ericsson and Nokia
and sensing that to learn a little bit more about it.
What do you think overall about Ericsson?
I think it makes sense that this would happen in 2024,
especially when you consider how much they won with AT&T
on OpenRAN and how that's going to translate
to pretty solid revenues for the next few years.
I do think that there's an potential opportunity for this
to continue forward and continue to be a success for Ericsson
and just a good region for them, especially if OpenRAN becomes
a big opportunity.
I'm not sure how sustainable it will be.
It's very cyclical.
But I feel like maybe 24 is where they ended up
booking a lot of business for the way it was accounted, right?
Was this revenue that was already accrued and was just
accounted for in Q4?
Or is this revenue that's actually
going to has already been accrued for Q4,
but will actually not be built out till next year?
That's how I look at it.
Maybe this was just like an accounting thing.
And we might actually see it smooth out better next year.
Or it's just the beginning of a big wave.
And also, their relationship with AT&T as well.
And that's not going away.
That's going to be a consistent revenue base for them.
So I think if that's a good opportunity for them
and it's going to continue to be, then they could be just
gravy from here on out for at least the next couple of years.
But it's hard to tell.
Other countries aren't really picking up OpenRAN
like the US has.
Japan has tried, but that was just really with Rakuten.
And I'm curious to see if maybe this becomes an opportunity
for Ericsson because such a mature market like the US
becomes, starts to adopt it and then others start
to follow suit.
Yeah.
You're going to talk about that in a son
next topic.
But I'll mention that Vodafone has pretty widely embraced
OpenRAN, a lot of POCs and that sort of thing.
So it'll be interesting to see what 2025 holds in store
with Vodafone and Europe.
But that's the segue to your second topic.
But you want to talk about low earth orbit, satellite.
Vodafone is an investor in AST SpaceMobile.
And you want to talk about a first with Vodafone and AST
SpaceMobile.
Yes.
So in extremely large, bold font on the Vodafone website,
it says that Vodafone makes the world's first space video call
from an area of no coverage using a standard mobile phone
and commercial satellites built to offer a full mobile broadband
experience.
That is deep.
That's a mouthful.
It's about this big on my monitor.
And that's a 32 inch.
80% of my monitor is just that text.
Basically, what they did is they worked with AST SpaceMobile
with the Blue Walker satellites and were
able to test the service on both 4G and 5G smartphones
to basically do a video call, which
has not been possible before.
Because most services are either using
specific specialized devices or they're not
commercial networks.
And the other thing is video is hard to do with satellite.
That's something that was anticipated to happen further
on.
But doing video now just shows how mature the network is.
Pardon me.
I'm going to see.
Bless you.
I think I got a little bit of a cold from Boston.
But yeah, that's the rub of it.
But what it is, it's just the next phase of what I would say
satellite based services can offer.
Because most of satellite based services today
are either emergency only or they're just text based messaging.
So being able to maintain and hold a video call
is a big deal.
And Vodafone obviously is one of the close partners
of AST SpaceMobile and has been working pretty, I would say,
aggressively to enable them.
And they said that Vodafone aims for the first commercial
direct to smartphone broadband satellite service in Europe
to start later in 2025 and 2026.
So they are getting ready to launch fairly soon,
basically end of this year.
And it'll be great because I think Europe needs somebody
like this to take the lead and show the way.
I agree.
And as SpaceMobile puts more birds in the air,
that performance and that latency and that throughput
will only improve over time.
And so I'm not surprised to hear that they're
planning for a late year sort of commercial deployment.
And we'll see if the US is ahead of that or not.
Time will tell.
But this is amazing technology.
You and I have been talking about it for years.
We were the first to discuss who we
felt was in a pole position.
I'll admit right now the news cycle
is filled with Starlink and what they're
doing with direct to device as well.
But don't discount what AST SpaceMobile is doing.
And I know that we have a group of followers
that are the SpaceMob.
They continue to ask me on social media,
when am I going to have follow up discussions with the company.
That's in process.
There's a lot going on.
There was another announcement I saw today
that I need to get caught up on more than from there.
But let me get my third and final topic.
And we've really punctuated this one with earnings and AI.
And I want to talk about Tom Thautica.
They're doing something with Gen AI.
And it's not what my group is.
So I talk about what AT&T is doing with Gen AI
to reimagine its operations and improve customer support.
And that sort of thing.
Thautica is taking a different slant.
So this is a light reading article that posted.
And DeepSeq has been in the news cycle.
And we could probably talk about DeepSeq forever.
But at a high level, what Thautica is doing
is their tech unit is launching its own Gen AI platform.
And it's aimed at helping companies and not
for organizations create customizable,
virtual systems capable of solving complex problems,
automating repetitive tasks, and streaming internal processes.
This is decidedly a Gen AI.
And again, it's very unconventional.
I would have thought that Thautica would have started
with something like intelligent truck rules
and improving customer support.
But certainly they're doing something
that's a little bit out of their wheelhouse.
But it's an interesting fact.
And hey, listen, mobile network operators have struggled
to monetize their investments, just
an infrastructure and spectrum.
They are also investing significant dollars
in modern AI applications.
But this is one that I find very interesting.
I don't know if you caught the news or read the article,
but what do you think about this whole agentic AI?
I would say agentic AI is something
that's been talked about for quite some time now.
It was very much a trend in the second half of last year.
Ironically enough, it was started by these guys.
They were the first ones to really talk about agentic AI
in a meaningful way, even though they
had a really rough launch.
This is basically an agentic device.
Agentic AI has been latched onto by Meta, by Amdedia,
all the smartphone vendors.
Most of the shift guys.
So agentic AI is a trend that is already going into this year.
We think that we'll see more of it just because the truth is
that something like DeepSeq, it's agentic and nature.
It's not actually agentic because it's just
a mixture of experts model.
But the truth is AI.
AI distillation, right?
Yeah.
But agentic AI is just a higher level version of that,
where you pick the models that are more
appropriate for the use case.
And I think we're going to see more agentic AI this year.
And everyone's going to talk about it if they haven't already.
Yeah.
And you're going to hear more about AGI as well,
which is Paul Goodson-Smith, our resident expert on quantum.
And AI talked about this on a data center podcast
that we recorded last week.
But AGI to Advanced General AI, I don't know.
I'm speaking of General Intelligence.
Yeah.
Advanced General Intelligence.
So yeah, I'll tell you what, modern AI is moving at light speed.
And it's pop to popcorn.
It's fun to watch.
But let's hit your third and final topic.
And you want to hit T-Mobile and Apple earnings.
Yes.
I'll start with Apple.
Apple actually reported better than expected earnings,
even though they showed reduced iPhone shipments,
specifically China falling as much as 11% in revenues.
There's a lot of competition in the Chinese market.
And because of that, they are struggling to keep up.
And I think a big factor in that is that Apple intelligence just
isn't that compelling.
Sorry again.
I have it on my deck.
But yeah, I think when you look at what's going on in the Chinese market,
Huawei is resurging.
And then all the other smartphone vendors, they're doing really well too.
So yeah, some things got to give and it's Apple.
So a lot of people were really concerned with what might happen with Apple,
with everybody else doing so well and they shrunk 11%.
What kept them afloat was that services grew significantly and made up for the
fact that iPhone was not really that great in the quarter.
Apple also says that in Apple intelligence will be much better this quarter
and more of the features will be rolled out.
So it would be more useful, which might actually help sales,
which I think is probably valid to a certain degree,
which is why I think that some of Wall Street believes that they will have a better quarter
as a result of Apple intelligence being more feature rich.
But the truth is that unless they really market Apple intelligence
accurately to what the capabilities are, it will continue to be a challenge.
And then overall, they still had record revenue and earnings.
They were able to make up for that gap with iPhone with services.
And then on the T-Mobile side, they had extremely good earnings across the board.
They said that they added 900,000 monthly subscribers,
mostly for premium 5G plans.
They had their greatest growth here in history,
which drove revenue up 6% to almost $17 billion,
while revenue increased 7% to $22 billion.
So they beat expectations, which were $21.3 billion for revenues.
Q4 was really good to them, and 2024 as a year was good to them.
And then all of their partnerships with OpenAI and NVIDIA,
and they talked about 6G,
and they planned to be the company that drives 6G forward with NVIDIA.
And they also had Net Ads on the broadband side as well.
I think they put wars in Net Ads.
Yeah, so postpaid Net account additions in Q4 were $263,000,
that's for the whole company, $1.1 million for the whole year.
And then let's see, I'm trying to find the, oh yeah,
high-speed customer addition of $428,000 in Q4 with $1.7 million in 2024.
So they added almost 2 million new customers to their already large customer base or broadband.
And yeah, they had a pretty strong outlook.
They expect EBITB between $33.1 and $33.6 billion for 2025.
And they expect Net Cash operating activities to be expected to be between $26 billion and $27 billion.
So they are printing cash.
And yeah, things are just very good overall.
They returned $31 billion to shareholders in 2024.
So this was a really good summary for both Q4 for them, but also for the whole year.
And yeah, Q4, they had $3 billion in net income.
And in all of 2024, they had $11 billion.
It was their highest net income in company history.
So they just had a great 2024.
And I think a lot of that just came from building a really good network and making sure that customers are happy.
And I think they're going to drive that forward in 2025 with all these differentiated services that they introduced last year.
And yeah, I'm excited.
I'll tell you anecdotally, I've been a team of customers for a very long time,
but I just started using the TCL 5G modem that they sent me that runs on bread cap.
And it's a really good experience because you're just getting 30 up, 30 down, no matter where you go.
Yeah, it's impressive.
They continue to execute.
And that was a great cover, a very comprehensive summary on the only thing that I would add to that is that T-Mobile for business is also growing its footprint.
So Cali Field spent some time during the earnings call speaking to that as well.
And that was my biggest criticism of T-Mobile is that they were very disruptive and consumer, but they were one trick pony.
And that they really needed to balance out what they were doing from a business perspective, be competitive with the likes of AT&T and Verizon.
So I think they finally, they took terminal velocity there and they're growing in services beyond access with an enterprise and reselling things like SD-WAN and that sort of things.
And that's going to be a very profitable business for them longer term.
We have a super reliable network that's very important to enterprises that are running mission critical applications that are automating OT environments for manufacturing automation and that sort of thing.
So it just rounds out what they're doing.
And it's great to see all the strides that they've made over the years.
Friend, it was another great episode.
Why don't you take us home?
Absolutely.
We hope our viewers and listeners from this week's topics interesting.
If anyone out there would like to reach out for specific insights on this specific 5G topic for another podcast, please reach out to us on social media.
Will is at WillTownTech and I'm at On Shell SOG.