The G2 on 5G Podcast by Moor Insights & Strategy
The G2 on 5G Podcast: AT&T's Fiber Expansion, Verizon's AI Connect, Ericsson's North America Growth, Vodafone's Space Video Call, Telefónica's Gen AI Platform, and T-Mobile & Apple Earnings
welcome viewers and listeners to episode two and the keen of the g2 on 5g the latest inside scoop on everything 5g we cover six topics in about 20 minutes and it's brought to you by moral sites and strategy. I'm Will Townsend and joining me again this week is fellow analyst much inside. Let's get started with my first topic and I want to talk about AT&T earnings that I posted recently their 4q and year end and the big thing to note here on told 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 we spoke about that as well as a number of other things such as the AT&T guarantee, AST space mobile, their relationship, their garden, low earth and satellite connectivity and the value of convergence and what else state about convergence is that the company also reported that their convergence strategy, in other words, selling both mobility and fiber in broadband in general red and gray together is driving amplification and they saw nearly a two-point increase in the number of customers that take advantage of their converged services. That's up to 40 percent 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 Miss 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 has 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 Miss 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 you know 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 digesting from those have resulted in better earnings and better customer satisfaction. I couldn't agree more the investment that AT&T in particular is 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 fiber. It's a long-term plan to build a franchise and I've you know spilled time with CEO John Stanky and he's talked about that but 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 of forward thinking that John has deployed there. Yeah I couldn't agree more investing in the network creates. I was going to add that I think AT&T's success in fiber is what I believe drove Verizon to go out and acquire Frontier after they had already sold off all their fiber assets to Frontier. Exactly and then T-Mobile their attitude with fiber for years was that it was a commodity and look what they're doing now with their with joint ventures and in their investment as well. Yeah because fiber is sentimental to back off yeah couldn't agree more. Hey let's talk more about AI. Verizon made an announcement recently with their AI connect platform and you want to talk about that and I definitely have some opinion about that announcement too. Yeah you and I both were on the pre-brief 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 and I think we all know that one of Verizon's biggest strengths is they have a lot of edge compute and then 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 fiber 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 is really leaning into what they're capable of on business and enabling Google and Meta who already have a lot of compute in their cloud to get closer to their and utilizing Verizon's fiber 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 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's 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 with modern AI to reimagine operations and customer support I have talked about what team will announced last year with respect to leveraging gen AI to do that it's gotten thinking that I'm going to pull together an analysis on a global new network operators that are in an indigent AI to not only provide business oriented services like Verizon wants to do with their Verizon I connect but also to lead it internally to again improve operational performance and delight customers yeah I think it would be interesting to see what happens. I wanted to add that I think you're right that in some way like this very much feels like a follow-on to some other announcements especially the GPU 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 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 I mean 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 fairly 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 in 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 systems to go focus on that area you and I talked about the possibility of the Trump administration sort of poking the fires again with open rail and the need to domesticate the mobility supply chain and that sort of thing I think this is it's an interesting development for Ericsson in North America now the challenge will be can they sustain this right and have a little grow on a global basis going forward I'm personally looking forward to Mobile World Congress while I get to spend some time with Ericsson and Nokia and Samsung to learn a little bit more about that what do you think that we're all about Ericsson? I think I think it makes sense that this would happen in 2024 especially when you consider how much they won with AT&T on open ran 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 like a good region for them especially if open ran becomes a big opportunity I'm not sure how sustainable it will be it's very cyclical but I feel like maybe Q4 is where they ended up booking a lot of business for the women's 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 an 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 years but it's hard to tell other countries aren't really picking up open ran 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 it starts to adopt it and then others start to follow suit yeah you're going to talk about Vodafone with your next topic but I'll mention that Vodafone has pretty widely embraced open ran a lot of POCs in that sort of thing so it'll be interesting to see what 2025 holds in store with Vodafone in 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 space mobile and you want to talk about a first with Vodafone in AST space mobile yes so an 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 of 80 percent of my monitor is that just that text basically what they did is they worked with AST space mobile with the blue walker satellites and we're 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 part of me i'm going to see bless you i think i got a little bit of a cold from boston but yeah that's a rub of it but yeah 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 space mobile 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 it 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 the space mobile 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 a late year sort of commercial deployment and we'll see if the u.s is ahead of that or not time will tell but it's 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 when a poll position i'll admit right now the new cycle is filled with starlink and what they're doing with direct to device as well but don't discount what AST space mobile is doing and i know that we have a group of followers that the space mob 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 but more to more to come there but let me at my 30 final topic and we really punctuated this one with earnings and AI and i want to talk about telephonica they're doing something with gen AI and it's not what you know what it 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 telephonic is taking a different slant so this was a light reading article that posted and deep seek has been in the news cycle and we could probably talk about deep seek forever but at a high level when telephonica telephonic is doing is their tech unit is launching its own gen AI platform and its aim helping companies and not for organizations create customizable systems capable of solving complex problems automating repetitive tasks and streaming internal processes this is decidedly a gen AI and again it's very unconditional i would have thought that telephonica would have started with something like intelligent truck rules and improving call for support but certainly they're doing something it's a little bit out of their wheel house 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 that i find very mean 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 yeah 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 um agentic AI has been latched onto by meta by embedded all the smartphone vendors most of the shift guys so agentic AI is a trend that's already going into this year i think that we'll see more of it just because the truth is that like something like deep-seak it's agentic in nature it's not actually agentic because it's just a mixture of experts model but the tree AI distillation right yeah agentic AI is just like a higher level version of that where you pick the the models that are more appropriate for the use case and i think we're going to see more more agentic AI this year and everyone's going to talk about it but 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 in AI talked about this on a datacenter podcast that we recorded last week but agi to advanced general AI i don't know i'm speaking general intelligence yeah advanced general intelligence so yeah i'll tell you what modern AI is moving at light speed and it's it's you pop the popcorn it's fun to watch but let's 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 i think when you look at what's going on in the chinese market while way is resurging and then all the other smartphone vendors they're doing really well too so yeah something's got to give and it's apple so a lot of people are really concerned with what might happen with apple with everybody else doing so well and bech wonky 11% what kept them locked 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 um a 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 it 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 on the and then overall they still had record or revenue in 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 were 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 dollars 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 2024s a year was good to them and then all their partnerships with open AI and NVIDIA and they talked about 6g and they plan to be the company that drives 6g4 with NVIDIA and they also had net ads on the broadband side as well i think they put words in that ads yeah so post paid 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 net 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 eb to be between 33 and 30 33.1 and 33.6 billion dollars for 2025 and they expect net cash operating activities to be expecting between 26 billion and 27 billion so they are drinking cash and yeah like things are just very good overall they were carrying 31 billion dollars to shareholders in 2024 so this was like a really good summary for both q4 for them but also for the whole year and yeah q4 they had 3 billion dollars in net income and in all of 2024 they had 11 billion dollars 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 teamable customer 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 very comprehensive summary on show um the only thing that i would add to that is that the 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 a one-trick pony and that they really needed to balance out what they were doing from a business perspective they competitive with the likes of at and t and verizon so i think they finally they took terminal velocity there and they're growing in services beyond access within enterprise and reselling things like stwann and that sort of things and that's going to be a very profitable business for them longer term you 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 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 beers and was serious from this week's topics interesting if anyone out there would like to reach out for specific insights on the specific fagie topic for another podcast please reach out to us on social media will is that well time tech and i'm at on shelf sog at