AT&T earnings: CEO responds to Starlink competition fears

Dallas-headquartered AT&T Inc (T) is extending gains on Wednesday morning after reporting Q2 earnings that came in handily above Street estimates.

The company posted $31.56 billion in revenue – up 2.3% on a year-over-year basis – on $0.65 per share of earnings (EPS), representing an exciting 20.4% increase from last year.

More importantly, responding to rising fears of Starlink competition in a CNBC interview, AT&T’s chief executive John Stankey said: “We can compete with anybody that comes in; we’re in a very strong position with the best product out there.”

That said, AT&T stock remains down over 20% versus its year-to-date high.

AT&T is strongly positioned to ward off Starlink threat

According to Stankey, new entrants like Starlink face severe structural hurdles trying to “replicate” ground-based connectivity.

While low-Earth orbit (LEO) satellites grab headlines, he pointed out that new rivals are “coming to the game very late after this industry has already been established.”

Crucially, satellite networks can’t really replace the tens of billions of dollars invested over decades to bring high-speed fiber and 5G connectivity into “dense environments” like hospitals, university campuses, stadiums, and high-rise office buildings.

AT&T currently handles more than 98% of the data traffic generated by its converged customers, leaving satellite coverage to fill only the coverage gaps when users walk entirely off the terrestrial grid, he added.

AT&T not interested in an agreement with Starlink

While there’ve been concerns that legacy carriers might repeat past missteps by signing wholesale network agreements that empower new competitors, Stankey dismissed the notion entirely.

According to him, AT&T does not need a wholesale partnership with Starlink to defend its market position, adding that the company pursues wholesale arrangements only when a segment of the market cannot be reached through its own brand, distribution, or fiber footprint.

In primary metropolitan and suburban US markets, AT&T’s combination of fiber buildouts and 5G spectrum allows it to “acquire and retain” both consumer and business accounts directly – making satellite-based distribution unnecessary for core market coverage.

AT&T shares are worth owning into post-earnings strength

Rather than surrendering distribution to a single satellite giant, AT&T Inc is leveraging an industry joint venture alongside T-Mobile and Verizon to manage off-grid coverage efficiently.

Stankey highlighted that the consortium allows carriers to aggregate consumer traffic volumes and contract across the entire satellite ecosystem – whether sourcing capacity from SpaceX, Amazon’s Kuiper, or AST SpaceMobile.

By maintaining flexibility across multiple satellite constellations, AT&T can handle the remaining fraction of off-network traffic at economical rates without undermining its primary connectivity offerings.

This pragmatic approach reinforces AT&T Inc’s core “fiber and wireless strategy” while offering seamless, affordable backup connectivity for subscribers wherever they travel.

Wall Street currently has a consensus Overweight rating on AT&T stock, with the mean price target of $29 indicating significant further upside from here.