‘I think we’ve known for a long time that traditional voice had a shelf life. And ultimately it was going to get replaced with integrated communication services and as-a-service capabilities that run over the top of IP. Now we’re seeing that evolution pick up with a degree of steam,’ CEO John Stankey said of business segment declines during AT&T’s first-quarter 2024 earnings call Wednesday.

Business relationships will be key to driving 5G and fiber-based connectivity growth, according to telecom giant AT&T.

The Business Wireline segment, which includes AT&T’s advanced Ethernet-based fiber services, IP voice and managed professional services as well as traditional data services, fell 7.8 percent during the first fiscal quarter of 2024 to $4.91 billion compared with $5.33 billion a year ago, which the carrier attributed to the ongoing transition away from legacy voice services.

But AT&T sees opportunities for incremental growth in its business segment from its fiber and 5G “core competency” connectivity offerings, said CEO John Stankey during the carrier’s first-quarter 2024 earnings call Wednesday morning.

“We’ve got a really good, solid growth business and those growth businesses are built on 5G and fiber,” Stankey said. “The endgame is we will catch this decline. And we’ll ultimately catch the decline with connectivity-based services, both in fiber and 5G, and we’re going through the transition to make that happen.”

The return to office and the hybrid work trend that has some businesses re-evaluating and rationalizing office spaces has caused AT&T to take a look at the kinds of technology these businesses want and need, Stankey said.

“I think we’ve known for a long time that traditional voice had a shelf life. And ultimately it was going to get replaced with integrated communication services and as-a-service capabilities that run over the top of IP,” he said. “Now, we’re seeing that evolution pick up with a degree of steam. … From my point of view, that’s why we’re seeing a little bit of that step up in that voice transition.”

Stankey said that AT&T is in the midst of a shift toward becoming a company that is “good at selling 5G and fiber” into smaller businesses, not just at the top end of the market.

“That’s a bit of a transition because I would say where we made our bread and butter over the last decade, rightly or wrongly, has been at the top end of the market. So, as we shift and generate more revenues and more share out of the mid portion of the market, we’re having to rebuild some muscle and some distribution and the right product mix to attack that.”

One way that AT&T plans to reach more small and midsize business customers is through its AT&T Internet Air for Business offering, which was launched nationwide in late March.

AT&T Business today provides services to nearly all Fortune 1000 companies and nearly 2.5 million businesses, according to the Dallas-based carrier.

First-Quarter 2024 Results

AT&T’s mobility segment revenue totaled $20.60 billion during the quarter, a 0.1 percent increase compared with $20.58 billion in the same quarter a year ago. The overall communications business, which includes high-speed internet, video and legacy voice services, totaled $28.86 billion during the quarter compared with $29.15 billion in the first quarter of 2023, a 1 percent decrease.

Mobility Services revenue climbed once again by 3.3 percent to $15.99 billion, up from $15.48 billion a year ago. Mobility Equipment revenue, on the other hand, declined 9.8 percent from $5.09 billion in first-quarter 2024 to $4.60 billion.

Business Wireline services continued to decline, falling 9.6 percent during first-quarter 2024 due to the transition of legacy wireline services and faster-than-expected declines in legacy voice revenue. Business wireline equipment, however, climbed an impressive 62.6 percent during the quarter.

Business Solutions wireless service revenue grew 4.6 percent during the quarter due to continued enterprise customer wireless adoption that helped partly offset legacy voice declines, said AT&T CFO Pascal Desroches.

Desroches said that the company expects Business Wireline revenue trends to continue to decline for the rest of the first half of 2024.

The company added 349,000 postpaid phone adds during the first quarter of the year, the company’s lowest first-quarter churn results on record.

Total operating revenue for the first quarter that ended March 31 was $30.03 billion, a modest decrease of 0.4 percent from $30.14 billion in the same quarter one year earlier. Diluted earnings per share during AT&T’s fiscal fourth quarter was 47 cents, compared with 57 cents a year ago.

AT&T’s first-quarter 2024 results missed Wall Street’s expectations during the first quarter of the year.