AT&T, BlackRock To Form Joint Venture Expanding Fiber-Optic Network

AT&T (T) and BlackRock, the world’s largest asset manager, have agreed to form a joint venture that will expand fiber-optic network and broadband services outside the telecom company’s current wireline footprint. AT&T stock edged up on the news.

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Called Gigapower, the joint venture will sell wholesale fiber services to internet service providers and other businesses. Gigapower will expand fiber-optic network services outside of AT&T’s traditional 21-state wireline service footprint.

“This is a much smaller initial step than we would have anticipated, with a target of only 1.5 million locations to be passed,” said Raymond James analyst Frank Louthan in a report. AT&T did not disclose a target date for completing the build-out to 1.5 million homes and businesses.

In addition, AT&T still plans to expand its own fiber-optic network to 30 million-plus homes and businesses by the end of 2025. At the end of the September quarter, it had 18.5 million.

AT&T Stock: 2023 Free Cash Flow Guidance Key

AT&T expects to report consumer subscribers served through Gigapower in the operational results of its consumer wireline business unit. Any impacts to AT&T’s 2023 capital investment or free-cash-flow forecast will be included in AT&T’s 2023 financial guidance.

Also, AT&T stock edged up a fraction to close at 18.31 on the stock market today.

In addition, AT&T will report fourth-quarter 2022 results in January. Analysts have stated that AT&T’s free-cash-flow guidance for 2023 will be key for T stock.

“The biggest debate on AT&T now is whether they will hit the street’s FCF estimates when they issue 2023 guidance,” added Louthan. “We believe this (BlackRock joint venture) may give them some wiggle room to come in below the sell side.”

In the September quarter, AT&T broadband subscriber additions were a bright spot.

AT&T Outperforms S&P 500

AT&T added 338,000 fiber broadband subscribers, topping views from AT&T stock analysts of 330,000.

T stock had dipped 1.6% in 2022 as of Thursday’s market close, outperforming the S&P 500. The S&P 500 has retreated 20% this year.

AT&T stock holds a Relative Strength Rating of 80 out of a best-possible 99, according to IBD Stock Checkup.

WarnerMedia broke away from AT&T and merged with Discovery in early April. The new media company is called Warner Bros. Discovery (WBD).

BlackRock is a top provider of exchange-traded funds and other low-cost alternatives that track market indexes.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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