From becoming the official innovation 5G partner of the NBA and WNBA, to a stadium in Dallas, to more than 20 years of partnership with the NCAA, AT&T (T) certainly has its footing in sports. As technology advances, so does its use in different businesses, with sports and telecommunications being no exception.
AT&T CEO John Stankey sits down with Yahoo Finance Anchor Bradley Smith to discuss the company's performance, its strategy and investment in the sports sector, and the use of AI.
Stankey comments on the advent of AI for the business: "I think AI is going to be another really significant seminal moment. In our business, we have a lot of data, we have a lot of network information. We have a lot of information about our customers. If you can take generative AI and manage it with proprietary data sets, you can do some very powerful things. How we're going to engineer and design our network to adjust to traffic flows. What do we do to fine tune our customer service profiles that match the particular need of a customer based on what we know on the behavioral patterns of what they're doing. These are all things we're doing today and starting to engineer into the business."
Overall, Stankey says he "couldn't have been more pleased with the way 2023 went," despite the company's fourth-quarter earnings coming in shy of estimates. Stankey says that the company benefited from the fact that overall, the industry is healthy, citing things like record investment and new technology.
When it comes to the economy, Stankey argues the it has been more resilient than many had thought it would be. He thinks consumer spending will hold up, noting that AT&T's customers are still paying their bills.
Watch the video above to hear why Stankey says AT&T is well-positioned to cope with a higher for longer interest rate environment.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor's note: This article was written by Nicholas Jacobino
Video Transcript
- Welcome back. We're here in Indianapolis at NBA all-Star Weekend. And we've got a very special guest joining us. John Stankey who is the CEO of AT&T. John, thanks so much for taking the time here.
JOHN STANKEY: Absolutely. It's great to be here with you.
- We got to talk about how sports has really been a fixture in AT&T's growth strategy and the customer acquisition strategy over the years here. AT&T stadium in Dallas, you've got the 5G innovation partnership with the NBA's Los Angeles Clippers. And then you've got over 20 years with the NCAA as a partnership there.
When you think out to how critical sports is to this broader strategy for AT&T, why invest so much into that? And what is the return on that investment look like for you guys?
JOHN STANKEY: Well, first of all, it's something people are passionate about. So it's always good to be associated with something that people have passion for. And generally speaking, when you go to a game, you're in a good mood, you're receptive to hearing things, sports is something that's part of the culture in the United States.
So it's easy to activate. You're seeing some of the things we're doing here where you can use our technology to enhance the fan experience. That's the natural place to go.
And as a result of that, it's just good to get the brand in front of people and do that activation. And then there's some pretty big iconic figures that play in these sports events. And you imagine attaching yourself to it can be really good for your brand.
- Absolutely. You've got two NBA players in Shai and then as well Paul George who have partnered with AT&T. So amazing to see that. One of the huge things that you mentioned just a moment ago, technology.
And the proliferation of technology being embedded within sports. And I think about some of the conversations that have been taking place around AI and how that's made its way to the NBA arena as well. How does that show up in your business from the way that you, the c-suite, are talking about that is AI just going to supercharge the next smartphone life cycle, for instance.
JOHN STANKEY: Well, there's AI in sports and then there's AI broadly. And AI broadly, I mean, I personally believe this is a seminal as the founding of the internet for commercial purposes. I mean, if I think back in the '99, 2000 timeframe, we said, what's the internet going to do to business? And what's the internet going to do to how you reach customers?
I don't think we had any imagination of what was actually going to transpire. I think AI is going to be another really significant seminal moment. In our business, we have a lot of data and are running our company.
We have a lot of network information. We have a lot of information about our customers. If you can take generative AI and manage it with proprietary data sets, you can do some very powerful things.
How we're going to engineer and design our network to adjust to traffic flows? What do we do to fine tune our customer service profiles to really match the particular need of a customer based on what we know on the behavioral patterns of what they're doing? These are all things that we're doing today and starting to engineer into the business.
And then when you think about what we do broadly in society, when we're sitting at an arena, and you start to imagine bringing in enhanced experiences, watching a basketball game, that's all payloads of data that have to be moved around that arena. And then if wireless is ultimately that user interface for that experience, it's going to be good for our business over the long run.
- What type of investment do you foresee AT&T really leaning into this generative AI move that we've seen?
JOHN STANKEY: Well, we've made significant investments right now. We're a key partner with Microsoft for one of their lead industry partners right this time. It's a joint investment portfolio where we put in our time, our energy, our resources, our knowledge of business process.
They've been furnishing compute for us to do that to build the applications that ultimately sell back into industry. But we're at the tens of millions of dollars a year right now scale just within our business.
- The growth narrative. It's been challenged by some analysts out there who downgraded the stock in 2023. And they were looking at some of the wireless and broadband segment concerns.
But at the same time, I mean, you reported Q4 earnings results, you beat on revenue, slight miss on earnings. What do you say to those out there who are doubting this turnaround story up against some tough comps of the past too for AT&T?
JOHN STANKEY: Look, I couldn't have been more pleased with the way 2023 went in total. We laid out for the financial community of what we intended to do. And we not only did that, we beat it.
Most importantly, on cash where we came in much stronger than what we had stated at the beginning of the year. And I think that's the ultimate sign of health in our company and our industry. So I feel really good about how the business is operating.
And one of the reasons we were able to do that is the industry is healthy. And so I think there was some fear last year that people thought that the wireless industry was going to eat its young and that it wasn't healthy and how it was operating. And I would say quite the opposite.
There's been record investment, new technology coming out, customers are using the product more. And those that invest in the technology are able to recover the cost of that investment by getting value and pricing right. And I think that's been happening not only in AT&T, but with our competitors as well.
- What is your read on the economy right now? I mean, there's so many forecasts that come out around this time of year from CEOs who are looking through and getting their read on the consumer. What is the consumer telling you about the shape that the economy is in?
JOHN STANKEY: The economy is resilient. I think it's been more resilient than many of us would have given it credit for maybe a year and a half ago. And I expect carrying through '24. We're going to see more of that.
We're going to continue to see consumers spending. We don't see any dynamics in our customer base that suggest credit is a problem. We still have people paying their bills the way they've normally paid their bills.
We see growth in our core products and services. And people willing to pay up for more value. That's all good things.
And I think, frankly, the dynamics in the country moving into a presidential election cycle. Policy is probably going to line up to make sure the economy stays on pretty even footing as a result of that as well.
- What type of election cycle are you anticipating? How does that change the fabric of how you do business right now and the broader telecom industry?
JOHN STANKEY: I think the one I'm anticipating is I have no idea. And therefore, you have to anticipate every possible outcome, and everything, and just accept that it may take some twists and turns that are a traditional or different than what you might typically see and be ready to adjust to them.
- You have a Fed that could be cutting rates going into that election cycle. And for consumers out there that as you were talking about, the delinquency rates or at least alluding to it in some fashion. For the consumer that's saying I'm waiting for interest rate cuts because that's going to make me feel better.
I mean, is that necessarily going to save them from the delinquency that they might already be in? Or is it going to be such a sentiment turn for the consumer that it really elicits some type of different performance in the economy that we've seen to this point?
JOHN STANKEY: I don't see a change because I think we're probably at peak rate right now. And I think things are pretty stable and healthy right now. I think based on last year's last week's news, I don't see the Fed being disposed to a rate movement right this minute.
It doesn't hurt my company. We're paying down debt. We're not out in the markets refinancing debt.
We did a good job of structuring the balance sheet before rates went up and have very long-term structure around that and low interest rates. So, frankly, for our business, I think we're fine. When the Fed starts to move, they're going to move. I don't know that it's going to have a dramatic change in sentiment in 2024 right now based on how things are structured.
- I want to end on a fun one. Because you guys have also really changed the fan experience for those who can't make it physically to some sporting events, and games, and matches with hollow vision as well, and some of the partnerships there. What is the next iteration of technology that is really just going to reinvent the fan experience from your perspective?
JOHN STANKEY: Well, I think you're seeing it now. Vision Pro and what Apple is doing is another step in the augmented and virtual reality.
- Is that a hedge against like high ticket prices for consumers?
JOHN STANKEY: No, I think it's both, right? I think there's going to be places where you want to go have that live experience and share it. But you can have even a richer experience at home that can have elements that will become more social and more interactive.
And whether it's adding gaming and wagering into the experience while you're at home, if it's the social dynamic that occurs when you're in the arena, there will be new experiences that start to pop up as a result of that. Was talked about here at the session today.
And these high performance networks that we're building are going to allow for that to happen. And it's augmented video that complements the play on the court. These are all really exciting things that we're going to see happen.
And they all drive more usage and more engagement with the networks that we build. And that should be a good thing for our business over the long run.
- John, thanks so much for taking some time sitting down with us. We know you've got a packed schedule of events this weekend.
JOHN STANKEY: It's good to be here. And I'm glad that we could share a few minutes together.
- Absolutely. Appreciate it.