Tag Archives: stock buybacks

Broadband Shorts September 2026

The following are topics I found interesting, but which don’t warrant a full blog – although the first item might still be expanded.

NTIA Announces a New Round of BEAD Funding. In a surprise announcement, NTIA told state broadband offices it is going to allow them to hold a new round of infrastructure grant awards using some of the money from the leftover non-deployment funds. I remember at one point that the agency said that BEAD has effectively solved the rural broadband problem. But this announcement acknowledges that there are still locations that won’t have good broadband after BEAD has been fully implemented. Many of the locations that will likely be part of new awards are those that current grant awardees are walking away from. ISPs have been loudly complaining that the level of funding from the Benefit of the Bargain round of BEAD pushed the awards too low to make economic sense, particularly considering the current high rate of inflation related to telecom construction. States are still eagerly awaiting news of the disposition of the rest of the non-deployment funds, which at this point represent more than half of the funding for BEAD established by Congress.

AT&T Stops Reporting Copper Customers. In its latest quarterly report, AT&T stopped reporting on the number of copper customers still using DSL. The company is still reporting on legacy revenues, and the company said that the legacy segment revenues dropped by $570 million for the quarter compared to a year earlier. I think there are likely several reasons why the company made this change. First, they are in the midst of a major effort to walk away from copper technology across the country, and it’s likely that they don’t want to highlight the number of people who are being booted from DSL. I’ve seen estimates that they will have walked away from hundreds of copper wire centers by the end of this year. Also, by only reporting on gains in fiber and FWA customers, they are painting a more positive picture of growth, without acknowledging that a lot of the customers for those two technologies are changing technology due to discontinued copper. One annoyance of not reporting copper customers is that we no longer know how many total broadband customers the company is serving.

SpaceX Continues to Lobby Against the High-Cost Fund. On several occasions over the last few months, SpaceX has told the FCC that the $4.5 billion High-Cost program that is part of the Universal Service Fund has outlived its purpose and should be phased out. In two different filings at the FCC in August, the satellite company says that the High-Cost program should be discontinued and that the federal government is now subsidizing rural companies to compete with Starlink. That’s an interesting argument that says the federal government shouldn’t be using money to overbuild satellite. Rural telcos and cooperatives counter this argument, pointing out that Starlink has major capacity issues and can’t serve everybody in rural areas, while small ISPs are still willing to serve everybody. The FCC is reconsidering every aspect of the Universal Service Fund, and we should start hearing their intentions over the next quarter.

Texas Pause of BEAD Funding is Still in Effect. Under pressure from the legislature, the Texas Broadband Development Office put the BEAD grant process on hold. The newly seated Texas Comptroller Dan Huffines, who oversees the broadband office, ordered a comprehensive review and audit of the BEAD process. This effort was the result of several elected officials claiming that too many locations were awarded to satellite broadband, and that satellite companies are also getting significant payment upfront when they sign a BEAD contract. It’s possible that the freeze won’t be lifted until the legislature returns in January.

Broadband Adoption to Drop? Several national witnesses told a Pennsylvania House committee in an August hearing that the State’s next big challenge with broadband will be keeping households connected. They warned that the changes in 2027 coming from the One Big Beautiful Bill, like another big increase in healthcare costs, are going to make it a lot harder for homes to afford a broadband connection. One witness estimated that 233,000 Pennsylvanians in the lowest income quintile are in danger of not being able to afford broadband.

Stock Buybacks Instead of Expansion. Elliott Investment Management has been pressuring Deutsche Telekom to pursue stock buybacks rather than pursue the major merger with T-Mobile. Elliott is a large hedge fund that is known for activism and putting pressure on companies it has an ownership share in to stress short-term returns over long-term strategies. The company is known for pushing through cost-cutting and similar actions at companies like Crown Castle, Southwest Airlines, and Salesforce. Customers of the big companies would rather see companies roll profits back into infrastructure, technology, and customer service rather than using profits to buy back stock to benefit stockholders.

Stock Buybacks

All of the big ISPs brag to the public about how much they spend on their networks. There is barely a press release when they don’t remind the public how much money they are pouring back into making their networks better. Even at the local level, it’s rare to ask a big ISP to a local government meeting where they don’t open the conversation by reminding local politicians how much money they have spent in a given town or county.

The story is often just the opposite when problems with networks are pointed out, and communities ask the ISPs to beef up networks and improve service. That’s when we hear that money for capital spending is tight, but an ISP will make upgrades a priority in the future.

What’s never heard in conversation about capital spending is how much big ISPs spend to buy back shares of their own stock. This is a practice where big ISPs (and many other large corporations) use profits to purchase and retire stock. The transaction reduces the number of shares of outstanding stock and consequently nudges up the announced earnings per share. The first time I encountered the practice, I was flabbergasted.

Let’s consider the Comcast stock buybacks. Comcast paused stock buybacks in 2019, but in 2021 repurchased 73.2 million shares of stock for $4 billion. The company has over 4.5 billion outstanding shares of stock, so the buyback reduced the shares of outstanding stock by 1.6%. Comcast earnings for 2021 were announced as $3.06 per share for the year. Without the stock buyback, the earnings would have been $3.01.

The theory is this small nudge is good for investors. But it’s hard to envision a worse use for cash. Comcast could have gotten a far better return for investors from using that money to extend networks around their current markets, upgrading older networks to keep customers loyal, or marketing to add new customers. Those kinds of changes would result in long-term value gain for shareholders. Comcast recently announced that it is increasing the stock buyback in 2022 to $10 billion. To put that into perspective, Comcast’s capital spending for the last two years was $11.6 and $12.1 billion.

ISPs vary in the amount put towards stock buybacks according to their current cash situation and Board philosophy. Here are a few other stock buyback plans for large ISPs.

  • Charter has actively been buying back its stock. The company repurchased $15.4 billion of its own stock in 2021 and $11.2 billion in 2020.
  • T-Mobile has plans to really step up stock buybacks and plans to repurchase $60 billion of its own stock between 2023 and 2025.
  • AT&T is not currently buying back stock and only repurchased $104 million of stock in 2021.
  • Verizon told investors it would buy back 100 million shares of stock in 2022 – the stock is currently trading at $54 per share.
  • The one that is hardest to understand is Lumen. The company generated $700 million in free cash flow in 2021 and spent $1 billion to buy back its stock. That probably demonstrates the pressure that Wall Street is exerting for stock buybacks.

This makes me wonder if corporations that are engaging in stock buybacks should be allowed to get federal grants. For example, should we have allowed a company like Charter to get $1.2 billion in RDOF funding in 2020 at a time when the company was spending $11 billion to buy back its own stock? Did Charter really need a federal subsidy, or does grant funding just allow a company to even further increase stock buybacks? I don’t have an answer for that other than it just doesn’t feel right.