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Telecom giant AT&T (NYSE: T) has successfully kept its wireless business growing by attracting hundreds of thousands of new subscribers each quarter. The fiber internet business is also performing well as the company expands its network. On the consumer side of the business, revenue growth from fiber services is outpacing revenue losses from legacy wireline services.

The part of AT&T that serves business is a different story. Business wireline revenue tumbled 7.3% in 2023, and operating income from that segment crashed 43.7%. While AT&T sells fiber internet services to businesses, as well as to consumers, it hasn't halted the ongoing slump in business wireline revenue.

Turning to 5G to win over businesses

The company announced on Tuesday that it was rolling out a business version of its AT&T Internet Air service, which uses its 5G wireless network to deliver internet service. The company launched the consumer version of Internet Air last year, although only in certain areas. On the consumer side, Internet Air helps fill in the gaps in the company's fiber network.

For the business Internet Air service, AT&T is launching nationwide. The company is pitching the service as a good option for businesses where fiber is not available or where a backup internet connection is desirable.

While AT&T's fiber internet service provides faster and more stable performance, businesses may be drawn to the ease of setting up Internet Air. For a business to set up fiber internet, fiber lines may need to be buried, holes may need to be drilled through walls, and building management may need to get involved. The complexity and potential for disruption of a fiber install may be stopping businesses from considering the company's fiber internet.

In contrast, AT&T's Internet Air service requires no installation of any kind, and the equipment can be set up without a technician. The company is being relatively aggressive with pricing, undercutting a competing 5G business internet service from Verizon. AT&T Internet Air for Business offers plans for $60 per month and $100 per month, with savings for businesses that also have a business wireless plan.

AT&T stock is still a bargain

While the company's fiber internet service may be a larger long-term growth opportunity for AT&T, its new Internet Air for Business offering will allow it to win business customers that otherwise would have stuck with traditional internet providers or opted for wireless services from Verizon or T-Mobile. This should help offset revenue declines from businesses dropping legacy services.

AT&T stock has recovered from its 52-week low but is still down around 40% from its pre-pandemic high. The company has gone through a major transformation over the past few years, undoing its disastrous media acquisitions and turning its focus to wireless and fiber. Its results have been solid, but investors haven't come around.

AT&T is expecting to generate free cash flow between $17 billion and $18 billion this year, and the stock trades for just over 7x the midpoint of that range. If the company can show progress in winning over businesses with its new 5G internet offering while maintaining momentum in the rest of the business, the stock could finally earn a more optimistic valuation.

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Timothy Green has positions in AT&T. The Motley Fool recommends T-Mobile US and Verizon Communications. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.