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4G/3G/WiFi

AT&T's Device Mix Shifts Away From Postpaid

AT&T managed to sell a record-breaking 6.7 million smartphones in the third quarter, but only signed on 178,000 new postpaid smartphone contracts. Instead, most of its growth came from upgraders, prepaid users, or tablet purchasers.

In announcing its third-quarter earnings on Wednesday after the bell, AT&T Inc. (NYSE: T) said it added a total of 989,000 wireless subscribers. Of those, 363,000 were postpaid compared to 192,000 prepaid additions owing to its new LTE GoPhone selections. Another 719,000 were connected device additions, offset by a net loss of 285,000 subscribers from its reseller unit, which CFO John Stephens said were primarily 2G subscribers who AT&T would lose when it sunset its network anyway. (See AT&T: Say Goodbye to 2G in 2017.)

Within its 363,000 postpaid adds, only 178,000 -- about half -- were contract-signing smartphone users. Comparatively, just shy of 90 percent of Verizon Wireless 's 1.1 million customer additions in the third quarter signed on to contract plans.

AT&T did, however, manage to further close the gap on its chief US rival when it came its 4G LTE network. It ended the quarter with an installed base of 21 million LTE devices, compared to Verizon's 36 million. About 40 percent of AT&T's smartphone users are on the LTE network, compared to 50 percent at Verizon. (See Verizon Beefs Up LTE Network, Nears VoLTE.)

AT&T said it now reaches 250 million POPs in 435 markets. It's on track to cover 270 million POPs by the end of the year and be substantially complete by the summer of 2014, covering 300 million POPs by the end of 2014. (See Fall Into 4G: AT&T Adds 13 New LTE Markets.)

"When we complete our LTE build and have a video-centric network out there in the wireless space, we expect to see continued growth," Stephens said on the third-quarter call, adding that AT&T's prepaid business and focus on Digital Life and the connected car will continue to complement its smartphone growth. "We're excited and confident to get really solid returns out of our investment."

Stephens didn't seem concerned about the slowdown in postpaid smartphones, instead noting "more than doubling our postpaid smartphone adds is something I'm pleased with." He also dismissed any added pressure from T-Mobile US Inc. , which this month shook up both its international pricing and its tablet data pricing, pointing to AT&T's steady churn numbers as evidence it isn't yet affecting the company. (See Bills Don't Lie: T-Mobile Drops International Roaming Charges.)

He did, however, admit AT&T is seeing pressure on price-sensitive, low-end subscribers on 2G feature phones. It's counting on its acquisition of Leap Wireless International Inc. (Nasdaq: LEAP) to close in the first quarter of 2014 in order to raise its profile with this market. If the deal closes, it will shutter its own new prepaid brand, Aio Wireless, and take Cricket Communications, Leap's customer-facing brand, nationwide. (See AT&T to Acquire Leap Wireless for $1.19B.)

— Sarah Reedy, Senior Editor, Light Reading

ANON1243905720301 10/24/2013 | 7:48:33 PM
21M LTE Subscribers I was excited to see 21M LTE subs.  I have been tracking AT&T for quite a while, and they had not mentioned LTE subscriber counts in prior earnings reports. The provided multiple comments in Q1 that could be used to calculate a number, which happened to be far higher than industry analysts were using, but they did not provide an actual number. 

For Q3 I have checked the financial slides, earnings transcript, etc. and did not find a number. So, I must assume that you interpolated and extrapolated statements like 42% of smartphones are LTE capable and other comments to get to 21.  Inquiring minds want to know, did you do math, or did I miss something? 


Thanks!
Sarah Thomas 10/24/2013 | 10:53:22 AM
Re: Postpaid He called T-Mobile's tablet move "noise," but then clearly responded to it with the $100 off offer. It was an interesting quarter for AT&T, since it's when it changed its upgrade cycle to 24 months and started requiring shared data. The low percentage of postpaid smartphones is pretty surprising though, esp when Verizon is still at 90%.
KBode 10/24/2013 | 7:30:58 AM
Re: Postpaid I think you're quite right about that.

Though the CFO on the conference call did vaguely acknowledge they were seeing movement among "price sensitive" customers (read: T-Mobile).
DOShea 10/23/2013 | 9:14:59 PM
Postpaid Something tells me AT&T won't admit postpaid contracts are going away until it actually has none left.
DanJones 10/23/2013 | 9:14:52 PM
Re: Tablets Here's the direct info on their tablet pricing:

MOBILESHARE:

Customers can add a tablet to their MobileShare plan for only $10/mo.

 

(NEW) SESSION-BASED PLANS ($5 and up)

Any customer who chooses not to take the $100 promo has the additional option to choose one of these for occasional use:

·         For $5, AT&T customers have access to 250MB for one day (no auto renew)

·         For $25, AT&T customers have access to 1GB for three months (no auto renew).

 

AT&T NEXT – ZERO DOWN:

With AT&T Next, customers have the ability to buy iPad with no money down and no activation fee (and no SIM fee). AT&T Next features only 20 monthly device payments (and no financing fee) – and here are our new iPad prices:

iPad Air

16GB

629.99

630 (31.50/mo)


iPad Air

32GB

729.99

730 (36.50/mo)


iPad Air

64GB

829.99

830 (41.50/mo)


iPad Air

128GB

929.99

930 (46.50/mo)


iPad mini w/ Retina Display

16GB

529.99

530 (26.50/mo)


iPad mini w/ Retina Display

32GB

629.99

630 (31.50/mo)


iPad mini w/ Retina Display

64GB

729.99

730 (36.50/mo)


iPad mini w/ Retina Display

128GB

829.99

830 (41.50/mo)


 

SESSION BASED ($14.99 and up)

These two session-based plans are in addition to the ability to add a tablet to an AT&T Mobile Share plan for just $10:

·         250 MB for 30 days for $14.99

·         3 GB for 30 days for $30

·         5 GB for 30 days for $50

 

Remember AT&T is offering $100 off tablets for people that go for a 2-year contract.
DanJones 10/23/2013 | 7:30:41 PM
Tablets To illustrate the importance of tablets in the mix now and perhaps knock T-Mob's tablet move. AT&T has just wrote and said they're offering $100 off new tablets bought with a 2 year contract from November 1.
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