AT&T: We’re Focusing On Growing Wireless The Right Way

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AT & T’s aggressive phone promotion has raised eyebrows across the industry, but the company says the promotion is the right way to grow wirelessly.

AT&T, the third-largest wireless service provider among subscribers, was recently asked about promoting these phones at Bank of America on June 16. Event for investors. The big question for investors is whether this is good for AT&T earnings.

AT&T Consumer CEO Thaddeus Arroyo said AT&T added more than 3 million net increases in postpaid services over the past three quarters, of which 2 million were “very postpaid phone additions. important “. “We know our position in the market… Our goal is to continually improve our position, to do it through growth and to do it the right way. “

This is similar to the question asked of AT&T admins in other recent events. June 15 meeting at Credit Suisse, CFO Pascal Desroches said the supply economy was very attractive.

“That’s why we introduced it. That’s why we are doing it, ”he said. “And interestingly, the same competitor who criticized the offer as unsustainable is duplicating the offer because it actually offers the best deal to the best customers and the number of years the device has. I think it’s a good deal. That’s what I’m saying we’ll keep it for the foreseeable future. It’s a good game for us. “

Relationship: AT&T CFO emphasizes “resiliency and reliability” subscriber relationships

It should be noted that the turmoil began last fall when AT&T announced $ 800 credits to new and existing customers of old exchange models. , surpassing the carrier’s offer of $ 650 in 2016 and the $ 700 offered by Verizon to new subscribers the year before.

Verizon appears to be responding to AT&T’s offer on June 1 of this year. Announcement Choose from unlimited plans in “The Biggest Verizon 5G Upgrade Campaign Ever.” When customers add a new line of smartphones “using the qualifying Verizon unlimited mobile plan” and trade in qualifying devices, some smartphones can get up to $ 800 off.

That’s why it has a few qualifiers, but I’m playing the ball in the sense that it targets new customers as well as existing customers. AT&T launched a collaborative effort to target existing customers over a year ago, highlighting an investigation of customer issues.

Relationship: AT&T aims to be a game-changer with wireless upgrades

Prior to that, most career postings were aimed at attracting new clients rather than attracting existing clients. What we don’t know about Verizon’s offer is its duration. By definition, promotions are temporary, but AT&T offers run for months or quarters instead of weeks.

AT&T says it does everything without the “pitfalls” that usually come with offers that sound too good and aren’t true.

“Customers can tailor an unlimited package portfolio for each family member without having to have a matrix to understand which packages they can actually choose,” Arroyo explained. “We are also giving our customers the ability to upgrade to the latest 5G devices with affordable installment plans, and by redeeming the trade-in value, we make your wallet easier to use. The first is to extend the payout period and, frankly, extend the payout period to match the life of the actual device. “

Customer response is positive, AT&T says. AT&T reported a postpaid phone churn rate of 0.76% in the first quarter of 2021, and Arroyo said the cost per net add from a promotional perspective has declined significantly year over year. . Says that.

“We are focused on appropriate growth, which requires us to increase effectiveness and efficiency throughout the transformation we are leading,” said Arroyo. “This will allow us to increase the number of our two customers while simultaneously increasing profitability. We are also seeing very strong demand for 5G devices shortly after the launch of 5G nationwide coverage last summer. This is partly due to the expansion of 5G services to all unlimited plans and the creation of a very efficient Go.-To market, with the aim of increasing market share. strategy.”

Wave7 Research said in its latest postpaid report that all carriers are focusing more on their foundations as Sprint no longer offers attractive switching deals. AT&T announced a 36-month Equipment Installation Plan (EIP) earlier this month, extending the payment period for customers. This allows the customer to keep the hook longer.

Relationship: AT&T offers a 36-month phone plan

“As carriers increasingly subsidize their phones up front, it makes sense to require customers to maintain their unlimited plans for long periods of time,” Wave7 said. “In addition, the upgrade cycle has been lengthened, which makes it easier to lengthen the EIP. “

Everything about 5G

According to Bill Ho, senior analyst at 556 Ventures, the new form of promotion will be a hit with 5G cores. In addition to attracting 4G LTE subscribers to 5G plans, operators must move 3G customers away from CDMA networks. Indeed, these networks will be obsolete in the not too distant future.

“It’s a way to get people on a 5G phone and prevent them from canceling,” he said. If you get a new cheap phone, it’s less likely to be worn. “I think that’s what motivates them. They know how many there are. They have goals and new customers are the sauce.

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For clients, promotion is like returning from a two-year contract. “It’s similar. The commitment is still there, ”he said.

On the operator side, promotion is a function of carrier performance and internal net addition or retention targets, but it can be difficult to analyze from the outside.

“They are behind the curtains, but the mechanics are still for everyone,” he said. “It’s a dual objective” for the acquisition and retention of customers.

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