AT&T trails Verizon, T-Mobile in post-paid subscriber growth

American telecom service provider AT&T trailed rivals such as Verizon and T-Mobile in the post-paid subscriber growth during the fourth quarter of 2013, said Eric Costa, Analyst in TBR’s Networking and Mobility Practice.

In a telecom analysis, TBR said AT&T’s single digit revenue growth and 809,000 total net additions placed third among the Tier 1 U.S. operators in 4Q13.

AT&T continued to feel the pressure from T-Mobile’s aggressive Un-Carrier strategy, which is the main driver behind AT&T’s lower net additions. This will continue to disrupt.

AT&T’s 1H14 performance as the operator combats T-Mobile’s price decreases and decision to cut early termination fees (ETF). AT&T will outlast T-Mobile’s recent comeback as T-Mobile focuses primarily on attracting cost-conscious smartphone subscribers to its Simple Choice plans.

As wireless revenue growth shifts towards the connected device segment and away from smartphones, T-Mobile’s strategy will not be as effective against AT&T.  Although AT&T will continue to struggle to post higher postpaid net additions than Verizon and T-Mobile in 1H14, the operator will use its strength in connected devices to regain momentum and drive revenue growth over the next five years.

AT&T grew total revenue 1.8 percent year-to-year and added 809,000 total subscribers in 4Q13, yet trailed behind strong performances from Verizon and T-Mobile in the wireless market. AT&T also came in third in lucrative postpaid net additions with 566,000 net additions in 4Q13, down from the 780,000 postpaid net additions from the year ago quarter and behind T-Mobile (869,000) and Verizon (1.6 million).

AT&T will achieve revenue growth in the low double digits in 1Q14 by rapidly deploying the remainder of its initial LTE 4G network, executing Project VIP to improve its network quality and reliability, and drawing subscribers to its Mobile Share plans. These initiatives will strengthen AT&T’s business and drive higher data consumption, enabling AT&T to better monetize its offerings and gain ground on Verizon, who outperformed AT&T in revenue and subscriber in 4Q13. AT&T’s strengths are in its connected device and postpaid segments, and the operator will continue to rapidly invest into these areas.


AT&T is making multiple plan changes to combat T-Mobile from stealing away its postpaid subscribers

Following AT&T’s move to offer Mobile Share plans exclusively, AT&T announced that it will be reducing the price of its existing Mobile Share Plans and expanding its offerings to price conscious customers with its Mobile Share Value plans. These plans offer less data for a cheaper price than its standard Mobile Share plans.  AT&T is losing net customer additions to T-Mobile’s aggressive “Un-Carrier” strategy, which offers low-price non-contract shared data plans that have been very successful in luring postpaid customers.

In addition to altering its Mobile Share offerings, AT&T extended its Next handset upgrade program to 18 months and offered multiple promotional deals in an attempt to retain postpaid subscribers that may be tempted to choose T-Mobile for its cheaper prices. AT&T’s Next program is in direct competition to T-Mobiles Jump! upgrade program.

TBR expects AT&T to continue to report positive postpaid net additions in 1H14, yet believes the operator’s recent changes to its postpaid offerings will not halt T-Mobile’s recent surge in subscriber net additions. Additional changes will need to be made to increase subscriber retention in order to recapture the second highest postpaid net additions from T-Mobile in 2014. AT&T has a strong long term growth strategy that will outlast T-Mobile’s recent comeback, yet it revolves around the connected device segment which is still multiple quarters away from experiencing high subscriber and revenue growth.

AT&T is driving new device connections by focusing on its Digital Life and Connected Car segments.

AT&T continued to lead the industry in connected devices in 4Q13. The operator focused primarily on its Digital Life and connected car verticals, while also maintaining its growth in connected handsets. AT&T is planning for long-term growth in the connected device market and is positioning itself to be the dominant player in the industry.

As of January, AT&T Digital Life expanded to a total of 59 markets. TBR believes there is significant opportunity for AT&T to drive short term growth in connections with its Digital Life portfolio as currently only 1 percent of U.S. households are using automated security systems.

AT&T also continued to secure contracts from automobile manufacturers. In January AT&T acquired contracts from Chevrolet, Audi and Tesla to provide wireless connectivity for their 2015 vehicle models. In addition the operator launched its AT&T Drive platform in January which enables automobile manufacturers to more effectively differentiate their connected vehicle platforms with customizable services and capabilities. The growth in connected car will not take off until 2016, as the technology is still being developed and trialed in the short term, yet AT&T is positioning itself as the early leader in this market.

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