AT&T ‘doubles down’ on last year’s iPhone offer

iPhone 13
AT&T is following the same playbook it used last year when Apple launched a new iPhone. This year, it has more experience setting up service in hands-free, socially distanced environments.

Last fall, just before the iPhone 12 series launch, AT&T introduced “best deals for everyone,” which was designed to offer the greatest deals not just for new customers but existing ones as well.

“We went out and made a very clear point and we have been consistent on that point over the last year – of offering our best deals to new and existing customers,” said Jenifer Robertson, EVP and general manager, AT&T Mobility, noting that over the last 12 months, it’s been interesting to see competitors starting to follow suit.

AT&T’s aggressive iPhone promotion last year, which included up to $800 off with an eligible trade-in, led some analysts to declare that promo wars were back. Back then, LightShed analysts said it was the largest promotion they had seen on an iPhone launch day, topping the $650 deals carriers offered in 2016.

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This week, Apple unveiled the iPhone 13 and a slew of other updated products, including the iPad Mini and the Apple watch. The latest iPhone is available for pre-orders beginning this Friday and will be available in stores on September 24. It sells for $700 for the base model, with support for multiple 5G spectrum bands.

AT&T, with the new iPhone 13 series, has "doubled down" on the offer from last year that gives the best deals to new and existing customers, Robertson said. Unique to AT&T, she added, is the offer applies to every unlimited plan, so “we aren’t pushing customers into our top tier plans to get these offers.”

One thing different this year is it’s offering the iPhone 13 Pro Max for up to $1,000 off, meaning customers can get iPhone 13 Pro Max for $99 or $2.75/month. That's when a customer trades in an iPhone 11 or newer. It also has a trade-in offer on the non-Pro series for the iPhone 13 and iPhone 13 Mini, and that includes up to $700 off for an iPhone 10 or newer.   

AT&T hasn’t committed to an end date on the new iPhone offer, nor has it said that it's an offer that lives in perpetuity. However, according to Robertson, it’s able to make these kinds of deals because, as opposed to breaking the bank, it helps AT&T's bottom line.

AT&T added 3 million postpaid phone lines in the last year; service revenue was up 2.7% in the first half of this year, and “we’re seeing profitability," she said. In the second quarter alone, it reported its highest EBITDA quarter on record.

“It’s absolutely an offer that we can afford and sustain,” she said.

RELATED: AT&T boasts major subscriber gains in Q2, adds 789K postpaid phones

She declined to comment specifically on competitors’ offers but emphasized AT&T's focus on simplicity in price plans.

“We’re trying to keep it very simple,” by staying consistent with what AT&T offered the past year so customers know what to expect. “We are very competitive in the marketplace and I think that we win for simplicity" and not asking customers to jump through extra hoops in the form of gift cards or getting credit. “I’ve seen a lot of complexity out there and we feel good about the simple message and the simple experience that we have.”

AT&T’s move to three unlimited plans – Starter, Extra and Elite – has stayed consistent for a while now,  and it offers 5G at no extra cost. All of the unlimited plans meet the needs for security, she said, and hot spot data is included in the two upper tier plans – the Starter plan does not include hot spot data.*

The differences in the higher-end plans tend to come in the form of international calling and the amount of hot spot data; the Unlimited Elite also includes HBO Max at no additional cost, she said.

AT&T’s phones show 5G when customers are in a 5G low- or mid-band spectrum area and 5G+ when using a millimeter wave-based service.

Last year, AT&T was well positioned to use digital and curb-side assistance, and it expects to continue to do that this year, she said. It’s a practice that came out of Covid that it will continue to use based on customers’ preference.

The “AT&T right to you” program means it will deliver phones to a customer’s door, or stand outside the customer’s home if that’s the preference when setting up a phone. “We certainly have improved the contactless and the customizable types of experiences that Covid brought about, and we’ll continue to lean on those," she said. 

Big 3 iPhone promos

AT&T is expected to maintain its recent momentum and the new promotions likely will have little impact to current margin assumptions, according to a September 14 report by Cowen equity research analysts led by Colby Synesael.

The analysts said Verizon appears to have the most aggressive offering of the three big carriers, with an additional $500 for those porting in a line, and it’s making it available to those taking “select unlimited plans.”

The Cowen analysts also said Verizon appears most likely to improve its share of gross adds, “although arguably with some level of incremental margin pressure while T-Mobile appears most vulnerable but is likely to preserve margins.”

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Overall, “it appears the sector holistically is more focused on defending each of their respective bases than historically, which should help maintain the relatively low churn environment we’ve been witnessing,” the analysts said.

*Article updated to reflect that the Starter plan does not include hot spot data.