Analysts: AT&T not worried about competition in the market, puts focus on network

AT&T (NYSE:T) isn't that perturbed by recent pricing changes at its Tier 1 wireless rivals, according to a report from financial analysts who met with AT&T CFO John Stephens.

The report, by Credit Suisse analysts Joseph Mastrogiovanni, Henrik Herbst and Michael Baresich, notes that from AT&T's perspective, the "recent competitive activity is similar to what they've seen in the past, indicating management feels the market remains rational." In the meeting, the analysts said Stephens "stressed the importance of network quality over price, which is likely why we have continued to see low churn."

T-Mobile US (NYSE:TMUS), AT&T and other carriers have in recent months changed their rate plans in multiple ways, offering larger data buckets to some customers, raising prices on others and in general trying to retain customers and go after those who might be willing to switch.

Meanwhile, AT&T is plowing ahead with its LTE network buildout, which now covers around 280 million POPs. AT&T aims to hit 300 million by the summer. The analysts said that Stephens reiterated "the importance of network speed and quality in reinforcing" the company's competitive position.

AT&T came in second to Verizon Wireless (NYSE:VZ) in terms of overall performance and network reliability in a RootMetrics study released earlier this month. However, AT&T edged out Verizon in terms of speed, RootMetrics found.

"The company should have enough spectrum to sustain network quality for 3-5 years," the analysts wrote. "Additionally, we expect AT&T to continue to look for opportunities on the secondary market, as well as participate in the upcoming auctions."

AT&T has made it clear that it is interested in participating in the auction of AWS-3 spectrum scheduled for sometime this fall, and AT&T is also likely going to be a major player in the incentive auctions of 600 MHz broadcast TV spectrum scheduled for 2015.

As for rumors that AT&T could make a play for a European carrier, the analysts wrote that they think AT&T's management "has signaled that it has less interest in Europe. Recent consolidation and commitments to LTE have lessened AT&T's chances to have a first mover advantage in the continent." 

Indeed, Stephens recently indicated at an investor conference that the window of opportunity to own assets in Europe is closing, and that AT&T's thinking has adjusted, with the company putting more of an emphasis on its U.S. network.

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