AT&T executives promise not to 'chase' customers amid 'noisy' competitive environment

According to new a new investor report from the financial analysts at Jefferies, AT&T (NYSE: T) plans to continue to engage in "rational competition" in an increasingly cutthroat market. Specifically, the analysts said that the AT&T executives they recently met with promised not to "chase" subscribers, "given the view that share losses are mostly lower-value postpaid subscribers, and prepaid."

The AT&T executives also described the current competitive marketplace as "noisy."

The Jefferies analysts said they recently met with AT&T executives in Atlanta and Florida this week, including Nick Jones, SVP of mobility finance for AT&T. The analysts said they came away from their meeting with a positive view on AT&T's shares and a belief that AT&T will maintain its "rational pricing behavior."

"As is always the case, the company expects to see some sequential margin pressures in Q4 as the holiday season brings incremental marketing spend, and higher volumes," the Jefferies analysts wrote in a note to investors. "Management also expects an uptick in churn, again due to seasonality. Nonetheless, EIP should diminish the magnitude of the sequential downdraft, and ARPU appears on track toward stabilization."

AT&T this year has remained relatively stable in terms of its offerings and performance. For example, it has offered only the occasional promotion and hasn't directly responded to new offerings from rivals like Sprint's (NYSE: S) offer to provide service for half the price of its rivals, or T-Mobile US' (NYSE:TMUS) offer to provide unlimited video streaming on select services for no addition fee.

AT&T added 2.5 million domestic wireless customers in the third quarter. Much of that growth came from the 622,000 tablets, 1.6 million connected devices and 466,000 prepaid subscribers it added during the period.

In response to AT&T's third quarter performance, New Street Research noted the carrier "held the line in a competitive environment." However, New Street Research's analysts said that "We think AT&T will continue to hold firm on pricing until these [postpaid subscriber results] turn negative, and then all bets are off."

In other AT&T comments, the Jefferies analysts said they expect AT&T's overall capital expenditures next year to be largely in line with the carrier's spending this year. "While not providing any update on capital spending guidance, other than reiterating the current mid-teens guidance, we believe GigaPower will drive Wireline spending, while Mexico is likely the only significant incremental Wireless spending," the analysts said.

AT&T CFO John Stephens said recently that the carrier's capital expenditures totaled $5.3 billion in the third quarter, about the same as the year-ago period.

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