AT&T expected to continue shedding postpaid customers in Q2

airport (Pixabay)
AT&T is expected to keep losing postpaid wireless customers. (Pixabay)

AT&T’s slide among postpaid customers is expected to continue, at least according to the analysts at Cowen and Company. Per the Wall Street research firm’s second-quarter predictions, AT&T will be the only major wireless operator to report a loss of postpaid customers during the upcoming quarterly reporting season.

“We expect Verizon to add 220K postpaid phone net adds (vs. 358K last year) and for T-Mobile to add 460K postpaid phone net adds (vs. 533K last year),” the firm wrote in a note to investors this morning, outlining its expectations for carriers’ second-quarter earnings reports. “For AT&T we expect -48K postpaid phone net adds (vs. -89K last year) and for Sprint we expect 63K postpaid phone net adds (vs. 88K last year), aided by an estimated 40K prepaid-to-postpaid migration similar to last quarter.”

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However, the analysts pointed out that AT&T is focusing much of its energy in wireless on regaining a firm financial footing. Indeed, the operator’s CFO John Stephens said in April that the carrier is “confident that service revenues will improve throughout the year and still expect that we'll be positive for the full year on a comparable basis.”

Stephens also argued that AT&T’s situation in wireless would improve as 2018 continues because in part the carrier would work to tie more subscribers to its other products, including wired internet services and its video offerings like DirecTV Now. “These are the most valuable customers with churn significantly lower than single-service customers,” Stephens argued at the time. “These results are very encouraging and gives us the confidence to continue to carefully invest in our customer base.”

AT&T’s current focus on selling video subscriptions aligns with its larger corporate activities. AT&T recently closed its purchase of content giant Time Warner, giving the operator control over media brands ranging from HBO to Turner to DC’s super heroes. While that transaction still faces opposition from the Justice Department, many industry observers believe AT&T will ultimately be successful in its purchase of Time Warner.

And that purchase, combined with AT&T’s acquisition of DirecTV, give the operator significant video content holdings and distribution options, as well as what AT&T has promised will be an extensive advanced advertising business.

Thus, AT&T doesn’t appear to be putting its efforts behind acquiring new wireless customers, but instead keeping the ones that it has and leveraging those into video subscriptions.