AT&T's Ralph de la Vega said he is not concerned about the decline in the number of the carrier's postpaid phone customers because of the growth of AT&T's (NYSE: T) Cricket prepaid wireless business. And he said that AT&T has a significant cross-selling opportunity following its acquisition of pay-TV company DirecTV.
"It's a really great position that I feel we're in," said de la Vega in comments at the 44th Annual J.P. Morgan Conference. De la Vega is vice chairman of AT&T and CEO of the operator's Business Solutions & International division, a position he gained in February. De la Vega previously was the head of AT&T's wireless business before being promoted to president and CEO of AT&T Mobile and Business Solutions in 2014.
"We have the best base of wireless customers in the industry," de la Vega said, explaining that AT&T continues to maintain a solid base of iPhone customers because the carrier was the exclusive provider for the iPhone for years before the rest of the nation's wireless carriers began selling the device.
When questioned about AT&T's ongoing postpaid customer losses, de la Vega said that those shortfalls are being countered by the success of AT&T's Cricket prepaid brand. De la Vega said that the average revenue per user of the carrier's departing feature phone customers is roughly $35 per month, but the ARPU of the carrier's Cricket users now hovers around $41.
"If you ask us, I really like the 41 for 35 tradeoff," de la Vega said, adding that AT&T has been growing its Cricket customer base by roughly 500,000 customers per quarter.
In the first quarter, AT&T lost 215,000 branded postpaid phone subscribers, but managed to record a notable increase in margins in its consumer wireless business. Overall AT&T reported 2.3 million net adds in the quarter, driven by connected devices, prepaid phones and its expansion in Mexico.
Aside from the carrier's postpaid business, de la Vega also said that AT&T has a major opportunity to grow its customer base by selling additional services to existing customers.
"I think we have the greatest cross-sell opportunity that any company has ever had because of the number of customers that have one of our services as AT&T but not two or three," he said, pointing out that fully 15 million of AT&T's newly acquired DirecTV customers don't subscribe to the carrier's wireless service. "I think there's a great opportunity for us to cross sell those products."
"All the research that we have done says that when you deliver multiple services to customers that gives them a 'wow' experience, the churn is better and the revenues are higher," de la Vega said.
Further, de la Vega said AT&T counts 20 million wireless customers who don't subscribe to the carrier's DirecTV service. "That's what we have our eyes set on," he said, adding that the carrier regularly communicates with those customers and can work to sign them up for additional AT&T services. "It's a huge cross-sell opportunity."
AT&T has already worked to spark that cross-selling push by offering unlimited data service only to its wireless customers who also sign up for DirecTV. That promotion appears to be a success; in the first quarter AT&T said it counted 3 million customers that had signed up to that unlimited data offering.
"What we have seen with our own U-verse products [in terms of cross selling] verifies what I'm telling you," de la Vega added.
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