AT&T CEO John Stankey said he likes what he’s seeing in the company’s wireless business when it comes to fourth-quarter momentum, and that’s in part because AT&T tweaked plans earlier this year to make them appeal to not only new customers but existing ones as well.
“I really like the momentum we’re seeing,” he said during a UBS investor event on Tuesday. “I see that momentum continuing, and that’s happening because we’re doing the right things for customers.”
AT&T’s mobility segment gained more than half a million net postpaid wireless phone subscribers in the third quarter. Churn remained low, as it has for its rivals throughout the pandemic. T-Mobile this past summer overtook AT&T as No. 2 in the U.S. in terms of number of subscribers.
Earlier this year, AT&T made a shift in its strategy where “we wanted to make things very simple and straightforward for our customer base so that they understood it,” Stankey said. “We’re seeing that occur with the significant migration in unlimited plans that we talked about late last year that needed to happen. We’ll probably end this year 10 points higher in our unlimited plan penetration in the wireless business.”
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A lot the good that's happening is due to the simplicity of what they’re putting in front of their customer base, he said. “The exclamation point on that is how we’re treating our embedded customers just as well as we’re treating new ones that want to come into our business, and I think some of the innovative approaches that we have in the market that are driving that momentum and carrying it forward and are going to make the fourth quarter another strong quarter for us is an example of how the management team is focused in the wireless business.”
Stankey said AT&T started to do some things to “get the network in the right place,” and it’s getting feedback from third-party firms showing the work is paying off. A lot of that has been noticed by customers. “There’s been a lot of work over the last couple years to put a great network out there and customers are seeing that,” he said.
FirstNet was a key driver behind improving the quality of the network – AT&T won access to its 700 MHz spectrum when it won the contract in 2017 – and gave AT&T the opportunity to distribute product differently to a segment of the market that “we were, frankly, underpenetrated in,” Stankey said.
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FirstNet is not just a rate structure or plan; it’s being done in collaboration with public safety and it opened up new distribution channels, Stankey noted. AT&T also has been approaching the enterprise channel with both its fixed and wireless business for a long time, he said.
AT&T’s market positioning is “very simple” and its plans are clear, he said. In August, AT&T began offering all of its 5G Samsung smartphone deals for new and existing customers, and it later extended that to the iPhone. In October, AT&T started to offer one of the most aggressive iPhone 12 promotions to both new and existing customers on unlimited plans.
Stankey explained that when they looked at why they weren’t growing at the rate they needed to grow, it wasn’t because people were unhappy about the network or not getting a good service; it was because they could get a new device somewhere else.
Stankey didn’t talk about AT&T’s spectrum position. The FCC’s C-band auction of 3.7-3.98 GHz spectrum kicked off today and qualified bidders, which include AT&T, are prohibited from discussing it per FCC rules. But analysts are still questioning where AT&T is going to get the funds to compete against Verizon and to some extent, T-Mobile and Dish Network, when it comes to the C-band.
In a note today, analysts at MoffettNathanson once again questioned where AT&T is going to get the cash. They also noted that if AT&T doesn’t acquire a competitive block of mid-band spectrum, its 5G position could be compromised for a generation.
“Without something comparable to what T-Mobile has, and Verizon almost certainly will have, AT&T risks losing competitive relevance,” wrote analyst Craig Moffett. “For what it’s worth, their current advertising boasts 'America’s fastest 5G network.' But at our 5G Road to Revolution Summit on November 12th, we were struck by the fact that Verizon largely cast its strategy in terms of competing with T-Mobile, and T-Mobile cast theirs in terms of competing with Verizon. AT&T’s name barely came up. Given the financial constraints on AT&T, we don’t have anything in our AT&T model for C-Band outlays. But we’re admittedly uncertain of what they will do.”