AT&T (NYSE: T) said 5 million customers have signed up for its bundled offering that packages DirecTV with unlimited wireless service -- which is an encouraging sign for a carrier preparing to leverage its $49 billion acquisition of the satellite TV company.
AT&T introduced the offering in January, resurrecting unlimited data for $100 a month for a first line and $40 a month for each additional line, with a fourth line available at no extra cost. The offer is available only to subscribers of DirecTV, however.
And while bundled telecom and TV offerings aren't always successful, unlimited mobile data has proven to be a compelling draw. Roughly 500,000 users signed up in the first two weeks of availability, and the audience has grown steadily since.
"I would suggest we're at the early stages when you think about getting the workforce trained in all aspects of being able to cross-sell and do the bundling and do single-truck-roll installs and so forth. It takes a while," CFO John Stephens said during a conference call Thursday following AT&T's quarterly earnings release. "And getting 5 million of these customers to sign up for this bundled approach with regard to video and wireless is just the best proof I can offer you that we've already done -- they've already accomplished that this works and that we have a real opportunity to exceed our merger integration synergies."
Meanwhile, the nation's second-largest carrier is planning to launch three DirecTV-branded streaming video services later this year: DirecTV Now, an app focused on content from AT&T's satellite TV business; DirecTV Mobile; an app designed for smartphone viewing and featuring premium video and made-for-digital content; and DirecTV Preview, an ad-supported service leveraging video from a variety of sources.
The move is clearly an effort to grow its media and advertising businesses, but it also is an effort to cross-sell services to fully tap both customer bases. Some analysts have been skeptical of the strategy, noting that while DirecTV Now may appeal to some smartphone viewers, it likely won't satisfy customers who regularly consume video on other platforms.
But UBS said AT&T's early success in bundling video and wireless offerings bodes well for the upcoming launch.
"Can AT&T improve subscriber trends with new converged products?" the firm asked in a research note. "Early trends suggest it can. Post-DirecTV, new product combinations such as the unlimited wireless offer for DirecTV subscribers attracted 5 million subscribers so far (15 million DirecTV households do not have AT&T Wireless, another 21 million households have AT&T Wireless but not DirecTV)…. Expectations are low for AT&T's bundling strategy and strong execution could drive upside."
- see this AT&T conference call transcript
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