AT&T (NYSE: T) is experimenting with ways to sell its mobile services to DirecTV customers, according to analysts at Jefferies.
The nation's No. 2 mobile network operator acquired DirecTV last year for $49 billion and has since moved aggressively to capitalize on the move. It has signed millions of customers to its unlimited mobile data plan available only to DirecTV customers, and later this year it will launch a three-tiered video service under the satellite TV provider's brand targeting users on mobile and other platforms.
Jefferies analysts met with AT&T executives this week and reported the carrier is now "testing how to sell mobility" to the 15 million DirecTV customers who currently use other mobile services.
"Assuming each household supports 2-3 smartphones, the opportunity could be significant with any reasonable share gains," Jefferies analysts said in a research note. "AT&T can target the offer in a walled garden approach using dynamic ad insertion and other means."
Meanwhile, AT&T continues to target high-end prepaid users -- even as it bleeds postpaid subscribers – in an effort to reduce churn and increase ARPU, Jefferies said. The operator posted a whopping net loss of 215,000 branded postpaid users in the first quarter of 2016 but reported 2.3 million overall net adds in North America due in part to its prepaid phone gains. AT&T executives told Jefferies analysts that Cricket's new $70-a-month unlimited plan "was trending well," which they believe will help reduce churn.
"AT&T looks at handsets on a branded basis, which when including prepaid, is relatively flat, suggesting further postpaid handset losses going forward," according to Jefferies. "The company remains comfortable with the trade-off between new prepaid customers and the loss of low-end postpaid customers."
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