AT&T CEO John Stankey (pictured) used its Q3 earnings call to hit back at analyst criticism of a recent decision to offer the latest iPhone [1] for free to customers who trade in their current device and select an unlimited 5G tariff.
The executive noted iPhone customers are “incredibly valuable”, making them an “important asset for us to focus on”. He added data on customers who change providers showed most were seeking more flexible tariffs or were lured by a device offer.
Analysts at MoffettNathanson had criticised AT&T’s promotion as “rather steep” and “a preemptive race to the bottom”, while LightShed Partners warned it could negatively impact free cash flow.
But Stankey argued the move, along with other recent tariff strategy changes, would help lure new subscribers to the operator, boost retention by tackling the biggest customer pain points and create upselling opportunities.
“It’s going to ensure that our very best customers”, many of whom are “original iPhone subscribers that’ve been around a long time, are treated just like a new customer coming into our business”.
Mobile gains
CFO John Stephens noted “wireless growth was stronger than we’ve seen in some time” during Q3, with nearly 1.1 million post-paid and 245,000 prepaid connections added. This included 776,000 phone subscribers, up from 255,000 in Q3 2019.
Mobile revenue increased 1.1 per cent to $17.9 billion, comprised of $4 billion in equipment sales (up 6.4 per cent) and $13.8 billion in service turnover (flat).
Net income attributable to AT&T fell 23.9 per cent year-on-year to $2.8 billion, with revenue of $42.3 billion down 5 per cent. The operator highlighted a $2.5 billion impact from Covid-19 (coronavirus), with the largest hit sustained by its WarnerMedia division.
[1] https://www.mobileworldlive.com/featured-content/home-banner/apple-embraces-5g-for-iphone
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