Why smartphones are driving net subscriber growth at AT&T

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AT&T has managed to consistently increase its net postpaid subscriber additions

In the previous part of this series, we discussed how AT&T’s (T) churn rate is the best in the industry. We discussed why not only the Next and Mobile Share plans but also customer loyalty towards Apple’s (AAPL) iPhone with the AT&T network are helping AT&T maintain lower churn rates.

During the second quarter of 2014, AT&T also managed to excel in one more parameter—net postpaid subscriber additions. AT&T’s net postpaid additions have consistently increased from 0.32 million in 2Q12 to 1.03 million in 2Q14, according to its filings.

Telecom postpaid subscribers additions

AT&T managed to increase its subscribers mainly on the back of smartphones additions

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Comparing net postpaid subscriber additions metric to its peers, we would find that AT&T is second only to Verizon (VZ). AT&T scores much better in this regard when compared with T-Mobile (TMUS) and Sprint (S), as reported by each company and as the chart above shows. Verizon managed to have the highest net postpaid subscriber additions mainly due to higher tablet additions. Verizon mentioned that tablets help the company by increasing data consumption, lowering churn rates, and lowering subsidy costs compared with smartphones.

The situation for AT&T is different. AT&T’s net postpaid subscriber additions happened mainly on the back of smartphones. According to AT&T, it added a net 700,000 postpaid smartphones and 366,000 net postpaid tablets in the second quarter.

But AT&T continues to lose its prepaid subscribers, which it acquired through its $1.19 billion acquisition of Leap Wireless earlier this year. AT&T recently re-launched its prepaid business under the Cricket brand. AT&T lost 405,000 net prepaid subscribers in the quarter.

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