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AT&T’s Mobile Share Value plan may grow in 4Q14

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Jan. 29 2015, Updated 3:05 p.m. ET

Mobile Share Value plan

In the last part of this series, we learned that Next helped AT&T (T) in manage churn during 2014. Now, we’ll look at another plan—Mobile Share Value. It helped AT&T manage churn and increase data billings.

The Mobile Share Value plan gives customers multiple accounts for families and connected devices. It’s similar to Verizon’s (VZ) More Everything plan.

Customers can add up to ten devices on the plan. They also get benefits like unlimited domestic and selective international telephony and texting. Shared data usage is the plan’s main attraction. Since families usually choose these plans, these customers are stickier than the customers in individual plans.

At the end of 3Q14, each Mobile Share Value account had an average of three connections.

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Higher data billings from Mobile Share Value plans

The Mobile Share Value plan catered to 62% of AT&T’s post-paid customers at the end of 3Q14. The majority of the customers in the plan have heavy usage data requirements. As you can see in the above chart, more than half of its accounts are in the 10 GB (gigabytes) and higher data bucket. The plan is the main source of wireless data billings for the company. The data billings increased by 24% year-over-year, or YoY, in 3Q14.

AT&T will continue to benefit from the plan by tapping the significant mobile internet demand. According to Cisco (CSCO), the US mobile internet traffic grew by 60% YoY in 2014. The rise of social networking and the steep increase in consumer video traffic fueled this growth. Cisco expects the growth trend to continue. It expects the monthly mobile traffic in the US to increase annually by ~47% from 2014 to 2018.

You can participate in the US mobile internet growth by investing in the Technology Select Sector SPDR Fund ETF (XLK). It had an ~9% holding in the two largest US telecommunication companies—AT&T and Verizon. Also, you can get a larger 46% exposure to both these telecommunication companies in the Vanguard Telecommunication Services ETF (VOX).

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