Significant additions outside the postpaid base
AT&T’s customer base and connections grew by 9% year-over-year during 4Q14. The company’s postpaid customers increased by 5% during the quarter. However, AT&T’s connected devices increased 21% year-over-year during 4Q14. AT&T added 1.9 million customers and connections in the fourth quarter.
The net additions primarily came from connected devices that include home automation, security products, and connected cars. Postpaid net additions also helped the company to expand its customer base during the quarter.
Tablets driving postpaid net additions
Despite stiff competition within the US telecom space, AT&T managed to increase its postpaid net additions during the fourth quarter. This was primarily due to higher tablet net additions, which helped mitigate a marginal decline in postpaid feature phone customers.
Competition in the US telecom space was particularly high in the last quarter. The four largest telecoms—Verizon (VZ), AT&T, Sprint (S), and T-Mobile (TMUS)—increased their promotional activities to gain as well as retain customers during the high-sales holiday season. Please read Verizon sees price competition among telecoms rise in 4Q14 to learn more.
If increasing competition within the US wireless telecom space concerns you, you can take advantage of diversified exposure on these four telecoms by investing in the iShares US Telecommunications (IYZ), which held ~34% in these companies at the end of January 2015.
Connected car segment growing quickly
In the connected devices segment, AT&T offers M2M (or machine-to-machine) solutions such as connected cars and Digital Life, its home automation and security product. During the fourth quarter, AT&T added ~800,000 connected cars and ~500,000 other connected devices. Connected cars contribute to a fast-growing wireless segment for AT&T, and the company expects significant growth in the segment in the medium to long term.