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AT&T 1Q15 Churn: Analysts Expect Best in Class Customer Retention

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Wall Street expects AT&T postpaid churn to decline in 1Q15

Previously in this series, we learned that AT&T (T) postpaid net additions in 1Q15 are likely to be the lowest since 3Q13. In this part, we’ll look at AT&T 1Q15 churn to determine if the company was able to retain its customers during the quarter. According to Wall Street analysts, AT&T 1Q15 churn will decline year-over-year.

Based on Wall Street analysts’ consensus estimates, AT&T postpaid churn will decline to ~1.06% in 1Q15, down from ~1.07% in 1Q14. AT&T also expects postpaid churn to decrease.

We’re not comparing the carrier’s 4Q14 churn rate here. There was a great deal of promotional activity that quarter after the launch of Apple’s (AAPL) iPhone 6 in September 2014. During such periods, the propensity for customers to leave their carriers is naturally higher.

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AT&T should have the best churn among national wireless carriers in 1Q15

AT&T had the best churn among national wireless carriers—Verizon (VZ), Sprint (S), and T-Mobile (TMUS)—in 3Q14. However, its postpaid churn increased at a higher rate than Verizon’s in 4Q14. As a result, Verizon became the market leader in customer retention during 4Q14.

In 1Q15, analysts expect Verizon to report a higher postpaid churn than AT&T. For more on this, read Verizon’s Churn Could Increase Marginally YoY in 1Q15. AT&T should get its top spot back in the customer retention metric in 1Q15.

For diversified exposure to AT&T, consider investing in the Sector SPDR Trust SBI Interest (XLK). AT&T made up ~4.2% of this ETF as of March 31, 2015.

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