AT&T’s Next plans
During the Morgan Stanley European TMT Conference on November 12, 2015, John Stephens, AT&T’s (T) chief financial officer, also talked about the dynamics of its Next installment plan. He said, “We’re seeing great acceptance of our next program. We’re seeing customers choose the 24-month upgrade option with a 30-month equipment installment plan. We’ve seen that shift from the 12-month upgrade capabilities to the 24. So, customers are choosing the 24-month and the vast majority of our customers are doing that.”
The adoption of AT&T’s Next plan has grown relatively evenly each quarter in the last year. As you can see in the above chart, the telecom company saw ~71% of its postpaid smartphone activations on the Next installment plan in 3Q15.
According to the company, the penetration of the Next installment plan continued to rise sequentially during 3Q15 among its wireless postpaid smartphone users. The company also reported that this figure was more than ~40% in 3Q15. For 2Q15, the metric was at ~37%.
AT&T on device leasing plans
Unlike T-Mobile (TMUS) and Sprint (S), AT&T and Verizon (VZ) do not offer device leasing plans. Stephens said, “From a financial perspective, we clearly have the capability to do a leasing plan. And we’d be willing to do that if we felt like our customers wanted that. Right now, that hasn’t been the case.”
Instead of investing directly in AT&T’s stock, you may consider diversified exposure to the telecom company by investing in the iShares MSCI USA Minimum Volatility ETF (USMV).
The ETF had ~1.7% of its holdings in the integrated telecom company at the end of September 2015.