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How Cricket Helps AT&T in the Consumer Wireless Space

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AT&T’s consumer wireless space

Earlier, we learned about AT&T’s (T) focus within the consumer wireless space in its domestic operations.

During the UBS Global Media and Communications Conference held on December 8, 2015, Randall L. Stephenson, AT&T’s chief executive officer and chairman, talked about how Cricket Wireless is helping the company in a very competitive segment within the US wireless industry.

Talking about the consumer wireless segment, Stephenson said, “As you move down market, the customer becomes more price-sensitive.”

He added, “The customers that we are churning and losing in the postpaid side tend to be feature phone customers. They tend to be fairly low ARPU (average revenue per user) customers, and they’re very, very price conscious. And this is where the Cricket acquisition is proving to be very powerful.”

Stephenson also said, “A customer moves from a feature phone to our Cricket smartphone, their ARPU goes up.”

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Growth of AT&T’s smartphone customers in 3Q15

During 3Q15, AT&T’s postpaid net additions were the lowest among the top four US wireless players including Verizon (VZ), T-Mobile (TMUS), and Sprint (S). AT&T had postpaid net additions of ~289,000 during the quarter. According to the company, it lost feature phone users in 3Q15.

Meanwhile, AT&T added a net ~1 million branded smartphone subscribers, who came from both its prepaid and postpaid components, during 3Q15. The growth of these relatively valuable customers was a significant ~9.9% YoY (year-over-year) during the quarter.

Note that as per the company, its smartphone ARPU is ~200% higher than its non-smartphone ARPU.

For a diversified exposure to AT&T, you may consider investing in the iShares Core S&P 500 ETF (IVV). AT&T made up ~1.1% of IVV at the end of November 2015. The ETF held a total of ~2.3% in telecom players on the same date.

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