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AT&T to Roll Out New Installment Plans in June

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New AT&T installment plans

AT&T (T) is changing its installment plan offerings for both current and potential customers. According to a recent press release, AT&T will offer two installment options instead of four in an effort to simplify the smartphone purchase process for clients. These two plans are AT&T Next Every Year and AT&T Next.

Per the company, AT&T Next Every Year is a 24-month installment plan whereby a device can be upgraded after 12 monthly payments are made or 50% of the retail cost of the device is paid off and an eligible device is traded in. AT&T Next is based on 30 monthly installments, and devices can be upgraded after 24 monthly payments are made or 80% of the retail costs are paid off and an eligible device is traded in.

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What’s the penetration level of AT&T Next plans?

The take rate on AT&T’s Next plans continued to expand in 1Q16. In the postpaid component, ~80% of its smartphone activations came with these installment plans in 1Q16. In 4Q15, the take rate was ~72%.

Meanwhile, the Next plans’ penetration in the carrier’s wireless postpaid smartphone market continued to expand in 1Q16. According to the company, this penetration figure was around 50% in 1Q16 and ~46% in 4Q15.

Unlike T-Mobile (TMUS) and Sprint (S), AT&T and Verizon Communications (VZ) don’t offer leasing plans. Both AT&T and Verizon Communications offer only installment plans.

For diversified exposure to select US telecommunication companies, you may consider investing in the SPDR S&P 500 ETF (SPY). As of the end of April 2016, SPY had a total of ~2.7% of its holdings in AT&T, Verizon Communications, CenturyLink (CTL), Level 3 Communications (LVLT), and Frontier Communications (FTR).

In the next part of this series, we’ll look at the expansion of AT&T GigaPower.

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