AT&T’s postpaid phone net additions
In the previous part, we discussed AT&T’s (T) expected EBITDA (earnings before interest, tax, depreciation, and amortization) margin in 4Q16. In this article, we’ll look at the kind of postpaid phone net additions we could expect from AT&T in 4Q16. Wall Street expects postpaid phone net additions to be negative, given intensified competition.
In 3Q16, AT&T suffered a loss of 268,000 postpaid phone subscribers, an increase from 180,000 net losses in 2Q16. AT&T defended this loss by mentioning that these losses were mainly subscribers who were using high-maintenance featured phones or 2G data plans, as it plans to gradually shut down the support of 2G network. The company says that these subscribers are low-margin subscribers for AT&T, and so it wants to focus on high-value customers with higher margins.
AT&T’s peer comparison of postpaid phone net additions in 3Q16
In 3Q16, Verizon (VZ) lost 36,000 postpaid phone subscribers for the first time ever. However, postpaid phone net additions by Sprint (S) and T-Mobile (TMUS) were 347,000 and 851,000, respectively, which came at the expense of Verizon and AT&T.
Postpaid phone users, especially smartphone users, are of particular value for mobile carriers. Users of smartphones such as Google’s (GOOG) Android or Apple’s (AAPL) iPhone tend to have relatively high data usage, so they’re the most lucrative customers for telecom companies.
Continue to the next part for a look at AT&T’s prepaid phone net additions.