AT&T’s postpaid phone losses
In the previous part of the series, we discussed that AT&T (T) has been showing a large improvement in its EBITDA (earnings before interest, tax, depreciation, and amortization) margins for the past few quarters. However, in 4Q16, AT&T suffered a loss of 67,000 postpaid phone subscribers.
AT&T said these losses were mainly subscribers who were using high maintenance featured phones. The company maintains that these subscribers are low-margin subscribers, and it wants to focus on high-value customers with higher margins.
AT&T’s peer comparison of postpaid phone net additions in 4Q16
AT&T will continue to face pressure in regards to postpaid phone volumes in the upcoming years, given an increasingly competitive market. In comparison, postpaid phone net additions by Verizon (VZ) were 167,000 in 4Q16. However, postpaid phone net additions by Sprint (S) were 368,000 in 4Q16. Meanwhile, T-Mobile’s (TMUS) preliminary report on January 5, 2017, said the company posted 933,000 postpaid phone net additions during the last quarter of 2016.
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 are the most lucrative customers for telecom companies.
Continue to the next part for a look at AT&T’s prepaid subscriber net additions.