AT&T’s new business
AT&T (T) has received approval from a federal judge for its mega-merger deal with media behemoth Time Warner (TWX). The agreement, which was entered into in October 2016, is expected to close by next week.
After the closing, AT&T will be split into two main parts. The services business, which includes wireless and TV, will be headed by John Donovan, who is currently president of AT&T Technology. Time Warner will become AT&T’s media division and will be led by John Stankey, who currently runs AT&T’s DirecTV division.
AT&T to attract more customers
AT&T, which is the second-largest wireless company after Verizon (VZ), is a leading provider of bundled services. After closing the merger with Time Warner, AT&T is expected to attract customers by giving a wide array of discounts to buy two or more of its services.
The telecom giant has been losing its postpaid wireless subscribers due to the growing popularity of online streaming services—commonly known as cord-cutting. The OTT (over-the-top) market is dominated by streaming giants Netflix (NFLX), Amazon Prime, and YouTube. Consumers prefer streaming services since they are cheaper than traditional cable plans and can be watched anywhere.
In the first quarter, AT&T added 2.6 million net new subscribers to its domestic wireless networks, mainly from connected devices and prepaid subscribers. It lost 22,000 postpaid phone subscribers that quarter. Verizon, Sprint (S), and T-Mobile (TMUS) gained postpaid phone customers.
To grow its customer base, AT&T has also launched attractive unlimited data plans to compete with the unlimited plans of T-Mobile and Sprint. AT&T believes that the addition of Time Warner’s cable channels HBO and CNN will boost its revenues and help it compete in the wireless market through content ownership.