uploads///Telecom Q Postpaid Phone Churn_Peers

Analysts’ Forecast for AT&T’s Postpaid Phone Churn Rate

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Jan. 22 2019, Updated 11:35 a.m. ET

AT&T’s postpaid phone churn rate

Earlier, we learned about the expectations for AT&T’s (T) prepaid subscriber net additions in the fourth quarter. Now let’s talk about the company’s customer retention metric, or its churn rate.

Analysts expect AT&T to report a postpaid phone churn rate of 0.97% in the fourth quarter compared to 0.89% in the fourth quarter of 2017 mainly due to intense competition in the telecommunications sector.

In the third quarter, AT&T had reported a postpaid phone churn rate of 0.93%, up from 0.82% in the second quarter and up from 0.84% in the third quarter of 2017. A rising churn rate is adverse for telecommunications companies because they have to deal with additional acquisition expenses, which in turn have an adverse impact on their operating margins. Thus, a rise in a company’s churn rate could be a cause for concern for investors.

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Peer comparison

In comparison, Verizon (VZ) is expected to report a postpaid phone churn rate of 0.82% in the quarter, while T-Mobile (TMUS) is expected to report a postpaid phone churn rate of 0.99%. Sprint (S) is expected to report a postpaid phone churn rate of 1.88% in the same quarter.

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