AT&T Not Chasing After Customers As Carrier Price Wars Subside
After a very competitive holiday period in which wireless carriers in the United States threw seemingly endless promos after promos, it seems that the price war in between network providers are beginning to subside. Indeed, we have seen some carriers raising back their fees and ending their special offers.
John Stephens, Chief Financial Officer of AT&T, certainly agrees. According to Stephens, the field of competition in the wireless industry seems to have stabilized and he expresses confidence about AT&T's chances of competing in the next quarter or so.
In a report it filed with the Securities and Exchange Commission recently, AT&T had disclosed that its churn rate has decreased in this quarter. This should be good news for the carrier, which saw its customer turnover rate balloon during the previous quarter. AT&T also revealed that it expects to gain 400,000 net new postpaid subscribers in the current quarter ending in March of this year.
Based on Stephens' comments, might we see AT&T ease off on offering promotions that promise low prices and added service inclusions? Last quarter, customers were overloaded with lots of special offers from wireless carriers, ranging from data rollover schemes to discounts.
A lot of these customers no doubt wisely took advantage of the promos coming their way, but it appears that those offers might be minimized in this quarter or the next. Stephens certainly mentioned that AT&T will not be chasing customers -- well, at least not that way. According to him, AT&T will be employing a smarter approach.
Right now, the carrier is transitioning its subscribers into wireless plans that offer a break on the monthly bill as long as they bring their own handset, purchase a phone outright or pay for the device in monthly installments. About 60 percent of the carrier's subscribers have decided to go for the zero subsidy model. A year ago, only 30 percent of AT&T's customers did so. AT&T continued to lose basic phone subscribers -- the expected 400,000 net new postpaid subscribers is well below what industry watchers are predicting. But apparently, the carrier is willing to let go of those customers as it gives its utmost attention to increasing its profit margins and gaining smartphone users to its customer base.
AT&T did warn that adopting brand new plans and integrating its Cricket Wireless prepaid brand would affect its profitability in the first quarter. But for the rest of 2015, the carrier is expecting some improvement.
It will not be easy for sure. Smaller carriers are continuously making aggressive efforts to grab away AT&T's customers. For instance, Sprint has been offering to cut the bills in half of customers who decide to switch from AT&T to Sprint.