AT&T's Q3 report contained information that could signal future difficulties for the company.
T-Mobile and Verizon are being aggressive as they try to lure AT&T customers.
AT&T's third-quarter results revealed a postpaid phone churn rate of 0.92%, a rise of 14 basis points from the 0.78% reported in the same period last year. This figure also represents a sequential increase of 5 basis points from the second quarter of 2024. However, the carrier added 405,000 postpaid phone subscribers between July and September.
Postpaid phone plans are a critical segment for wireless companies, encompassing their higher-end offerings. Unlike prepaid customers, postpaid subscribers typically remain loyal for extended periods and provide a more stable revenue stream due to credit checks and monthly billing.
The increase in third-quarter postpaid phone churn followed AT&T's decision to reduce discounts for paperless billing and autopay. Specifically, customers using credit cards for autopay instead of debit cards lost their discounts. Additionally, some new subscribers found their monthly bills higher than initially anticipated.
During an October 22nd conference call, AT&T CFO Pascal Desroches attributed the churn increase to "seasonal patterns," noting increased market activity and a rise in customers reaching the end of device financing periods. Desroches anticipates that postpaid phone churn and upgrades will follow typical seasonal patterns in the fourth quarter, influenced by new device launches and the holiday season.
Starting November 1st, AT&T CEO John Stankey will become the longest-tenured CEO in the wireless industry as Srni Gopalan succeeds Mike Sievert at T-Mobile. Stankey acknowledged that competitors like Verizon and T-Mobile are employing aggressive strategies to attract customers. He stated that the market is competitive, with continuously shifting tactics.
T-Mobile's strategy of including deals, such as free lines, in the T-Mobile Tuesdays section of its T-Life app has proven effective. Verizon utilizes AI to analyze bills from rival providers to create enticing offers for potential switchers and provides generous deals on Samsung Galaxy and Apple iPhones.
AT&T CEO Stankey clarified that the company doesn't raise prices without justification, stating that they do so when they believe they have provided greater value to the customer.