For the past eight quarters, AT&T has been losing more and more postpaid customers, and according to analysts, the company is losing more customers than their competitors. This means that more and more customers are heading to other carriers like T-Mobile, Sprint and Verizon, from AT&T, than from another carrier. This is according to Cowen and Company Equity Research, who also noted that AT&T is likely to continue “donating” customers to their competitors. The analysts stated that they asked postpaid subscribers who had been with their current carrier for less than two years, which carrier they jumped ship from, and the answer was “previously AT&T”. Cowen and Company Equity Research noted that answer was much more popular than before. In the past, it would be a bit more mixed with the other three carriers.
Lately, AT&T has been focusing on keeping their high-margin subscribers, and that has caused them to lose a lot of their other postpaid subscribers. In fact, in the third quarter of 2016, the carrier lost 268,000 subscribers alone. Many of these were low-ARPU users, and AT&T did hit their best ever EBITDA margin which was 50.1% in the quarter. Not only has AT&T been focused on their high-margin subscribers, but they have also been working to diversify their offerings. Selling tablets, smartwatches and even data connections for vehicles – thanks to their many auto maker partners. So while they are losing postpaid phone subscribers, they are gaining subscribers in other areas. Not to mention Cricket picking up steam and bringing the competition to Boost Mobile, Virgin Mobile and MetroPCS.
Cowens believes that AT&T won’t be focusing as much on wireless in the coming quarters, as they are looking to expand their media business. Having recently bought DIRECTV and then launch their OTT service, DIRECTV NOW. They are also looking to pick up Time Warner for a price that is north of $80 billion. That deal was announced back in October, but it has not been approved by regulators, nor Time Warner shareholders, so that deal is far from being set in stone at this point. With AT&T focusing on media, they will likely be lacking in the wireless world, which is going to lead to even more growth for their competitors, particularly T-Mobile and Sprint, who have been very competitive in recent quarters.