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The AT&T paradox: why the biggest subscriber 'donor' is happy to see them go to T-Mobile, Sprint or Verizon

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By Daniel Petrov

Updated: Jan 19, 2017, 3:40 AM

The AT&T paradox: why the biggest subscriber 'donor' is happy to see them go to T-Mobile, Sprint or Verizon

Given that AT&T operates with very high earnings margins, we wouldn't shed much tears over the latest analyst revelations about its negative subscriber churn, as it is a part of a consciously pursued strategy that is proving to be rather brilliant, it seems. According to data from Cowen and Company Equity Research, AT&T is the largest subscriber "donor" to other carriers in the last eight quarters:

When asking postpaid subscribers that have been with their carrier (less than) two years which carrier did they previously have, the top answer for current Sprint, T-Mobile and Verizon respondents was ‘previously AT&T, whereas in previous surveys it’s been more mixed. The survey is in line with AT&T reported results where the carrier has lost postpaid phone subs for the past eight consecutive quarters as it has pivoted to a more surgical retention strategy of keeping high-value/high-margin subscribers.

The last sentence here is key, as it seems that AT&T isn't too worried about losing low-margin subs with feature phones, and is doing basically nothing to stem the tide. It hasn't offer any promo blitz, incentive or family plan discounts worth noting for a while now. Heck, it was even the only major carrier that barely did a thing to take part in the Black Friday and Christmas promo fight that ensued among T-Mobile, Sprint and Verizon. Another example - until recently, its Galaxy S7 edge price for buying outright was $799, compared with, say $780 on T-Mobile, and now it is tied with Sprint at $795 for the most expensive S7 edge among the big four carriers, which raises the average selling price (ASP) of its phone roster.

AT&T, however, focused heavily on expansion in digital media and advertising with the DirecTV Now launch, and the move to acquire Time Warner, keeping an eye on the future, with the idea to prevent becoming a dumb pipe for bits, bytes and voices. All in all, AT&T's refocusing on high-value customers seems to be paying off, as during the third quarter it reported gross margin of more than 50% for its wireless service, and its plan ASP is the highest in the industry, so the carrier may be the biggest subscriber donor, but at the same time is apparently glad to see those lightweight users go to the competition.

source: Fierce Wireless

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Daniel, a devoted tech writer at PhoneArena from 2010 to 2025, has been engrossed in mobile technology since the Windows Mobile era. His expertise spans mobile hardware, software, and carrier networks, and he's keenly interested in the future of digital health, car connectivity, and 5G. Beyond his professional pursuits, Daniel finds balance in travel, reading, and exploring new tech innovations, while contemplating the ethical and privacy implications of our digital future.