AT&T reported 424,000 postpaid phone net adds in its first quarter 2023. And it reported domestic wireless service revenues of $15.5 billion, up 5.2% year over year.
Post-paid phone average revenue per user (ARPU) was $55.05, up nearly 2% year over year. ARPU growth was driven by price increases on legacy plans announced last year, a continued shift of subscribers to higher rate plans and an improvement in consumer international roaming plans.
In pre-paid AT&T reported 40,000 phone net additions for Q1 2023.
AT&T reported that FirstNet connections reached about 4.7 million across more than 25,000 agencies.
The company reported low wireless churn rates. Postpaid phone churn was 0.81% versus 0.79% in the year-ago quarter. And prepaid churn was 2.73%, with Cricket churn lower, versus 2.77% in the year-ago quarter.
AT&T CEO John Stankey said, “We’re coming off the most profitable quarter and most lucrative EBITDA generation in our wireless business in its history. And it’s got the goodness of low churn, higher ARPU and customer growth.”
AT&T provided a little color on its ongoing cost-cutting initiative.
“We remain on track to achieve our $6 billion-plus cost savings run rate target by the end of the year, if not sooner” said Stankey. “In fact, we believe we can further accelerate cost take-outs as we progress through the year. Part of this entails transforming our network as we ultimately replace our copper services footprint with best-in-class fiber connectivity.”
Stankey talked quite a bit about AT&T’s fixed wireless access (FWA), something the company has not shown much interest in until recently. Stankey first mentioned it on AT&T’s Q4 2022 earnings call three months ago.
Today Stankey said its FWA will be used in places where fiber isn’t reasonable to deploy and where it makes sense for customers.
“We’re out in the market today,” he said. “We have a consumer product that’s there that we’ve recently brought into play. We’re in the process of scaling it. We are going to use it where we think we can offer a customer a better set of services than what they currently have, especially where we have an opportunity to go and use it to hold as we’re going to build fiber over the next couple of years and come in behind it.”
Similar to Verizon and T-Mobile, which have been offering (and heavily marketing) their FWA home broadband services for a couple of years now, Stankey noted that there are places where AT&T has fallow capacity. He said, “It’s a smart play” for AT&T to offer FWA “to keep a customer in the family.”
He also touted FWA for businesses.
He said FWA can be “incredibly well-suited” to parts of the business segment. “When we match the product to the right user profile, it can be a very viable opportunity for a sustainable, effective product.”
Overall, the company reported revenues of $30.1 billion for the quarter compared to $29.7 billion in the year-ago quarter, up 1.4%. This increase primarily reflects higher Mobility, Mexico and Consumer Wireline revenues, partly offset by lower Business Wireline revenues.
It seemed like a good quarter for AT&T, but analysts can be hard to please.
Jamie Lumley, analyst at Third Bridge, wrote, “AT&T continues to see a slowdown in growth for its mobility segment. We’ve heard from our experts that the company is running out of headroom when it comes to gaining new customers, even though AT&T has seen relatively strong net adds for longer than many had expected.”
Jonathan Chaplin with New Street Research noted that prepaid subscribers have probably been leaving Dish during the quarter because of its problems related to a ransomware attack. Chaplin wrote, “Prepaid adds for AT&T were roughly in-line. We expect the hack to negatively impact Boost by at least 200,000. If this is the case, it doesn’t look like AT&T was the beneficiary. We will be watching Verizon and T-Mobile’s pre-paid numbers to see if they show up there.”
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