AT&T’s feeling the burn of slow wireless customer growth and declines in DirecTV Now subscriber volume in its Q4 earnings results.
The second-largest US wireless carrier by volume added 3.8 million wireless net adds during the quarter, down over 7% from the 4.1 million sign-ups in Q4 2017.
AT&T added 232,000 postpaid smartphone subscribers, a 42% YoY drop from last year, and lost 410,000 tablet and other branded computing device subscriptions, a significant increase from the 230,000 net loss the prior year.
On the entertainment front, AT&T’s DirecTV Now skinny bundle service lost 267,000 subscribers, or about 14% of its user base. DirecTV Now currently has about 1.6 million subs, down from 1.86 million at the end of Q3, marking the first time that it’s lost customers in nearly two years.
The results suggest AT&T needs to make its offerings more attractive to remain strong in the increasingly competitive US wireless market. AT&T can drive up customer loyalty and lure subscribers from its rivals by focusing on the following areas:
- Shoring up value in its wireless plans by offering perks that resonate with subscribers. AT&T’s been pulling back on its previously offered media content since the summer. For example, it dropped its $15 monthly discount for DirecTV Now in November, and many subscribers are unwilling to pay for the service now, suggesting that the discounted service wasn’t a significant value-add to AT&T’s wireless plans. Introducing more must-have services — such as Netflix, Hulu, and Amazon Prime or a new video service disruptor leveraging its media assets from Time Warner — that consumers would pay for as stand-alone products can help the carrier increase its plans’ value. This is crucial because value is the chief sore spot for AT&T; the carrier came in dead last on value for cost for the second year running, according to Business Insider Intelligence’s Telecom Competitive Edge Report (enterprise only).
- Emphasizing its market-leading rollout of mobile 5G. AT&T added 3.2 million connected devices during the quarter, up 23% from last year. That’s nearly 14 times the number of postpaid smartphones it added and double the number of connected devices Verizon signed up. Moreover, connected devices are becoming a larger contributor to AT&T’s wireless subscriber volume: They accounted for 33% of its base in Q4 2018 versus 27% in Q4 2017. AT&T should market its leading 5G efforts and network to position itself at the forefront of the next standard of connectivity. In doing so, we think the carrier could improve the perception of its network and continue the momentum in connected device adds.