AT&T says price hikes caused some customers to leave

Telecom giant AT&T says recent price increases across some of its wireless plans caused about 1 percent of its customers to drop its network during its most-recent financial quarter.

On Thursday, AT&T said it added around 964,000 postpaid wireless lines, with around 708,000 activating a new phone on their network over the past three months.

Most of these customers joined AT&T for its FirstNet connections, executives affirmed on a conference call with investors and reporters on Thursday. FirstNet is a program operated by the U.S. Government that utilizes AT&T’s wireless network to connect first responders, including police and firefighters.

Executives said AT&T’s enterprise offering, AT&T Business, also saw strong postpaid growth, and affirmed there was “healthy traction in our consumer market.”

Churn increased by over 1 percent, which the company said was related to recent price increases across some of AT&T’s wireless packages. Over the summer, AT&T raised fees on some unlimited data customers who were grandfathered in to older plans.

John Stankey, AT&T’s chief executive, said the company’s churn rate was not unexpected, given the recent price increases.

“Churn is up a bit, but it’s not out of line with what we expected when we did the pricing changes,” Stankey said. “We were able to execute the pricing change in a way that we feel very comfortable with.”

Stankey affirmed most customers were “making adjustments to their plans” to accommodate the price increases. In some cases, customers switched to a costlier plan that offered more features, something Stankey characterized as “higher-value,” and a move that helped AT&T increase its key average revenue per user (ARPU) data point.

“We think that, over the long haul, is great,” Stankey said.

Revenue was reported at $30 billion, a drop from the $31.3 billion reported this time last year. But the entirety of that revenue was based on AT&T’s services business, according to a presentation reviewed by The Desk. Last year, the services business brought in just $29.1 billion, while its DirecTV and WarnerMedia sectors contributed another $2.2 billion.

Earlier this year, AT&T spun off DirecTV into a separate company. The new DirecTV is 70 percent owned by AT&T, with investment firm TPG Capital owning the rest. On Thursday, AT&T said its investment in the new DirecTV contributed $400 million to its bottom line.

AT&T’s wireless services contributed about half its revenue, with the wireless service portion of its portfolio generating $15.3 billion in the third quarter. Equipment revenue, which includes sales of smartphones, tablets and hotspots, climbed to $4.9 billion spurred in part by the release of new Apple iPhone models and devices from other companies.