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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.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 11 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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