AT&T Downplays Effect of T-Mobile’s UnCarrier Revolution

by Matt Klassen on May 9, 2014

AT&T Chief Financial Officer John Stephens balked at the notion that T-Mobile’s UnCarrier push was having any negative effect on his company, saying Ma Bell was unfazed by the new rhetoric over the changing competitive landscape or any so-called price war.

“The competition is more noisy than disruptive,” Stephens said at an investor conference held on Thursday. Stephens went on to say that while T-Mobile did clearly increase its subscriber base over that last several quarters, its growth didn’t come at the cost of AT&T’s own customers, as Ma Bell exceeded its own growth estimates and was able to find additional revenue streams that more than offset any cost of responding to T-Mobile’s market antics.

This revelation must surely come as a blow to T-Mobile, who had aimed many of its latest marketing efforts squarely at AT&T, particularly its promise to pay the early termination fees of subscribers who left Ma Bell for T-Mobile, a strategy designed to balloon AT&T’s churn rate and wreak havoc on its growth. With its marketing strategies cutting deep into its revenue stream, the simple fact is T-Mobile can’t afford to have its UnCarrier strategy fail, but that’s exactly what seems to be happening.

There’s no question that T-Mobile has posted some impressive growth as it’s continued to roll out its UnCarrier agenda, but the reality that such efforts have had no impact on its largest competitors is likely a bitter pill to swallow. According to Stephens, not only did AT&T withstand the impact of T-Mobile’s efforts, but the company actually “topped expectations for customer growth, adding 625,000 contract customers and more than 1 million total net new customers.”

“It doesn’t appear that based on our results, there was much of an impact,” he said.

But if there was one glimmer of hope for T-Mobile that it had found a chink in AT&T’s armour it’s the fact that Stephens simply couldn’t stop talking about the fourth largest national carrier, as the CFO criticized T-Mobile’s ETF buyout program as economically unsustainably, particularly if it morphs into an ongoing effort.

“It’s not something that a company with a best-in-class balance sheet would jump into,” he said.

Although it’s the sort of confidence stockholders want to hear from a company at a shareholders meeting, in my experience the more a larger, more established competitor tries to downplay the role of its smaller challengers, the greater benefit to those smaller competitors. While T-Mobile may only be a fly in AT&T’s ointment, the reality is that AT&T has noticed T-Mobile’s efforts and finds them onerous enough to warrant a response, telling the world how pointless, unsustainable, and ineffective they are.

If T-Mobile’s UnCarrier strategy was really having no impact on AT&T the best response would be to ignore it, dismissing it out of hand without criticism or judgement.

Beyond that, Stephens did note that T-Mobile’s efforts had changed the mobile landscape, but noted that despite the loss of long term revenues the company generates from subsidized contract plans the company has found additional revenue streams with the adoption of more expensive plans, extra insurance, and other mobile devices like tablets.

While much of that seems to be the usual fare of a shareholders meeting, I can’t help but think the underlying message is that T-Mobile’s UnCarrier strategy is working, at least to some degree. Given how much Stephens tried to downplay its impact and tout the company’s newfound revenue streams says to me that T-Mobile has succeeded in changing AT&T’s traditional way of doing things, and given that the nation’s fourth largest carrier was able to change anything is a win for Legere and company, and a mitigated loss for AT&T, despite what the numbers say.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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