Aggressive promotions helped AT&T stem subscriber losses in Q1, but came at the expense of the company’s profit margins.
As the operator works to stabilise declines in its wireless and pay TV businesses, CFO John Stephens said the trade-off of lower margins for more subscribers is one AT&T is willing to make.
He explained during AT&T’s Q1 earnings call: “It’s a [decision to] take responsibility for that investment [in subscribers] today, get it over with and get the [revenue] benefits not only over the ten years the customer stays with us but, quite frankly, start getting the benefits of it in the very next quarter or very next month with that investment behind you.”
Stephens noted the operator chooses its promotions carefully and will continue to make “data-informed decisions” in order to achieve its desired results. He added AT&T is also pushing ahead with a campaign to bundle its video and broadband services with wireless as a way to both reduce churn and increase revenue from user accounts.
In Q1 2018, AT&T staunched its post paid subscriber losses from 348,000 the year prior to 22,000. The operator also added 192,000 prepaid subscribers.
Excluding the impact of accounting changes, operating expenses were $33.4 billion in Q1, up around $350 million over Q1 2017 due to wireless equipment costs. Though tax reform helped boost net income from from $3.47 billion in Q1 2017 to $4.76 billion, consolidated revenue of $38 billion was down 3.4 per cent year-on-year.
Total wireless revenue rose 1.5 per cent year-over-year in Q1 to $17.4 billion, with doubt-digit growth in equipment revenue overcoming a dip in service revenues.