AT&T Saw Subscriber Losses Before Launching Unlimited Plans; T-Mobile Picking Up Steam

AT&T warned Tuesday that another unnamed company has made a superior bid to AT&T's for Straight Path, a buy that would give AT&T more high-frequency spectrum for 5G (see 1704100037). “Under our existing contract with Straight Path we have the right to negotiate with the company over the next business days to match or exceed the new bid,” said John Stephens, AT&T chief financial officer. “We will evaluate the situation and make a decision in that time frame.” Stephens said a more competitive market affected the company’s net phone adds, especially before it launched unlimited plans during the quarter. “Trends are now back to where things stood before unlimited plans were introduced by our competitors in February,” he said.

The return of unlimited plans “has made an already competitive market even more so,” said Randall Stephenson, AT&T CEO, on a call with analysts. “Our response to unlimited data plans was probably a little slow and we lost some share in the quarter, but it was really important that our unlimited offers be unique and play to our strengths.” Stephenson said if the industry stays with unlimited plans “we’re prepared and can probably sustain it better than anyone else because of our spectrum position.”

Stephenson also said AT&T is pleased with moves at the FCC and elsewhere in the government. “It has obviously been an amazing few months,” he said. “There’s clearly a return to a lighter-touch, pro-growth regulatory philosophy and that’s not only in our industry, but it’s across all industries right now and we think this is incredibly positive.” Time Warner deal approval is “moving along as expected,” with the acquisition now before the DOJ, he said. “We’re working closely with them to answer any questions they might have.” Approval is still expected by the end of the year, he said.

In general, FCC moves have been positive, Stephenson said. Rules on business data services “have been abandoned and they’re been replaced by a logical, common-sense approach,” he said. Set-top box rules are “now off the table,” he said. The government is working toward privacy rules that apply equally to all internet players, he said. “The Title II regulation is under review,” he said. “We remain committed to open internet rules that are fair and open to all players” but not under rules “that were put in place 83 years ago for the rotary-dialed telephone.” AT&T also sees corporate tax overhaul as likely in 2017 “but the timing and magnitude of it are anybody’s guess,” he said.

“The strategic moves we’ve made over the last few months to expand our wireless capacity and fortify our 5G leadership will be felt for years to come,” Stephenson said in a news release. Winning the contract for “FirstNet gives us access to 20 megahertz of valuable, low-band spectrum and allows us to deploy our spectrum assets more efficiently as we build a high-quality, mobile broadband network for our first responders. And our planned acquisitions of Fiber Tower and Straight Path will add valuable millimeter wave spectrum assets to our 5G tool kit as we lead the way to the next generation of wireless technology.”

AT&T also said Tuesday 5G Evolution, a stepping stone to 5G, will be available to customers with the latest devices in more than 20 major metro areas by the end of this year. In parts of Austin, starting Tuesday, “AT&T wireless customers with a Samsung Galaxy S8 or S8+ can access faster 5G Evolution internet speeds,” the carrier said in a separate news release.

T-Mobile Gains

Meanwhile, T-Mobile said Monday it added more subscribers than expected in Q1. It said it had 1.1 million total net adds, including 914,000 branded postpaid net adds. Postpaid churn was 1.18 percent, down 15 basis points since the same quarter last year and 10 basis points over the previous quarter, T-Mobile said.

T-Mobile has had customer and financial growth "the rest of the industry would die for," CEO John Legere said on CNBC Monday.

Much of the call focused on spectrum. T-Mobile’s spectrum holdings increased 39 percent as a result of its buys in the TV incentive auction, said T-Mobile Chief Technology Officer Neville Ray on a financial call. “The good news is from a clearance perspective there are many areas of the country where they’re actually cleared today and/or broadcasters have announced their plans to exit their licenses within 2017,” he said.

T-Mobile will have 600 MHz handsets within a year, Ray said. “I think that’s a huge surprise for most folks out there,” he said. T-Mobile’s 700 MHz spectrum covers 269 million people in the U.S., he said. T-Mobile’s first target will be launching low-band spectrum in areas where it’s not now available, he said.

T-Mobile doesn’t have concerns that it alone among the major carriers went big in the incentive auction (see 1704170042), Ray said. Equipment will be available with 600 MHz chipsets, he said. The band “is starting to build popularity globally and of course it’s going to happen here in the U.S., not just with T-Mobile but with other providers,” he said. T-Mobile faced a similar dynamic with AWS-1, Ray said. Other carriers “sat back, we charged through; we cleared the band in record time even without FCC-mandated clearance periods,” he said. “We’ve got a ton of experience on how to go at this.”