AT&T Subscriber Churn Slows As Profits Increase 8%

James Johnson - Author
By

Jun. 15 2013, Updated 9:40 p.m. ET

AT&T Wireless managed to slow down subscriber churn during the second quarter, allowing the company to show profit gains despite nearly flat overall revenue.

AT&T witnessed a jump in net income from $3.6 billion to $3.9 million, income that was largely attributed to the company’s wireless division. According to the company subscriber churn declined to just one percent while the average revenue per user (ARPU) increased thanks in large part to wireless data usage.

AT&T also shows an increase in post-paid subscriber loyalty while its 320,000 new customers was far behind Verizon Wireless which claimed 888,000 new customer contracts during the same period. AT&T also noted that half of its new customers signed up for tablet contract and not the more expensive profit generating smartphone plans.

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The company did suffer declining revenues on the wireline sector with a 0.8 percent decline in users. Despite that landline decline the company still witnessed a net income gain in the sector.

It is believed that AT&T wireless customer churn was low as customers eagerly await the arrival of the Apple iPhone 5 which is expected to be announced and then released in September or October 2013. When Apple nears release dates for new devices AT&T has traditionally witnessed a lower churn rate.

With iPhone customers waiting for an upgrade AT&T wireless was able to lower smartphone upgrade costs which include subsidized cellular device pricing, a fact that helped the company’s overall profit margin. In last 2011 AT&T changed its upgrade rules to eliminate a 12-month eligibility clause, making customers wait two-years before they can receive a subsidized phone at ultra-low costs.

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