Will U.S. Telecom Market Turn to Bigger Bundles?

AT&T says it added total postpaid net adds of 1.3 million in the fourth quarter of 2021, including some 880,000 postpaid phones. “Each of the 2021 quarters has improved,” said John Stankey, AT&T CEO. 

For the full-year 2021, postpaid phone net additions were 3.2 million, “AT&T’s highest annual postpaid phone net adds in more than a decade,” the company says. 

Many observers believe the rather-torrid pace of net additions in the mobile service market should cool in 2022, though. 

Covid restrictions on schooling and work also are considered to have accelerated growth, possibly pulling forward some latent demand. Some amount of higher subsidies should also have helped boost sales. 

Competition from cable TV companies and Dish Network eventually will affect growth prospects as well. 

And some argue that a wave of promotions likewise has stimulated demand that is essentially pulled forward as well. Stankey does not agree with that argument. “Our cost per acquisition is dropping,” he said. “Our lifetime embedded value is increasing as churn goes lower and average revenue per user grows.”

In the event that such growth drivers end, overall growth rates could--or should--slow. In that case, net market share gains by some companies or others will become more important. T-Mobile, for example, has been gaining share for years.  

AT&T also added 270,000 fiber-to-home subscribers for the quarter. “We did really well with home broadband as well,” said Stankey. 

Full-year 2021 fiber net adds totaled about one million, the fourth consecutive year in which the company has added one million or more fiber subscribers. 

AT&T ended the year with an additional 2.6 million FTTH-passed customer locations, compared to its prior expectation of about 2.5 million. The company still is targeting 30 million FTTH home locations by the end of 2025. 

AT&T also ended the year with 73.8 million total global HBO Max and HBO subscribers, ahead of prior guidance suggesting accounts between 70 million to 73 million. “Warner Media knocked it out of the park,” said Stankey. 

Cash flow also improved, he added, driven by efficiencies, lower churn levels and profitable growth. 

In operational terms, Stankey also suggested the industry might well be seeing a turn towards consolidated offers where single-supplier offers might be viewed more attractively. One example might be the value proposition that “it doesn’t matter where you go, we will handle your bandwidth,” Stankey said. 

As you might expect for a firm that has the largest fixed network position in the market as well as mobile assets, Stankey believes there “could be a reordering of industry structure” coming that favors firms with broad fixed and mobile offerings. “My gut tells me there are more consolidated offers coming,” where one firm supplies all a customer’s needs.