““We actually win customers in many different places and in many different ways, and there’s no one-size-fits-all answer to that. And I know people want to keep going back and saying, well, it’s a high level of promotion that does it. And that’s not really right.”“
AT&T CEO John Stankey hit back at critics who say AT&T Inc.’s recent growth has been fueled by strong promotional activity, telling investors on a conference call Monday that many factors are behind the company’s subscriber momentum.
The telecommunications giant added a network of 813,000 postpaid subscribers in its latest quarter, more than rival Verizon Communications Inc.
and T-Mobile US Inc.
combined. The company has reported similar-sized subscriber acquisition for multiple quarters, an acquisition that some analysts attribute to the company’s promotional tactics — AT&T
focuses not only on adding new subscribers but also offering comparable deals to existing subscribers so that they stay with the company.
Stankey said Monday that those who focus on AT&T’s consumer wireless deals don’t understand the company’s broader growth story.
“We’ve had big share changes that have happened in certain segments of the market,” including public sector businesses, Stankey said at a Goldman Sachs conference call on Monday. AT&T’s push into the public sector “is not based on promotion,” but rather on the company’s investment in improving the public safety network in ways that allow AT&T to “penetrate a segment where we were previously severely underpenetrated “.
Additionally, AT&T “saw the same dynamic movement toward the upper end and middle of the business market, where our stock performance improved,” he said, according to a transcript of the presentation provided by Sentieo.
While Goldman Sachs analyst Brett Feldman acknowledged Stankey’s comment about the more business-oriented aspects of AT&T’s business that don’t involve heavy promotions, he also said that AT&T’s consumer offers clearly play some role in attracting AT&T subscribers. which comes as the wider industry has seen subscriber growth well outpace population expansion for years.
AT&T’s promotional strategy is working, Feldman said, but it has investors wondering what will happen to the industry and the company when consumer demand for wireless slows.
Stankey said even the consumer aspect of AT&T’s promotional tactics is being misinterpreted. While device subsidies are “one element” of the cost AT&T incurs to acquire or retain a customer, he said the company has also adopted a more customer-friendly model that allows the company to “spend less money on transmission of the message’.
“We’re getting probably the best profits on our promotional advertising that we’ve ever done, but we’re not spending anywhere near the levels that we’ve spent in the past, and I’ll tell you, we’re not spending at the top of the industry right now,” he said.
Stankey suggested that a lower-growth landscape would not necessarily be worse for the company.
“I would tell you that our equation is very consistent when you look at the big picture of it,” he said.