AT&T slumps after launching family plans; Verizon, Sprint also off

Following a Q4 in which it saw disappointing net subscriber adds and intensifying competition from T-Mobile (TMUS -1%), AT&T (T -3.4%) has launched aggressively-priced plans for families looking to share 10GB/month of data between accounts while receiving unlimited talk/text.

A family with just two smartphones still has to pay $130/month, but each additional smartphone costs only $15/month. One important catch: Like AT&T's recent shared data plan discount and a $200 credit provided in its T-Mobile promotion, the family plans require users forgo traditional smartphone subsidies. AT&T's efforts to pare subsidy expenses are a major reason its wireless op. margin rose 690 bps Y/Y in Q4.

AT&T is underperforming on a bad day for equities, as are Verizon (VZ -3.4%) and Sprint (S -4.3%). While AT&T, Sprint, and (especially) T-Mobile have launched major discounts and promotions in recent months, Verizon has maintained its premium pricing strategy, betting its coverage and service quality will allow it to continue delivering industry-leading subscriber adds and margins. But fears are growing Big Red increasingly has no choice but to return fire.

AT&T's latest move comes days after the carrier announced a $100 credit for each new line opened by a new or existing subscriber.

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Comments (10)
  • richjoy403
    , contributor
    Comments (13902) | Send Message
    I'm a shareholder in T (plus VZ and VOD), and a user of T's service and data plan. But T's pricing is excessive, as they have lacked a strong competitor (except for VZ). Today's announcement does nothing for us, and we will soon discuss service with T-Mobile and see what they have to offer.


    Being a shareholder means I benefit from their does not mean I am obligated to use their service if I can do better elsewhere.
    3 Feb 2014, 03:20 PM Reply Like
  • june1234
    , contributor
    Comments (4481) | Send Message
    With VZ reporting a 10% decline in smartphone activations expect this trend to continue
    3 Feb 2014, 03:41 PM Reply Like
  • six pack
    , contributor
    Comments (9) | Send Message
    The Market is hungry for a third carrier and the future bodes well for whoever gets the coverage/speed/price first. I like Sprint's chances.
    3 Feb 2014, 04:13 PM Reply Like
  • richjoy403
    , contributor
    Comments (13902) | Send Message
    I doubt anyone can say with certainty which carrier might be best positioned after the dust settles (though I vote for VZ), but in the short term, it looks very much like T-Mobile is going to lower prices until they have changed the pricing model used in the U.S. (to similar to that of the rest of the world). I assume VZ can't stay above the fray for long, and will be reluctantly forced to lowering prices to remain competitive.


    As for the proposed Sprint/T-Mobile merger, it's not looking like a sure-thing....this may be the latest:

    3 Feb 2014, 04:24 PM Reply Like
  • 250F
    , contributor
    Comments (242) | Send Message
    They're all nearly in a rage over T-Mobile's raid on their customer base, and equally threatened by a change to status quo pricing structure. I dumped ATT last June for T Mobile, and couldn't be happier with their service and an extra $100/month to boot. If this condition goes on too much longer, T Mobile will be a genuine threat to Sprint
    3 Feb 2014, 05:13 PM Reply Like
  • gfoley11
    , contributor
    Comments (8) | Send Message
    I see no reason for anyone to ditch T (AT&T) on the notion that they "won't get it right". They have all the right capital, personnel, and stockholders backing them to always get it "right" if they want to. I for one would not let the overall paradigm shift of lower rates for all carriers to become an overwhelming decision in your portfolio to get out of T. The dividend payout alone, over time, makes a quite handsome enticement to keep an owner of the stock sitting comfortable, especially in trying times. And besides, T is not going anywhere, for I've never seen a kid texting who's not going to pay their smart phone bill -- that wouldn't be hip now would it....
    3 Feb 2014, 08:23 PM Reply Like
  • richjoy403
    , contributor
    Comments (13902) | Send Message
    ...agreed, I am contemplating a change in mobile providers...not selling my T.
    4 Feb 2014, 02:20 PM Reply Like
  • tomahawk21
    , contributor
    Comments (25) | Send Message
    Lol....agreed gfoley11 and enjoying the dividend!
    4 Feb 2014, 01:04 AM Reply Like
  • User 14816442
    , contributor
    Comment (1) | Send Message
    T-Mobile may operate at a higher radio frequency than the other big three competitors, but in the metropolitan and areas and suburbs around the US, TMo can provide quality and affordable service. Many people can benefit from their services, but VZ and T can provide the better coverage in the more rural areas. There are some temporary solutions Tmo has, but the higher frequency and lack of lower frequency is its weakness. I do believe full price phones with discounted services are in, and discounted devices are getting the kick to the curb. All the carriers are offering an upgrade program to get a new device at least once a year( twice a year for tmobile subscribers) while not signing a two year service agreement and not fully paying off a device. TMo is also helping alleviate costly international travelling costs with unlimited data, text and affordable talk rates in over 115 countries. Lastly, T-mobiles' move to pay off ETFs are flooding retail stores with customers trying to switch to get out of their agreements and save $.


    The questions you need to ask yourself are: Will T-Mobile provide service to where you live, work and travel to? Will you save $ by switching? Will you benefit from unlimited data plans and international travelling plans?
    5 Feb 2014, 01:01 PM Reply Like
  • richjoy403
    , contributor
    Comments (13902) | Send Message
    6442 -- Assuming your assertions are factual, I appreciate your having provided a useful contrast between T-Mobile and VZ, my present provider.
    5 Feb 2014, 01:44 PM Reply Like
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