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AT&T Expects A High Churn Rate In Q4 But Not Worried In The Long Term

December 9, 2014 - Written By Cory McNutt

AT&T joined yesterday’s announcement by Verizon and an earlier one by T-Mobile in warning investors about their fourth quarter and yearly financials coming out sometime in January. It reminds me of when kids prepare their parents for upcoming report cards, where you prepare them for a bad grade, but remind them that your overall average grade is still okay. When you start paying to have customers transfer to your network and give other promotional offers, you are always going to see the effect in your bottom line, and if customers leave because of ‘greener grass,’ you churn rate is always going to raise…I think Newton’s Third Law of Motion said it best “to every action, there is an equal and opposite reaction.”

Our source reported that AT&T’s CFO John Stephens said that AT&T Mobility will likely see a higher churn rate during the fourth quarter in 2014 than they had during the same period last year. He is also confident that their outgoing customer trend will not continue given the limited-time of these competitors’ offerings. He is also confident that while those dreaded churn rates would show higher in the fourth quarter, that overall for the year, the postpaid churn rate will be “one of our best ever”. The Q3 2014 churn rate was .99-percent compared with 1.11-percent for the Q4 2013 and despite the higher expected churn rate in Q4 2014, Stephens has seen all customers increase year-over-year for every quarter in 2014 and he sees no reason why that should not carry over to the Q4 2014.

Verizon seems to be following the same type of pattern, although Verizon just sat back and watched T-Mobile and AT&T battle it out for a while and did practically nothing themselves. As it became clearer that their customers were indeed leaving them for other carriers, then they too jumped on the discount bandwagon. If you are clearly the best network out there, you can be stubborn and not budge in your pricing, however, as AT&T and T-Mobile expanded and improved, all of a sudden those lines start to blur and customers are willing to take a chance with another network. Sprint is throwing out some decent incentives to jump to their network, but people still do not trust them for total coverage.

It will be interesting to see the profits and losses from all four carriers next month. Maybe when the dust settles, we will be able to tell just what kind of impact those promotions have had between customers jumping carriers. Please hit us up on our Google+ Page and let us know if you switched carriers and why…or why you decided to stay with your current one…as always, we would love to hear from you.