From the perspective of hardware sales, AT&T had a strong Q2 2021. Smartphone sales were up 31% YoY. The carrier sold over five million smartphones within postpaid and about 1.6 million smartphones within its prepaid brands. The third largest carrier in the US saw 789,000 postpaid net additions and 174,000 prepaid phone net additions. These were solid wireless results. The selloff of some international assets and media units will continue to help AT&T focus on its 5G rollout and new service offerings. For complete AT&T and Q2 2021 results, click here.
Interesting takeaways from AT&T’s quarterly results:
- AT&T’s ‘upgrade the base’ campaign remains on track and successful. The carrier seems committed to this expensive but effective way of reducing churn and pushing subscribers onto unlimited 5G services.
- AT&T’s service revenues grew 5%. Impressive growth, which will likely keep AT&T aggressive on upgrading the base.
- Equipment revenues were up 32% YoY. Much of the growth was due to a poor Q2 2020 due to COVID-19 lockdowns. However, even after taking COVID-19 into account, smartphone sales were strong, and AT&T punched above its weight selling iPhones and flagships during the quarter. Again, much of this can be attributed to the same promotions being offered to its base – the best deals are not reserved for ‘switchers’ coming from other carriers.
- AT&T is divesting its media units. DirecTV was a disaster. TimeWarner faces similar problems plus it was hit during COVID-19 as cinemas and sports activities were shut down for many months. It appears AT&T is worried about debt and will focus more on wireless, 5G and new 5G services, reducing the leverage of media. Verizon is ahead of AT&T here, already divesting most of its media investment errors.
- AT&T continues to invest to grow digital sales. Counterpoint’s Online, Offline Channel Share Tracker estimates online sales increased to over 33% during COVID-19 but have reverted to just above pre-COVID levels. Prepaid is slower to transition to online sales. AT&T will be adding more Cricket authorized retailers, which will help its prepaid business.
- To further help digital sales, AT&T is adding same-day delivery. AT&T aims for “more sales via less stores”. This is an especially good goal for postpaid, which is more accustomed to digital purchases.
- AT&T is focusing on improving the customer experience, shortening sales distribution, and quickening customer service responses. T-Mobile has done a nice job improving in this area and AT&T is pushing in similar areas. This will help keep churn low.
- Within prepaid, LG volumes will be quickly selling through for good. Moto and Samsung have been the first OEMs to gain on LG’s void. Top-sellers within prepaid have been the Moto G Power 2021, Moto G Play, Samsung Galaxy A01 and Samsung Galaxy A12.
- Surprisingly, AT&T sounds less optimistic about fixed wireless access (FWA) than Verizon and T-Mobile. The carrier is focusing on AT&T Fiber and its faster speeds. It continues to add fixed broadband subscribers — 246,000 during the quarter — and penetration has increased to 36%. AT&T expects to add over one million fiber broadband subscribers in 2021.
- AT&T added 4.2 million connected device subscribers during the quarter. It had a very solid wearables quarter. Connected cars continue to be strong, too.
