The AT&T paradox: why the biggest subscriber 'donor' is happy to see them go to T-Mobile, Sprint or Verizon

Given that AT&T operates with very high earnings margins, we wouldn't shed much tears over the latest analyst revelations about its negative subscriber churn, as it is a part of a consciously pursued strategy that is proving to be rather brilliant, it seems. According to data from Cowen and Company Equity Research, AT&T is the largest subscriber "donor" to other carriers in the last eight quarters:


The last sentence here is key, as it seems that AT&T isn't too worried about losing low-margin subs with feature phones, and is doing basically nothing to stem the tide. It hasn't offer any promo blitz, incentive or family plan discounts worth noting for a while now. Heck, it was even the only major carrier that barely did a thing to take part in the Black Friday and Christmas promo fight that ensued among T-Mobile, Sprint and Verizon. Another example - until recently, its Galaxy S7 edge price for buying outright was $799, compared with, say $780 on T-Mobile, and now it is tied with Sprint at $795 for the most expensive S7 edge among the big four carriers, which raises the average selling price (ASP) of its phone roster.

AT&T, however, focused heavily on expansion in digital media and advertising with the DirecTV Now launch, and the move to acquire Time Warner, keeping an eye on the future, with the idea to prevent becoming a dumb pipe for bits, bytes and voices. All in all, AT&T's refocusing on high-value customers seems to be paying off, as during the third quarter it reported gross margin of more than 50% for its wireless service, and its plan ASP is the highest in the industry, so the carrier may be the biggest subscriber donor, but at the same time is apparently glad to see those lightweight users go to the competition.

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16 Comments

1. btbotimtim

Posts: 272; Member since: Dec 08, 2010

and they are raising activation fees.

2. palmguy

Posts: 982; Member since: Mar 22, 2011

Mo money! Mo money! Mo money!

3. TreyTreyTaylor

Posts: 728; Member since: Dec 21, 2010

They disgust me. Everything about the business, from the plans, the data prices, the stupid boxes the phones come in, the horrible hotspot devices, and the ridiculousness that is software updates. They are the absolute worst carrier for anything other than coverage.

6. Doakie

Posts: 2478; Member since: May 06, 2009

You obviously haven't had Sprint. They're bad in ALL the categories. Back when I had them I had to get home internet to cover their data coverage holes around my house, then had to buy an AirRave to provide myself voice coverage at home. All while their coverage map showed excellent coverage. Sprint is bulls**t in every way possible.

4. Acdc1a

Posts: 473; Member since: Jan 21, 2016

When you ignore one aspect of your business you risk the whole thing. With T-Mobile aggressively improving and growing AT&T has the most to lose.

8. XDAdam

Posts: 276; Member since: Feb 03, 2016

Offering great plan deals and promo deals is still a drop in the bucket if they don't offer great coverage in your area. T-Mo still has a ways to get EVERYONE covered, and not just barley covered, I mean really covered (consistent coverage, not spotty) If you are in an area where you're covered, then it is a great carrier to have.

15. sissy246

Posts: 7115; Member since: Mar 04, 2015

This is so true. A friend of mine has no service with Tmobile at my house. I have great service with att

5. CajunMoses

Posts: 5; Member since: Jun 17, 2016

I love AT&T. Their commercials are really entertaining. And their Website is fun to navigate.

9. XDAdam

Posts: 276; Member since: Feb 03, 2016

You made me spit out my coffee.

11. geolemon

Posts: 10; Member since: Jun 09, 2016

At least Lily is attractive enough to make the stupid commercials tolerable.

14. jeroome86

Posts: 2314; Member since: Apr 12, 2012

She has a bodacious set of ta ta's

7. civicsr2cool

Posts: 270; Member since: Oct 19, 2016

its 2017, if you're still on a cell phone contract what are you doing with your life?

10. geolemon

Posts: 10; Member since: Jun 09, 2016

Eventually kids grow up, get jobs that aren't flipping burgers, move out of the neighborhood where they had to park on the street. Those people buy adult smartphones complete with plans that don't throttle them, and don't leave them stranded when they travel to client sites for business. You probably also ask why some people pay four times as much as you do to live in the houses that they live in, or why people buy Lexus and Mercedes when your Corolla gets you home 'just as well'.

12. k9luvr

Posts: 122; Member since: Oct 17, 2016

Why waste money on the big 4 ? Go to one of their MVNO's and cut your bill in half. Same service at half the cost. Makes sense to me.

13. XDAdam

Posts: 276; Member since: Feb 03, 2016

Data plans suck and are usually speed-capped.

16. hazard1

Posts: 236; Member since: Feb 11, 2017

I regret buying my wife's Iphone with them. We are stuck for another year (too much to pay off right now). But that year will pass. And we will be leaving them. Their network, which I thought was good, now is the third best (behind Verizon and T-mobile). And there is no cost savings. We have no complaints about the network. it seems fine enough. The thing is, why pay more for the same amount of service?

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