AT&T’s Q2: Hello, new smartphone subscribers; Goodbye, Cricket prepaid customers

34 Comments

Credit: AT&T

AT&T’s(s t) Q2 earnings report today was a tale of two carriers.

On the one hand, AT&T had a record spring quarter when it came to its core postpaid business, adding 1 million net new customers. But in its prepaid business, AT&T lost 405,000 subscribers, all casualties of AT&T’s acquisition of Leap Wireless.

From Ma Bell’s perspective it’s all good news, since postpaid customers buying premium data plans are far more profitable than pay-as-you-go subscribers. But if you were still under any illusions that AT&T was going to put its full support behind Leap’s Cricket service, you can dash them right now. As I’ve written before, AT&T only wanted to cannibalize Leap for its spectrum.

AT&T Mobility CEO Ralph de la Vega said on AT&T’s earnings call that these kind of defections from Cricket were expected as AT&T began transitioning Leap’s old CDMA networks and devices to GSM technology. De la Vega said the number of customers abandoning Cricket every month is already slowing down as AT&T gets them to try out AT&T’s new unified network.

Ralph De La Vega, AT&T Mobility CEO

AT&T Mobility CEO Ralph de la Vega (Photo: Om Malik)

However, no former Cricket customers upgraded to AT&T postpaid plans, de la Vega pointed out, meaning AT&T reached 700,000 smartphone net adds entirely by luring them away from other carriers. So we’re basically seeing flight in two different directions: postpaid customers arriving and prepaid customers leaving.

Turning to the numbers, AT&T recorded a profit of $3.6 billion, down from the $3.8 billion posted a year ago, off of revenue of $32.6 billion. On the wireline side, AT&T added 190,000 U-Verse TV subscribers and 488,000 U-Verse internet customers, though as always wireless continued to dominate its consumer business.

AT&T Mobility had a record postpaid churn rate of 0.86 percent, meaning a much smaller percentage of its core customer base departed for other carriers than in previous quarters. AT&T chalked that up to its evolving business model, which is focused heavily on shared data plans and its new Next upgrade program.

Graphic: AT&T

Graphic: AT&T

AT&T now has 15 million Mobile Share accounts, encompassing 41 million individual connections. Half of those accounts subscribe to a 10GB plan or greater monthly plan. The more individuals and devices AT&T has on the same data plan the less likely account holders will take their business elsewhere.

Meanwhile Next is proving to be one of AT&T’s most important programs ever. Next now accounts for more than 50 percent of all smartphone sales, which is helping AT&T move away from device subsidies and make money from phone sales. Subscribers in the Next program building up equity on their next smartphone upgrade are also proving to be more loyal and profitable customers in the long term.

De la Vega also noted that less than 10 million AT&T subscribers are grandfathered into unlimited data plans, contrary to a report earlier this week that AT&T still had 44 percent of its customers on the unlimited spigot.

AT&T’s results definitely question whether T-Mobile’s Un-carrier onslaught against the U.S. is working. In the first quarter we really saw T-Mobile throw its weight around. It cut into AT&T’s smartphone growth, but Verizon(s vz) really felt the pain, recording its first net loss in phone customers in recent memory.

But in Q2, both Verizon and AT&T rebounded, particularly in the postpaid market where they made big gains in smartphone and tablet connections. T-Mobile may be luring away prepaid customers, but it doesn’t look like either of the Big 2 are losing the customers they care most about.

34 Comments

Mike

Watch out Commercial Property owners. AT&T is putting new equipment in your buildings and not telling you that they will be using your power to run their equipment. They tried it will me but I caught them. Their response to me was they were providing me a service and I should pay for the electrical use. I told them they aren’t supplying me with nothing they are providing their customers this service and making the money on it not me. They still refused to pay for the electrical use so I told them to get their equipment out of my building. I am telling you AT&T will screw you every opportunity they get. Watch out they will get you. They are screwing everyone in all kid of ways! AT@T is the biggest rip off of all phone carriers!!!!!!!!

jamieyoak2

What is the best cell phone provider out there for customer service.?

Zachary Franklin

Having a smartphone on ATT or Verizon is like having a sports car and a gallon of gas.

Jamie Yoak

Cricket sure beats having a two year contract with Sprint, T Mobile or Verizon.

Surge Man

Well the “real” reason most pre-paid customers are leaving Cricket is because Cricket would activate any phone from other CDMA carriers and they still could use the phone of their choice without all the contracts and heavy fees.Plus….most of the CDMA phones that were brought over to them had bills owed on accounts from previous carriers and were simply flashed with the Cricket PRL and could be re-activated with their service no questions ask.You would be surprised how many stolen/lost bad ESN phones were on their system.And that’s fact…But what doesn’t make any sense at all is that AT&T sub leases to 3rd parties and they offer their same service for far way less than they do their own?When they acquired Cricket they didn’t even re-think their pre-paid plan structures at all and basically offered it as you can get the Go Phone service.Then in turn you have Straight Talk,Net 10(Tracfone) still under cuts their plans and offers the same service.Same as Lucas Communications a.k.a. H2O Wireless..So I say long live the pre-paid service for these 3rd parties.Go buy your phone and be done with it.It’s your better option…

Holly Mrkvicka-Moore

People aren’t likely switching from Cricket to AT&T because people are usually on prepaid service because of no credit or trashed credit. Even if someone’s horrible credit qualified for postpaid service, they would likely have to pay deposits, down payments and/or extra monthly fees.

Jamie Yoak

We need more choices. Sprint and T Mobile do not cut it, Jamie Yoak

John

Watch out Commercial Property owners. AT&T is putting new equipment in your buildings and not telling you that they will be using your power to run their equipment. They tried it will me but I caught them. Their response to me was they were providing me a service and I should pay for the electrical use. I told them they aren’t supplying me with nothing they are providing their customers this service and making the money on it not me. They still refused to pay for the electrical use so I told them to get their equipment out of my building. I am telling you AT&T will screw you every opportunity they get. Watch out they will get you. They are screwing everyone in all kid of ways! AT@T is the biggest rip off of all phone carriers!!!!!!!!

RBBrittain

What does THAT have to do with their MOBILE business, which this article is mostly about? They were probably wanting your power for a box related to U-verse or some other data service, *NOT* a cell tower…

George Boatman Hayes

no Thanks Bell South two cans and a string is better

Mo

So what happens to the GOPHONE plan users? Is that goin away??

dan

Didn’t they say that cricket is CDMA? that means they use same phones as Verizon, Sprint and Metro PCs..They won’t work on ATT after Cricket network is changed to gsm..

thatoldgoat

Cricket was CDMA. Since the Aio and Cricket merger they have been GSM. ( I know they are GSM too since I use them with a OnePlus One).

Hermann

Metro PCS is T-Mo now and is switching now to GSM.is providing free GSM phones to Metro PCS subscribers
ATT is not providing free phones the Crcket sunscribers, therefore they have a big churn rate

Both ATT and T-Mo bought Cricket and Metro Pcs for their frequencies which they convert to LTE and save on the fees they pay to Verizon and Sprint for they leased CDMA access
and less competion

Looking forward to the merger of T-Mo with Sprint, where Sprint will change their entire network to GSM LTE, with new VOLTE phones, all calls and data and voice over LTE

So before you upgrade, wait a few months to get a VOLTE capable now. HTC has the only one on T-Mo until now, hopefully the new I-Phone will have VOLTE

RBBrittain

I know VoLTE will be coming someday, but as far as “a few months” I’ll believe it when I see it. Besides, the carriers will figure out a way to monetize it; from what I’ve heard they’re talking about “HD Voice” (yeah, right) as a selling point for VoLTE. Maybe the “sheeple” who buy a new iPhone every year will want VoLTE when it comes out, but not me.

eye4bear

Seriously doubt the new iPhone will have VOLTE. Apple has a tradition of never putting cutting edge tech into their phones. They wait until the tech is mature, so possible the iPhone 7 will have VOLTE.

cassidy

they dont get the same network nor the same features or phones. IF its just to make a simple phone call then yes cricket is the way to go. Most want more than a simple phone call.

DrRage

you do realize that cricket has data plans and that they use the AT&T network, right? so in that regard, they DO get the SAME network with the SAME features….and you can use ANY AT&T phone with cricket, so you get that benefit too….same network, same features, same phones….yeah, i can see where you get confused :P

Bighorner

You obvioulsy do not know what you’re talking about. I’ve been with cricket for months using my iPhone 5, and I get download speeds of 600 KB/ps (that’s 4.8 Mbps). That’s fast enough to stream music and videos, and of course basic web browsing, maps, gps.

They also do get the same phones – but AT&T has a ton more. You can bring your own phone into Cricket.

Seriously, are you talking out of your ass? I wonder where you got your information from. The times where prepaid were basic phone plans was years ago.

John Roberts

Uh, I use Cricket (switched the day after the Aio merger). For $55/mo, I have unlimited talk and text and 5GB of data, including LTE. They also offer value added services like Visual Voicemail free of cost.

The ONLY benefit I don’t get that I would have with a post-paid AT&T plan is roaming. However, I switched to AT&T from Tmobile, and can vouch for the fact that AT&T’s network is much larger than T-mo’s, so the odds of finding myself in an area with Tmo service but not AT&T are fairly slim.

Ralph Spooner

John, you are correct at the moment that T-Mobiles network does not have the coverage that AT&T or Verizon does. They are sorely lacking in the rural areas. I would say that Verizon has the largest coverage of the rural areas than any of the carriers, mostly due to the fact that over time, they have acquired a lot of the small rural Cellular One carriers that sprung up in the early days of the 90s. I worked for a rural Cellular One carrier in my home town that ended up being owned by Verizon. AT&T has only been in my home market for about a year and a half, maybe 2 years. They started with GSM and later, about a year ago or so, turned up 3G. Even though I worked for AT&T as a switch technician up until a year ago and think highly of their service and coverage in North Florida, I have a Verizon phone, a flip, due to coverage reliability, now that I am back in my home town.

RBBrittain

I agree with both of you, even though I don’t get LTE thanks to my choosing a Moto G (good deal at $99 before rebate, a steal at $49 after rebate); but with GSM Cricket’s speed caps (HSPA+ 4 Mbps, LTE 8 Mbps), to me LTE isn’t worth it for now. (Maybe when VoLTE arrives, but not today.) Here in Arkansas, in rural areas away from the interstates AT&T & Verizon have almost 100% coverage; Sprint & CDMA Cricket have nothing but Verizon roaming (an add-on most CDMA Cricket customers never bought), and if you’re lucky T-Mobile might have 2G voice-only towers. Even though I lost postpaid roaming switching from a Net10 AT&T BYOP SIM to GSM Cricket, AT&T’s towers here are plenty for me.

Simon

I don’t get it. Cricket, using AT&T’s network, is one of the best deals around. Why are folks still getting sucked into two-year contracts with AT&T when they can get the same service on the same network, cheaper, on a month-to-month basis?

Bob

Cricket’s demographic is not the same as AT&T. Therefore, the area where Cricket has its best signal, AT&T doesn’t. When Cricket folks get on AT&T network they will be disappointed and churn

Bighorner

Not sure what you’re talking about. I’m with Cricket and I’ve had very good speeds everywhere I’ve ever been. I did a cross country road trip in my car from California to North Carolina, and almost always had great speeds with my Cricket plan. The only places where it suffered were very VERY remote places.

casualsuede

Well Bighorner, if you feel that way, you can thank Sprint. Outside of Cricket’s tiny 4G footprint, Cricket has a nationwide 3G Roaming agreement with Sprint.

Now that Cricket is kaputz as an independent company, I bet that 3G Sprint agreement went away and the remaining customers, with a CDMA phone constantly looking for signal got pissed off and left.

DragonDagger

If you are with Cricket, when you go to replace/upgrade your not CDMA phone it will be a GSM phone. Come back then an tell us how you feel. I bet you’ll understand why 450K Cricket customers left.

Michael Mincey

I’m using a GSM Lumia 1020 and my speeds are fantastic and connectivity is great. Not sure what the fuss is all about. I pay $60/month for 5.5 GB of data and all you can eat calling/texting. That’s AFTER taxes. And I’m on the same network as AT&T post paid subscribers. Why would I want to switch to pure AT&T service? I buy my phones outright, pop my sim in, and I’m good to go.

Ken Paulson

I suggest that if you think you know AT%Ts network, you don’t at all. The new GSM/CDMA/WCDMA RF technology is UTMS (Check Wikipedia or Google.)

I’ve been testing for AT&T since before all the mergers, and they really do their homework before announcing mergers. Integration is key to successful merging of technologies. A couple years ago, AT$T bought out Alltel, and integrated the two together, with minimum equipment upgrades, well before the takeover.

Brian

That’s the problem they are getting the same service but not the same quality. When they use AT&T towers they get left overs. The AT&T customers come first and other prepaid services like cricket and boost come 3rd or even 4th. I have had several friend complain about the dropped calls or slow internet.

Jon

@ brian Proof that you have no idea what your talking about and i quote….

“The AT&T customers come first and other prepaid services like cricket and boost come 3rd or even 4th”

At&t doesn’t even own BOOST, Sprint does….Next time you want to lead people astray at least have your facts str8!

Coni

In the area I live in I have AT&T and excellent service but have several friends that have Cricket and can’t make or receive calls sitting right next to me.

Jon

@coni were they cdma handsets or GSM handsets? Just because it says cricket doesn’t mean its the At&t network remember they are operating 2 networks simultaneously now

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