AT&T Secured More Lucrative Long-term Wireless Contracts

AT&T added 854,000 of the wireless industry’s core customers in the last three months of 2014, as profits and customer retention showed signs of strain from the heightened competition among the nation’s biggest carriers. But the Financial Times reports that AT&T lost more than 100,000 of its most lucrative mobile phone customers in the final three months of 2014, as the second-largest US wireless carrier fell victim to a bruising industry price war being waged by its smaller rivals.

The rate at which customers left its network, known in the industry as “churn”, hit 1.22 per cent, or its highest level in two years. The fourth quarter, usually the busiest and least profitable for wireless companies because of the costs related to phone upgrades, included strong demand for Apple’s latest iPhone at a time when the carrier used promotional deals to battle with rivals for customers. With little room for growth in the US, where the market is saturated, AT&T is spreading into new businesses through the acquisition of satellite television provider DirecTV and deals to acquire two wireless companies in Mexico. AT&T expects all the deals to close by mid-2015. The company is also coming to the end of two years of intense investment to upgrade its wireless and wired networks. AT&T reiterated that it would spend around $18 billion in 2015, down from about $21 billion in 2014. Amid all the strategic moves, the company’s net income was hit by an already disclosed $7.9 billion charge for pension-related costs. For the three months ended Dec. 31, AT&T reported a loss of $3.98 billion, compared with a profit of $6.91 billion a year earlier. Revenue rose 3.8% to $34.4 billion.