AT&T CEO Says Wall Street Critics Are Wrong About the Company’s Promotions

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“We actually get customers in many different places and in many different ways, and there is no one-size-fits-all answer. And I know people want to keep going back and saying, well, it’s a high level of promotion that it does. And that’s actually not true.”


— AT&T CEO John Stankey

AT&T Chief Executive John Stankey responded to critics who say the recent growth of AT&T Inc. has been fueled by hefty promotional activity, telling investors at a Monday conference that numerous factors are behind the company’s subscriber momentum.

The telecommunications giant added net 813,000 postpaid phone subscribers in the last quarter, more than rivals Verizon Communications Inc. VZ,
+1.23%
and T-Mobile US Inc. tmus,
-0.38%
combined. The company has registered subscribers of similar size for several quarters, traction some analysts attribute to the company’s promotional tactics – AT&T T,
+2.06%
has focused not only on adding new subscribers, but also offering similar deals to existing subscribers so that they stay with the company.

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Stankey said Monday that those focusing on AT&T’s consumer wireless deals are misunderstanding the broader story of the company’s growth.

“We’ve had major stock shifts that have occurred in certain segments of the market,” including the public sector, Stankey said at a Goldman Sachs conference Monday. AT&T’s momentum in the public sector is “based not on promotion,” but rather on the company’s investment in improving its public safety network in a way that allows AT&T to “penetrate a segment we previously were grossly under-penetrated”.

In addition, AT&T has “seen that same dynamic move into the upper and middle segments of the enterprise market, where our stock performance has improved,” he said, according to a transcript of the presentation given by Sentieo.

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While Goldman Sachs analyst Brett Feldman acknowledged Stankey’s comments on the more business-oriented aspects of AT&T’s business that aren’t tied to heavy promotions, he also said AT&T’s consumer offerings clearly play a role in AT&T’s subscribers, who come as the The broader industry has been experiencing subscriber growth for years that has far outstripped population growth.

AT&T’s promotional strategy is working, Feldman said, but investors are wondering what will happen to the industry and the company if consumer demand for the wireless sector slows.

Stankey said even the consumer aspect of AT&T’s promotional tactics is being misinterpreted. While device subsidies are “an element” of the costs AT&T takes on to acquire or retain a customer, he said the company has also adopted a more understandable model for customers that allows the company to “spend less money on communicating.” of the message”.

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“We’re probably getting the best return on our promotional advertising that we’ve ever done, but we’re not spending nearly at the level we’ve spent in the past, and I’ll tell you, we’re not spending at the top of the industry at this. moment,” he said.

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Stankey offered that a landscape with less growth wouldn’t necessarily be worse for the company.

“I’d tell you that our equation is very much intertwined when you look at the overall picture of this,” he said.