AT&T Effectively Countered T-Mobile US Attack; Verizon and Sprint, Not so Much

Some might argue the present U.S. mobile marketing attack launched by T-Mobile US is having only a slight impact on operator financial results.

"It doesn't appear that based on our results, there was much of an impact," said John Stephens, AT&T CFO.

Of course, what is true for one company sometimes is not true for all. In AT&T’s case, the most-recent quarter showed big subscriber gains for T-Mobile US and significant net subscriber gains for AT&T, if weighted towards tablet device connections at AT&T.

But Sprint and Verizon Wireless did not fare so well, both firms are losing important postpaid phone accounts, presumably mostly to T-Mobile US and AT&T.

Sprint lost 231,000 net postpaid subscribers during first quarter of 2014, as compared to a net gain of 12,000 posted in the same period of 2013.

Verizon lost roughly 138,000 net postpaid phone customers in the first quarter of 2014, the first time Verizon ever had lost mobile customers on a net basis.

Those results likely are a result of AT&T moving quickly to counter the T-Mobile US attack coupled with Sprint’s inability to respond and Verizon’s unwillingness to respond.

Whether Sprint and Verizon must now step up their own efforts is the issue. Most observers would have expected the brunt of T-Mobile US attack to fall on AT&T. That might be true, but AT&T also countered early and apparently effectively.

The picture is more complicated, though, since it is tablet additions that are fueling net growth at AT&T, Verizon and likely Sprint as well. T-Mobile US seems to be the only top-four mobile service provider actually gaining phone share.

While T-Mobile did post impressive customer growth in the first quarter, AT&T withstood the impact and topped expectations for customer growth, adding 625,000 contract customers (though largely fueled by tablet additions in both the fourth quarter of 2013 and first quarter of 2014). AT&T added more than one million net new customers.

AT&T in the first quarter of 2014 gained about 625,000 net new postpaid accounts, of which about 313,000 were tablet connections. In other words, half of AT&T’s net additions were tablet accounts, not phones.

It might be as accurate to say that AT&T managed to respond effectively to T-Mobile US marketing attacks, as to say T-Mobile US efforts had only a slight impact on AT&T.

Nobody can really say how much better AT&T average revenue per user or per account might have been, in the absence of the actions taken to counter T-Mobile US.