Leading telecom company AT&T Inc. (T) has come up with yet another plan to tap the rising demand for wireless service given a cascade of new smartphone releases this fall.
The company is reportedly running promotional offers between Sep 28 and Oct 31 offering double the amount of data than what is generally available with its Mobile Share Value plans. We believe the new plan will help AT&T capture a significant amount of wireless data business over a short term while also driving its smartphone sales.
AT&T is offering plans starting with 30 GB data for $130 per month (line fees additional). On the other hand, Sprint Corporation (S) and T-Mobile US, Inc. (TMUS) reportedly have similar offers that start at $100 and $140 per month, respectively, with almost the same amount of data. We believe AT&T’s pricing is competitive enough to result in potential customer accretion.
AT&T is looking for opportunities to improve its growth profile through a number of strategic initiatives. Last year, the company began selling AT&T Next that offers customers early upgrades to smartphones and tablets every 12 or 18 months without the need for any upfront payment, activation charge, upgrade cost or financing fee.
In addition, the company introduced new Mobile Share Value plans to generate more sales and provide better value to customers through more savings with no annual service contract options. AT&T’s Mobile Share plan is also gaining popularity with over 24 million subscribers comprising about 44% of the postpaid base. Further, in Jan 2014, the carrier introduced a promotional offer of $100 credit for new and existing customers who add an additional smartphone, tablet, feature phone, mobile hotspot or Wireless Home Phone line. In Mar 2014, AT&T also slashed the cost of its mobile share plan by $15, bringing the cost to $40 per month for unlimited talk and text and 2 GB data.
AT&T currently has a Zacks Rank #3 (Hold).
A Better Stock
A stock worth considering in the same sector is Telefonica S.A. (TEF) with a Zacks Rank #1 (Strong Buy).
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