The wireless industry has seen robust net additions over recent years, and Wall Street wants to know how long companies can keep up the strong growth.
AT&T Inc.’s T,
“We expect AT&T to outperform on postpaid phone net adds this quarter as it benefits from its customer retention and acquisition tactics,” Barden wrote in a note to clients, adding that investors “await an industry postpaid phone subscriber ‘mean reversion’” from all-time highs in 2021 and 2022.
See also: AT&T says ‘very healthy’ wireless climate has continued
When a subscriber switches carriers, one company’s gain is another’s loss. But companies have been doing more than just canceling each other out, with Deutsche Bank analyst Bryan Kraft pegging wireless industry postpaid phone net adds at 9.3 million in 2022. That number far outpaces population growth, driven by trends such as people increasingly getting separate devices for work and personal use, kids obtaining phones at younger ages, and industry promotions that encourage the addition of new lines.
AT&T has stepped up its relative performance in the past couple years, notching subscriber gains on the heels of promotions that apply the same to new customers as they do to existing ones, and what the company says is a more simplified messaging strategy around plans and pricing.
While Keane expects a smaller level of first-quarter net additions for AT&T relative to last year — his estimates call for 344,000, versus 691,000 a year before — he still thinks the company’s net-addition growth will be “healthy” this year, and he sees room for possible upside.
“[M]anagement seems more bullish…and, consequently, we think there is some positive optionality here from stronger net adds,” he wrote.
That could suggest another decent year of gains for the industry as a whole.
“We believe that industry switching levels have been reasonably robust in 1Q, and that if trends continue at a similar pace, wireless industry postpaid phone net adds could end up above 8M this year,” he wrote. That would still mark a drop from last year’s levels but be “generally higher than what the carriers had been communicating earlier in the year, and lower than most buy-side and sell-side expectations.”