AT&T CEO says Wall Street critics are wrong about company’s promotions

“We actually win customers in many different places and in many different ways, and there’s no single answer to that. And I know people want to keep coming back and saying, well, it’s a high level of promotion that does it. And that’s actually not right.”


— AT&T CEO John Stankey

AT&T CEO John Stankey hit back at critics who say AT&T Inc.’s recent growth has been fueled by heavy advertising activity, telling investors on a conference call Monday that many factors are behind the company’s subscriber momentum.

The telecom giant added a net 813,000 phone contract subscribers in the latest quarter, more than rival Verizon Communications Inc. VZ,
+1.23%
and T-Mobile US Inc. TMUS,
-0.38%
combined. The company has recorded similar subscriber size for several quarters, traction that some analysts attribute to the company’s promotional tactics – AT&T T,
+2.06%
has focused not only on adding new subscribers, but on offering comparable deals to existing subscribers to keep them with the company.

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

“We’ve had big share changes that have occurred in some segments of the market,” including public sector companies, Stankey said at a Goldman Sachs conference on Monday. AT&T’s public sector momentum “is not based on promotion,” but rather on the company’s investments in improving its public safety network in ways that allow AT&T to “penetrate a segment that we have previously largely underpenetrated.”

In addition, AT&T “saw the same dynamic movement into the upper and middle segments of the business market where our stock performance has improved,” he said, according to a transcript of the presentation provided by Sentieo.

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While Goldman Sachs analyst Brett Feldman acknowledged Stankey’s comment about the more business-like 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 its subscriber acquisitions. AT&T, which come as The industry has seen subscriber growth far outpace population growth for years.

AT&T’s push strategy is working, Feldman said, but it’s leading investors to wonder what will happen to the industry and the company when consumer demand for wireless slows.

Stankey said even the consumer aspect of AT&T’s promotional tactics is being misconstrued. While device subsidies are “one component” of the cost AT&T incurs to acquire or retain a customer, he said the company has also adopted a more customer-friendly model that allows the company “to spend less money to transmit the message”.

“We’re probably getting the best returns on our advertising that we’ve ever done, but we’re not spending anywhere near the levels we’ve spent historically, and I’ll tell you we’re not at the top of the industry right now,” he said.

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Stankey offered that a lower growth landscape would not necessarily be worse for the company.

“I would tell you that our equation really sticks together when you look at the overall overall view of this,” he said.

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