AT&T CFO Raises Inflation Concerns, Warns of Possible Price Hikes
Inflation is running “at a faster clip” than AT&T expected, and is the biggest concern for the immediate future, AT&T Chief Financial Officer Pascal Desroches warned at a Credit Suisse financial conference Tuesday. Desroches said AT&T may have to consider…
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raising prices for its service plans for a second time this year (see 2205030066). “We built in a fairly healthy level of inflationary expectations into our budget,” Desroches said: “With that said, it's running harder than we thought, and you saw one of the things that we did recently was to raise prices in response. … We're seeing inflation in labor, supplies, energy, transport.” The AT&T executive expressed optimism about the C-band, with the next phase of deployment looming. “Our network is reliable, consistent, and it's better than it's ever been and getting better every day,” he said. He noted the nearly $40 billion of mid-band spectrum the company bought in the 3.45 GHz and C-band auctions: “We expect to deploy that over the next 18 to 24 months and as we deploy, the network will only get better.” Churn was low during the COVID-19 pandemic, as many consumers benefited from stimulus payments, Desroches said. Churn could rise due to inflation, he said. “As I look at the inflationary expectation over the next several quarters, it's hard for me to envision that that's not going to impact the consumers negatively and that we and others will see some pressure,” he said. Wireless competition isn’t increasing, Desroches said. The market has “been competitive for some time” and “remains competitive,” he said. AT&T has been targeting segments of the population that are underserved, he said, citing FirstNet and outreach to Hispanics. “We are being very surgical,” he said. “We have stepped up our investment [in wireless] to match the competitors and that has helped enormously,” he said. Other markets are also growing, Desroches said: “You're seeing kids getting phones at an earlier age. You have older people getting phones that never had them. You're seeing all of a sudden a separation of your work life from your home life, so people [are] getting multiple devices.” New business formation has also been “really strong” since the start of the COVID-19 pandemic, he said. AT&T recently eliminated HBO Max from its premium unlimited wireless plan as a free perk for new customers. Desroches said the carrier is trying out other included features, such as hot spot data, to bring in more customers. “It’s really not anything against HBO Max,” he said: “It’s us trying to drive deeper penetration to different portions of our customer base.”