AT&T ups revenue growth forecast on new pricing model

Tue Apr 22, 2014 7:29pm EDT
 
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By Marina Lopes

NEW YORK (Reuters) - AT&T Inc on Tuesday raised its forecast for full-year revenue growth to reflect its acquisition of LEAP wireless in March and the popularity of a new handset pricing model that charges customers for devices separately from their wireless plans.

Like other carriers, AT&T (T.N: Quote) is seeking growth in a nearly saturated environment, making strategies such as alternate pricing plans more crucial to attract customers.

The company raised its forecast for full-year revenue growth

to at least 4 percent from 3 percent.

A higher-than-expected 35 percent of wireless customers transferred to NEXT, its new pricing plan, boosting quarterly revenue 3.6 percent from the year-earlier quarter.

"We are very pleased with the take rates," John Stephens, AT&T's chief financial officer, said of NEXT in a conference call following the earnings release. "I believe the 35 percent will become a new standard."

AT&T added 625,000 postpaid net wireless subscribers in the quarter, the company's strongest post-paid growth in the first quarter in five years, blowing past Jefferies Equity Research expectations of 173,000.

Yet the growth in subscribers was somewhat offset by weak service revenue growth as customers who moved off of the traditional device subsidization model were eligible for Mobile Share, a plan that includes unlimited talk and text and allows for shared data in up to 10 devices.   Continued...

 
The AT&T logo is pictured by its store in Carlsbad, California, April 22, 2013. REUTERS/Mike Blake