WASHINGTON (Reuters) - AT&T Inc (T.N) expects that customer use of its equipment installment plan will have reached 50 percent in the third quarter, the company said in a regulatory filing on Tuesday, fewer customers than analysts expected.
Last year, faced with growing competition from rivals, AT&T debuted its NEXT equipment financing plan, which decouples the cost of service from the cost of devices.
In July, AT&T said it expected two-thirds of its customers to be on the plan by the end of the year.
In previous quarters, the equipment financing plan has resulted in a lower average revenue per user for AT&T but higher equipment revenue, as customers take on the majority of the burden of paying for their devices.
A shrinking base of new customers has made the wireless industry increasingly competitive, with carriers slashing prices and launching new plans every few weeks as they vie for customers.
Still, AT&T, in its filing released on the final day of the third quarter, said it expects its postpaid customer defection rates to remain at 1 percent or lower for the quarter. The company will release third-quarter results in October.
As the market for new smartphone customers shrinks, wireless companies are turning to connected devices for growth.
AT&T said it expects to service nearly half of new connected vehicles in 2015. Connected cars link to a wireless provider's network and allow drivers to unlock a car remotely and make it a wireless hot spot for other devices, among other functions.
AT&T said it currently provides connectivity to nearly 2 million cars and added 500,000 cars in the third quarter.
The carrier expects to connect more than 10 million vehicles by the end of 2017.
Reporting by Marina Lopes; Editing by Leslie Adler