Inflation is running at a higher pace than AT&T had planned and the MNO has been forced to raise prices as a result, Pascal Desroches, senior executive vice president and chief financial officer, AT&T Inc. (NYSE:T), said this week at the virtual Credit Suisse Annual Communications Conference. “We’ve built in a fairly healthy level of inflationary expectations into our budget,” he said. “With that said, it’s running harder than we thought. We’re seeing inflation in labor, supplies, energy, transport. One of the things that we did recently was to raise prices in response.”
While demand is healthy, according to Desroches, there has been an “uptick” in involuntary churn and he is concerned about the impact of sustained inflation on future subscriber growth. “As I look at the inflationary expectations 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. But so far, so good,” he said.
Desroches said that spectrum AT&T purchased in the mid band for $40 billion at auction is expected to be deployed over the next 18 to 24 months. Services provided on those frequencies will help the MNO’s bottom line because of different profit characteristics compared with current wireless offerings.
“Our network is reliable, consistent and it’s getting better every day. And as we deploy the new spectrum, the network will only get better,” he said. “The new capabilities that will be unleashed by our spectrum deployment, it’s upside that hasn’t been factored into any of the guidance we’ve given.”
Also on the positive side, roaming, which suffered during the pandemic, is recovering, and consumers are migrating to higher-end plans, which is helping ARPU, according to Desroches.
“We feel really good about the state of the business,” he said. “Big picture, we are doing, as a company, a lot of things very well. We are targeting segments of the population that are underserved — for example, FirstNet and the Hispanic market. We were underinvesting in our mobility customers. We have stepped up our investment to match the competitors and that has helped enormously.”
By J. Sharpe Smith, Inside Towers Technology Editor
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