How Much Beneficial Was AIO For AT&T Inc. (NYSE:T)

Posted by Chris Bell October 20, 2013 0 Comment 1310 views

AT&T, Inc. (NYSE:T) has announced that it intends call timeout on its prepaid wireless offers. The $186 billion telecom major had introduced these new prepaid plans earlier in the year under its Aio brand.  The phased withdrawal of the Aio prepaid plans coincides with the completion of AT&T’s acquisition of Leap Wireless. Leap Wireless International Inc. (NASDAQ:LEAP) had close to 5.3 million subscribers at the time of acquisition and was operating the lucrative Cricket Wireless brand which had created a niche for itself among the prepaid user base. AT&T has plans of promoting Cricket wireless as a standalone prepaid brand after its home grown Aio brand is completely withdrawn from the market. Post the buyout, AT&T subscriber base has expanded to 107 million users.

At that time of acquisition, analysts had predicted that the takeover will help the telecom major, slow down erosion in its prepaid customer base to competition since Cricket Wireless had created a niche for itself in the prepaid market. In addition AT&T got hold of additional spectrum (close to 60% of wireless frequencies allotted to Leap was going unused) which will in turn allow it to service more number of users at improved levels of data and voice quality.

 The huge push by U.S second largest telecom player to capture a larger share of the prepaid customers is because the segment is seeing double digit growth in terms of revenue on a quarter on quarter compare. Usage patterns over the past few months have confirmed that a large segment of customers who are graduating to smart phones are opting for prepaid connections. These prepaid connections are also averaging higher usage resulting in more revenue to the telecom operators.

 In a related development, AT&T on October 17, announced launch of $5 per day prepaid passes specifically targeting tablet owners. A similar prepaid plan for tablets also offers 3 month connectivity for $25.

About Chris Bell

Chris Bell is an investing reporter for GDP Insider. Chris covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Chris is also over consumer reporter and covers a wide variety of issues ranging from housing to immigration to urban poverty. Chris graduated from the University of Scranton with a degree in Communication and Philosophy. Chris's diligent investigations earned him the honor of being named "Best Reporter" once by the Headliners Foundation of Texas and once by the Houston Press Club.

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