AT&T updated its consolidated revenue forecast for the year to 4 percent in its report on first-quarter financial results, noting customers opted for its installment pricing model.
On Tuesday, April 22, the telecommunications company announced its financial results for its quarter ended March 31. AT&T reported that its Next sales, the company's equipment installment plan that was introduced in July 2013, surpassed its own expectations. AT&T also reported that the company has seen a growth in Mobile Share plans, which are for 10GB or more.
"We have been working very deliberately to transform our business, and this quarter you really start to see the benefits," says Randall Stephenson, AT&T chairman and CEO. "Customers really like the new mobility value proposition and are choosing to move off device subsidies to simpler pricing while, at the same time, they are continuing to move to smartphones with larger data plans."
The Next plan has attracted many customers as it allows a customer to buy a new handset without paying an upfront cost and spread out the expense of the handset. AT&T allows its Next customers to upgrade to a new handset after 12 months or keep the handset after paying 20 installments. Depending on the type of handset, customers have to pay a monthly installment between $15 to $50.
AT&T introduced the Next plan as a result of stiff competition from rival T-Mobile, which has similar equipment installment plans like Jump. Both T-Mobile and AT&T have also been trying to poach customers by paying early-termination fees for subscribers who switch services.
AT&T says that around a fourth of its wireless subscribers are using plans that do not have any subsidies on handsets. During the first quarter, more than 40 percent of the company's new smartphone customers opted for the Next plans. However, AT&T expects that the figure will decline to around 35 percent in the next quarter as the initial demand for the plan slows down.
The Next plan also had a significant effect on AT&T's device sales. The company reported that its device sales soared 52 percent when compared with the same period in 2013.
AT&T confirmed that its revenue for Q1 2014 was $32.5 billion, slightly above the analysts forecast of $32.4 billion. The revenue rose 3.6 percent when compared with the revenue of Q1 2013. For the entire 2014, the company expects the revenue to grow 4 percent or more.
