AT&T (NYSE:T) has made its triple play bundle more flexible by offering its subscribers a choice between landline phone and mobile phone service as one of the three services offered in its triple play bundle. This step is likely to give AT&T an edge over competitors like Verizon (NYSE:VZ) and cable operators like Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC) who do not offer such flexibility in their bundled services.
We believe with the flexible triple play offering, AT&T will be able to differentiate its services from its competitors and could lead to a higher number of existing AT&T subscribers using the company’s U-verse TV and internet services.
Differentiate Against Services Offered By Cable Competitors
AT&T has traditionally offered quadruple play service (internet, TV, landline phone and mobile phone) that has differentiated it against the triple play service (internet, TV, landline phone) offered by cable operators (Comcast, Time Warner Cable).
Quadruple play is more expensive than triple play because of the additional service being offered, and some consumers prefer the triple play service. By introducing flexibility in choosing mobile or landline phone service, AT&T is creating an advantage over cable competitors who cannot offer such an option currently.
Quadruple play and flexible triple play are both unique offerings that will help AT&T attract more customers to its bundled services.
AT&T Can Leverage Its Large Wireless Subscriber Base With Triple Play Offering
AT&T currently has about 31% share of the US wireless market, or about 85 million wireless subscribers. The new offering allows existing AT&T subscribers to switch to triple play without having to subscribe additionally to landline phone service (as is the case with quadruple play). Such a shift in customers can positively impact the number of AT&T U-verse TV and internet subscribers.
We currently estimate that AT&T only has about 2 million U-verse TV subscribers and about 1.9 million U-verse internet subscribers. These customers primarily subscribe through bundled offerings. You can modify our forecasts below to see how AT&T’s stock would be impacted if AT&T’s new flexible triple play service led to a higher than expected increase in it’s U-verse TV and internet subscribers.
For additional analysis and forecasts, here is our complete model for AT&T’s stock.
