AT&T makes its money primarily through mobile phone plans which include monthly fees for voice and data (text messages, e-mail, internet) service. We estimate that Mobile Phones & Plans constitute 51% of the $31.60 per share Trefis price estimate for AT&T.
We believe that data usage will continue to rise due to faster internet speeds on mobile phones as well as increasing adoption of smartphones which offer convenient e-mail and internet access. We forecast that AT&T’s SMS & Internet Revenue per User will increase from $14 per month in 2009 to $21 per month by the end of the forecast period.
However, free Wi-Fi, which is becoming increasingly available in many metropolitan areas, may be a threat to growing data revenues. Wi-Fi is not only offered in many bookstores, cafes and restaurants but also public spaces such as parks and plazas. As local governments become more involved in providing abundant Wi-Fi, mobile phone subscribers in densely covered Wi-Fi zones will benefit by being able to utilize free Wi-Fi to send e-mails and access the internet rather than using the mobile phone network. This could be particularly impactful for those subscribers who do not subscribe to unlimited data plans; e.g. the user pays a flat fee for a certain number of e-mails or internet data per month, and then is responsible for additional charges beyond that limit. It could also lead some unlimited data customers to downgrade their data plans.
Within AT&T’s content on our platform, you can see how AT&T’s stock price would be impacted if SMS & Internet Revenue per User grew slower than expected due to increasing availability of free and easily accesible Wi-Fi.
