AT&T jumps off the media bandwagon
On the heels of Verizon’s recent announcement on the divestiture of its media assets (AOL and Yahoo), AT&T has shaken the market last week by the spin-off of its WarnerMedia business. The carrier announced that its media division, which includes content brands like HBO, Cartoon Network, CNN, DC Comics, Warner Brothers, TBS, and TNT will spin-off to join Discovery for the formation of a new media company. Under the agreement, AT&T will receive a total amount of $43 billion in a combination of cash, debt, and WarnerMedia's retention of certain debt. The AT&T shareholders will own 71% of the new media giant, while the Discovery shareholders will control the remaining 29%. AT&T argued that this spin-off will allow the carrier to boost its investment in growth areas such as 5G mobile broadband. AT&T’s Time Warner acquisition was closed only three years ago at a record $84.5 billion.
The NPD Take:
- AT&T surprised the mobile market back in Q4 2020 when it extended its switcher promotions to its existing customer base to retain its massive iPhone base, who could have been lured by rivals’ switcher offers. AT&T defended this costly move by claiming that its media business could help recuperate as customers upgrade to high-tier plans that include media bundles. AT&T’s decision to step back in content ownership may derail these recuperation plans.
- While the spin-off will help the carrier focus on its core mobile business, having exclusive access to rich content is equally important in staying competitive in this content-driven mobile world. Rival Verizon and T-Mobile’s content partnership strategies have already proven that mobile carriers can offer competitive bundles even if they are not the owner/creator of the content. You can read more about NPD Connected Intelligence’s take on this announcement via the blog “Pretender to the Throne”.
T-Mobile sets eyes on the SMB market
T-Mobile announcedplans to launch a set of new rate plans geared towards small businesses. The new “Business Unlimited” plans come in three tiers, ranging in price between $25 to $40 a month per line. The lower tier Business Unlimited Select offers 50GB of high-speed data, while the other two plans, Business Unlimited Advanced and Business Unlimited Ultimate, offer 100GB and unlimited high-speed data, respectively. Notably, the low-tier plan has data throttling at times of network congestions, while the upper-tier plans offer high-speed data at all times. All plans come with mobile hotspot tethering of 5GB, 40GB, and 100GB depending on the tier. One of the noteworthy aspects of T-Mobile’s announcement is the marketing assistance provided to the businesses signing up for these new plans. The SMBs will be offered three one-hour consultations with a Facebook marketing expert, and those accounts that have three or more lines will get $200 credit to be spent on digital advertising on Facebook and Instagram. The new plans will be commercially available for all SMBs beginning June 1.
The NPD Take:
- T-Mobile’s pricing on the new Business Unlimited plans are more affordable and feature more perks (such as faster international data or Unlimited GoGo In-Flight Wi-Fi) than the existing Magenta for Business plans, thus the carrier should enjoy better adoption rates.
- T-Mobile may be the nation’s fastest-growing postpaid carrier, but it is significantly behind rivals when it comes to enterprise and SMB customer base. The reduced rate plans will help the carrier close the gap with rivals, but T-Mobile should put as much focus on the large enterprise segment, which can provide a faster ROI on 5G thanks to the private network opportunities.