What's Going on With AT&T's Net Addition Numbers?
AT&T has a funny way of accounting for customers that switch to its enterprise services.
Adam Levy (adamlevy) Oct 7, 2016 at 5:18PM
IMAGE SOURCE: AT&T.
All four major wireless carriers operate in both the consumer and enterprise space, but AT&T (NYSE:T) is the only company that breaks out its wireless business into two segments. At the end of the second quarter, AT&T reported 77.5 million total subscribers and connections for its business solutions segment and 54.3 million subscribers and connections for its consumer mobility division. Its 131.8 million subscribers gives it more than any of its competition including Verizon (NYSE:VZ), which has a total of 113.2 million retail connections.
But AT&T's segment reporting produces some interesting results when it comes to net additions. Last quarter, AT&T reported its consumer postpaid connections fell from 28.294 million to 27.862 million. But it somehow reported net additions of 72,000 connections.
Let's dive into AT&T's quarterly operating metrics in order to figure out what exactly is going on here.
When a subscriber loss isn't a subscriber loss
The discrepancy in AT&T's total consumer mobility subscriber count and its reported net additions is due to its business services. In an 8-K filing accompanying its earnings release, AT&T notes "Our business wireless offerings allow for individual subscribers to purchase wireless services through employer-sponsored plans for a reduced price. The migration of these subscribers to the ABS segment negatively impacted consumer postpaid subscriber and service revenues growth."
However, AT&T doesn't seem to count those consumers switching from consumer plans to business plans as a net loss for its consumer mobility segment. Nor does it count them as net adds for its business solutions segment. Business postpaid subscribers climbed from 48.844 million to 49.432 million last quarter, but AT&T reported postpaid net adds of just 185,000 for the segment go figure creative math