AT&T Betters Data Plan for Users, Adds 5 GB at No Extra Cost

U.S. telecom behemoth AT&T Inc. T is leaving no stone unturned to attract more customers in a bid to increase revenues. In a limited period offer, the carrier is providing its Mobile Share Value customers a 15 GB shareable data plan for $100. Previously, AT&T customers could avail only 10 GB of data for the same amount.

The company has reduced the price of its data plan for the second time in two months. Both new and existing AT&T customers can avail the scheme. Those opting for this offer will not only get 5 GB of additional data, but will also be able to enjoy limitless international messaging (text, picture, and video) at no extra cost.

We believe such promotional price cuts will help the company attract more customers. At the end of third-quarter 2014, A&T had 118.65 million wireless subscribers and connections, up 8.4% year over year. Of this, postpaid subscriber count tolled 75.105 million, up 4.3%, while prepaid subscriber count touched 11.179 million, up a whopping 50.6%. However, despite gaining customers in the recently concluded quarter, the company failed to meet the Zacks Consensus Estimate on both the earnings and revenue front. Significant pricing competition, new device financing plans and other promotional strategies primarily weighed on earnings in the reported quarter.

Moreover, AT&T is challenged by aggressive pricing plans of direct competitors such as Verizon Communications Inc. VZ and Sprint Corporation S, for iPhones and smartphones. On its part, discounts on pricing plans could hurt its near-term earnings. On the other hand, smaller wireless carriers also offer cost effective voice and data plans. This may negatively influence AT&T's high-end handset sales and challenge subscriber retention.

AT&T currently has a Zacks Rank #3 (Hold).

Stock to Consider

A well-placed stock in this sector is Chunghwa Telecom Co., Ltd. CHT with a Zacks Rank #2 (Buy).