AT&T

AT&T announced price hikes on wireless customers, the first in three years

In Early May 2022, AT&T announced its first price increases on wireless customers
in three years. “AT&T’s increases are the first for such plans in three years. The Dallas-based
carrier is raising monthly fees on those older packages by up to $6 a month for single-line
customers and up to $12 a month for families, a spokesman confirmed Tuesday. Staffers in
multiple stores were informed of the changes this week and are offering new plans or telling
customers to call the company’s consumer service line for help on choosing new offers. Shares
of AT&T rose as much as 2.9% to $19.68 on the news. Verizon Communications Inc. added
2.1% and T-Mobile narrowed its loss for the day. Subscribers will have the option to avoid the
price hike by switching to new unlimited plans, the carrier said.” (Bloomberg, 5/3/2022)

In earnings calls, AT&T’s CEO was critical of rising wages and called for a “policy” solution, while also admitting it was not “the end of the world”

AT&T’s CEO criticized wage inflation, saying “from a policy perspective, it needs to
be addressed.” ”John Stankey — Chief Executive Officer: Sure, Brett. So look, there is no
question there’s wage inflation in the environment. And frankly, it’s 7% inflation. There is no
question there’s pressures across a broad segment of goods and services and we’re not
insulated from that. I don’t think anybody in the industry is insulated from that, and it’s not a
good position for the overall economy to be in. And I think from a policy perspective, it needs
to be addressed. We were pretty deliberate when we did planning for ’22, acknowledging that
we expected we’d see some wage inflation. And we compared to previous years as we built
the plan, we assumed upticks in wages as a result of that.” (AT&T Q1 2022 Earnings Call
Transcript, 4/21/2022)

AT&T’s CEO: “I’m not happy about the fact that wages are rising as fast as they are.
We’re having to deal with it.” “John Stankey — Chief Executive Officer: We’re in the middle
of — as you know, we have labor contracts. Labor contracts are extended and ultimately
program out wage increases. And we have the luxury in some cases, given the way the
current wage market or job market is set up, that people stick around and work here because
we have great benefits for middle-class folks and they often go beyond the wage that
somebody gets paid. And as a result of that, we’ve been managing through the dynamics of
the wage — the labor market pretty well. I will tell you, we’re in the middle of some
negotiations right now. Those negotiations are likely to land in a place that I think is
consistent with how we built the plan this year, which was a stepped-up wage level from
previous historic levels. I’m not happy about the fact that wages are rising as fast as they are.
We’re having to deal with it. It is going to drive a bit of an uptick in what I would call per
individual wages. The good news is we’re doing a lot of investment in other forms of
mechanization and automation in our business. And some of that investment is helping us
keep a lid on some of the wage-related inflation costs.” (AT&T Q1 2022 Earnings Call
Transcript, 4/21/2022)

AT&T’s CEO: “So well, obviously, we’d like to pay less in wages. It’s not the end of
the world when we’re seeing a little bit of an uptick.” “John Stankey — Chief Executive
Officer: I would also point out that as you look at other parts of our business where people
deploy long-lived infrastructure like fiber networks, wages are a portion of that deployment
cost, not all of that deployment costs, and they are capitalized and they are taken over the life
of a product that stays in service for many, many, many years. So well, obviously, we’d like to
pay less in wages. It’s not the end of the world when we’re seeing a little bit of an uptick. It’s
a small portion of the cost of deployment and we can ultimately recover that over the long life
cycle of the product, especially if prices ultimately go up in the market.” (AT&T Q1 2022
Earnings Call Transcript, 4/21/2022)

AT&T suggested that inflation would force them to raise prices and fees

AT&T’s CEO: “. It’s my belief if we do not see some moderation in this fairly quickly
that I think every business in the United States is going to be dealing with the cost
of inputs. And I don’t see the wireless industry being immune from that.”“John
Stankey — Chief Executive Officer: Now to your question of pricing, I’m not going to give
away or announce anything here that — it’s not appropriate to do that. But I’ll go back to the
comments I made a couple of weeks ago, which is broadly across the board in the economy
right now, we are seeing inflationary pressures and the consumer is seeing that every place
they go. It’s my belief if we do not see some moderation in this fairly quickly that I think
every business in the United States is going to be dealing with the cost of inputs. And I don’t
see the wireless industry being immune from that nor any other industry being immune from
that.” (AT&T Q1 2022 Earnings Call Transcript, 4/21/2022)

AT&T’s CEO: “if we’re forced into a situation where we have to start maybe taking
some price that we can do that and move it through? Our history would suggest that we know how to do that, and we can do that.” “John Stankey — Chief Executive Officer:
And as I shared earlier, there’s a lot of different ways you can deal with price adjustments.
There’s a lot of different tactics and approaches you can use. But when we’re looking at the
customer base as satisfied as we are, when we look at a customer base with some of the
value we’ve been putting back into the product and service over time, when we look at our
current churn levels do we believe we’re in a position if we’re forced into a situation where we
have to start maybe taking some price that we can do that and move it through? Our history
would suggest that we know how to do that, and we can do that. And we’ll be very smart and
judicious as we have to apply it.” (AT&T Q1 2022 Earnings Call Transcript, 4/21/2022)

AT&T’s CEO: “running this business and not sitting here and evaluating where we
have options to move on pricing and be successful, I wouldn’t be doing my job
properly” “John Stankey — Chief Executive Officer: But running this business and not sitting
here and evaluating where we have options to move on pricing and be successful, I wouldn’t
be doing my job properly. And I want to maybe go back to a comment I made in my opening
remarks. If you look at what we’ve done in our fiber product this last quarter, we went to a
simplified price structure. I want everybody to understand what this means.” (AT&T Q1 2022
Earnings Call Transcript, 4/21/2022)

AT&T’s CEO suggested they got rid of promotional pricing because “it is a pain point
for customers. They hate it. They hate the 12-month mark.” “John Stankey — Chief
Executive Officer: We’re giving the customer a better experience. We’re getting rid of
promotional pricing, it is a pain point for customers. They hate it. They hate the 12-month
mark. And when they’re using another service, that 12-month mark means their price is going
up $15 or $20, and that’s just a really bad thing for a customer. And so now we put out a very
simple, straightforward constant price, where the customer isn’t going to see that step up for
12 months. They know what the equipment pricing is on the front end. They’re getting the
square deal. They’re getting a great product. And they’re happiest clams and it shows in the
data.” (AT&T Q1 2022 Earnings Call Transcript, 4/21/2022)