KeyBanc says AT&T’s new plans fit strategy despite likely negative reaction

KeyBanc notes that AT&T released three new wireless plans, Premium 2.0, Extra 2.0, and Value 2.0. The firm expects investors to read this as a negative, given lower retail pricing on the “Value/Extra” plan suggests a continuation of a “price war,” and potentially softening gross add trends, and is notable in the context of recent Q1 service revenue headwinds. However, KeyBanc believes this is entirely consistent with AT&T’s messaging of targeting the low end/value segments, and single-line accounts, which are areas AT&T under-indexes. It also represents AT&T matching peers in the market, makes the company a relatively more attractive choice on the lower end segments, and there are aspects of the new pricing around “appreciation savings” and “signature discount” that incentivize customers toward the premium rate plans, the firm adds.