Sunday, May 19, 2024

AT&T exec says ‘it’s only a matter of time’ before people ‘really’ feel inflation

Must read

AT&T Inc. Chief Financial Officer Pascal Desroches says “it’s only a matter of time” before consumers start to “really” feel the impact of inflation, but he thinks the wireless business will prove “resilient.”

In the wake of a recent Federal Reserve report that showed jumps in debt not witnessed in years, Desroches sees signs that “the consumer is starting to feel the pinch and that [at] these higher interest-rate levels, credit-card debt will be very expensive to maintain,” he said at a Morgan Stanley conference Thursday.

“The last thing a consumer is going to turn off is their wireless relationship.”

“So, all those things cause me to be somewhat cautious. But candidly, when I think about where we are as an industry and as a company, the last thing a consumer is going to turn off is their wireless relationship,” he added. Speaking about wireless access, he said that people “need it to live” and “need it to work.”

Still, AT&T T, +0.11% has seen some impacts to its business from the current economic situation. Desroches has noticed an “uptick in delinquencies” that’s “slightly worse than prepandemic levels.” That’s not necessarily an “alarming” sign, he noted, but rather “something we have to keep a close eye on as we look out the next several quarters.”

Desroches commented on strong recent trends across the wireless industry. While some analysts have wondered how long companies on the whole would be able to keep up subscriber growth that’s significantly in excess of population growth, he pointed to several positive dynamics, including that kids are getting phones at younger ages, seniors seem to be embracing technology more due to the pandemic, and recently formed small businesses can give workers a second wireless connection.

AT&T specifically has benefited in the past few years from offers aimed at current customers as well as potential switchers. “We wanted to make sure we kept our existing customers because our churn was higher historically than others,” he said.

See also: AT&T’s ‘far simpler story’ and ‘solid’ dividend earn stock an upgrade

The company’s enterprise business could be more exposed to economic pressures than its consumer business, he said. While Desroches doesn’t think that the current economic climate has “accelerated” declines in AT&T’s business wireline segment, he acknowledged that, in the future, “if companies are faced with real economic challenges, they may all of a sudden decide, ‘you know what, this legacy phone line is probably not a priority for me anymore.’”

“But so far, we haven’t seen any of that,” he said.

More articles

Latest article