Tuesday, September 30, 2014

AT&T: 2 Million Connected Cars and Growing Fast

AT&T told a group of investors that it expects meaningful subscriber growth for its connected car services in the next three-to-five years. As of today, AT&T provides either wholesale or retail connectivity (“connected cars”) to nearly 2 million U.S. registered passenger vehicles with about 500,000 added in the third quarter.

In 2015, AT&T expects to connect nearly half of new wireless-connected U.S. passenger vehicles and the company expects to serve more than 10 million such vehicles by the end of 2017.

Initially, AT&T will get revenues through wholesale customer relationships with auto manufacturers.  Later, the company will have the opportunity to develop a direct retail relationship with drivers. Wholesale ARPU (average monthly revenue per subscriber), paid for by auto manufacturers, is expected to be in the low single digits and retail ARPU, paid for by the car owners, is expected to be similar to that of a tablet on an AT&T Mobile Share Value Plan.

AT&T also update some of its guidance on its wireless business:

  • For the third quarter of 2014, AT&T still expects wireless postpaid churn to be 1 percent or lower.
  • AT&T Next take rates are expected to be approximately 50 percent and to have over 400,000 postpaid smartphone gross adds from customers who “bring their own mobile devices” (commonly known as BYOD adds).
  • AT&T expects approximately 58 percent of its postpaid smartphone base to be on Mobile Share Value plans at the end of the third quarter.
  • AT&T Digital Life, the company’s home security and automation service, has approximately 140,000 subscribers at the end of the third quarter with more than half of those added in the last two quarters.