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Key Words: AT&T CEO says Wall Street critics are wrong about the company’s promotions

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““We are actually gaining customers in a lot of different places and a lot of different ways, and there isn’t any single answer to it.  And I know folks want to continue to go back and say, well, it’s a high level of promotion that’s doing it.  And that’s actually not correct.””

— AT&T CEO John Stankey

AT&T Chief Executive John Stankey shot back at the critics who say AT&T Inc.’s recent growth has been fueled by hefty promotional activity, telling investors at a Monday conference that numerous factors are behind the company’s subscriber momentum.

The telecommunications giant added a net of 813,000 postpaid phone subscribers in its latest quarter, more than rivals Verizon Communications Inc.
VZ,
+1.23%

and T-Mobile US Inc.
TMUS,
-0.38%

combined. The company has logged similarly sized subscriber hauls for numerous quarters, traction some analysts attribute to the company’s promotional tactics — AT&T
T,
+2.06%

has focused not only on adding new subscribers, but offering comparable deals to existing subscribers so that they’ll stay with the company.

Read: Here are the iPhone 14 deals from AT&T, T-Mobile, and Verizon as preorders begin

Stankey said Monday that those focused on AT&T’s consumer wireless deals misunderstand the broader story of the company’s growth.

“We’ve had great share shifts that have occurred in certain segments of the market,” including the public-sector business, Stankey said at a Goldman Sachs conference Monday. AT&T’s public-sector momentum is “not based on promotion” but rather the company’s investments in improving its public-safety network in ways that allow AT&T to “penetrate into a segment that we were previously grossly underpenetrated in.”

Additionally, AT&T has “seen that same dynamic move into the upper end and mid part of the business market where our share performance has improved,” he said, according to a transcript of the presentation provided by Sentieo.

Read: Verizon says it’s ‘very challenging being the premium brand’ but that new efforts will pay off

While Goldman Sachs analyst Brett Feldman acknowledged Stankey’s commentary about the more business-oriented aspects of AT&T’s business that aren’t linked to heavy promotions, he also said that AT&T’s consumer offers are clearly playing some role in AT&T’s subscriber hauls, which come as the broader industry has seen subscriber growth well in excess of population expansion for years.

AT&T’s promotional strategy is working, Feldman said, but it leads investors to wonder what will happen to the industry, and the company, when consumer demand for the wireless sector slows.

Stankey said that even the consumer aspect of AT&T’s promotional tactics gets misinterpreted. While device subsidies are “one element” of the cost that AT&T takes on to acquire or retain a customer, he said the company has also adopted a more understandable model for customers that lets the company “spend less money communicating the message.”

“We are getting probably the best yields in our promotional advertising that we’ve ever done, but we’re not spending nearly at the levels we’ve historically spent, and I will tell you, we’re not spending at the top of the industry right now,” he said.

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See also: T-Mobile sees huge demand for $3 billion bond deal despite September borrowing blitz by big companies

Stankey offered that a lower-growth landscape wouldn’t necessarily be worse for the company.

“I would tell you our equation very much hangs together when you look at the overall aggregate view of this,” he said.

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