AT&T To Rebrand Mobile Prepaid Service With Attractive Offer

AT&T Inc. (NYSE:T) , the U.S. telecom behemoth, is rebranding its AT&T GoPhone wireless prepaid service to AT&T Prepaid. Customers who activate a new line will receive their 3rd and 12th months of service free. Since prepaid service needs no contract, the free months are offered only to those who maintain continuous service for 12 months. The service will apply to the company’s unlimited bundles offered at $40 and $60 per month.

Competition is intensifying in the U.S. wireless prepaid market. The gap between prepaid and postpaid average revenue per user (ARPU) has narrowed significantly, forcing telecom biggies to turn their attention to the domestic prepaid mobile service business.

This was not the case even a few years ago when the prepaid segment was largely ignored by wireless carriers interested in the lucrative postpaid wireless market. However, this new development has forced these wireless operators to concentrate on the prepaid segment, consequently escalating competition in this market.

Unlimited Data Plan War

Stiff pricing competition in the industry is a genuine concern. Recently, we witnessed the four major wireless telecommunications companies participating in the unlimited postpaid data plan war in order to stand out. These wireless operators are now extending their unlimited data plan to the prepaid market as well.

AT&T’s Cricket prepaid wireless brand, which it acquired after the takeover of Leap Wireless, recently cut the price of its existing unlimited plan from $70 to $60 a month. T-Mobile US Inc.’s (NYSE:T) MetroPCS prepaid mobile brand has expanded its monthly 8 GB plan to include unlimited data.

Similarly, Sprint Corp. (NYSE:S) has decided to strengthen its Boost Mobile prepaid wireless brand. The company is offering four lines of compressed unlimited data for $100 a month to users who switch carriers. Sprint’s Virgin prepaid brand also followed suit with a new $60-a-month unlimited plan.

Moreover, United States Cellular Corp. (NYSE:S) has introduced unlimited high-speed data on its Simple Connect and Ready Connect Prepaid offerings, for $70 per month. In addition, the company has streamlined the plans and added more data to its $35 and $45 plans, which now come with 1GB and 5GB data, respectively. United States Cellular currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Rapid technological invention and innovation have resulted in significant competition within the telecommunications industry. Product life-cycle and upgrade-cycle have gone down drastically. Several firms are coming up with new versions of products and services within a short span of time. To combat competition, the players are thus increasingly looking at new avenues. Rebranding the prepaid service is one such avenue.

Price performance of AT&T

Year to date, the stock price of AT&T has witnessed a decline of 13.40%, slightly better than the Zacks categorized U.S National Wireless industry’s decline of 14.03%. The stock currently carries a Zacks Rank #4 (Sell).

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