In the last part of this series, we learned about why AT&T (T) is focusing on gaining prepaid customers. In this part, we’ll look at AT&T’s customer retention metric, the churn rate. Earlier in 2Q16, AT&T’s postpaid churn of 0.97% was lower than the churn of 1.0% in 2Q15. Verizon has the best churn rates in the industry, at around 0.94%. T-Mobile and Sprint have higher churn rates of 1.3% and 1.6%, respectively.
The release of Apple’s iPhone 7 in September 2016 could mean an increase in churn rates for all telecom providers as customers change carriers to get the best wireless plan. AT&T’s 3Q16 churn rate is expected to increase due to this launch. A higher churn rate is negative for telecom companies because they have to deal with additional acquisition costs associated with customers, which negatively impacts their operating margins. In the next part of this series, we’ll discuss AT&T’s aggressive international expansion into Mexico and Latin America.