June 28, 2018: So users will foot some of the cost for AT&T to acquire Time Warner. No surprise.
By quietly bumping administration fees in April and June, customers are now paying about $1.99 for each line. Not much to the customer, but it should amount to about $800 million in additional annual revenue for AT&T. The company booked $160.5 billion in revenue last year and is purchasing Time Warner for $85.4 billion.
The change was noticed by BTIG Research analyst Walter Piecyk on June 27, 2018. A hefty 85 percent of AT&T’s 64.5 million postpaid phone lines in service, no pre-paid lines, will be impacted.
AT&T’s monthly administrative fee had been essentially unchanged since it was first introduced in 2013 at 61 cents. While previous bumps were not noticed, Piecyk wrote that the fee was likely around 76 cents for the past year when AT&T bumped the admin fee twice in the past three months to $1.99 in June.
In a statement to CNBC, AT&T said, “This is a standard administrative fee across the wireless industry, which helps cover costs we incur for items like cell site maintenance and interconnection between carriers.” mindWireless has seen this happen with other carriers, it is a widespread practice.
Piecyk noted the timing of AT&T admin fee bump conveniently coincides with the closure of the deal, “which increased net debt by over $60 billion,” adding that the additional revenue could help finance $10 billion in debt.
While the $1.99 doesn’t seem high on the surface, for enterprise wireless budgets, across 4 thousand to even 1 million lines, the increase looks much higher. That’s where enterprise wireless telecom management shines. mindWireless can look at the increased cost as part of the Average Revenue Per Unit (ARPU) and compare the average cost with other carrier rate plans plus fees. If changes must be made, telecom managers, CIOs or IT Directors have the detailed information they need to make smart decisions.