AT&T Inc. Chief Financial Officer Pascal Desroches says “it’s only a matter of time” before consumers “really” start to feel the impact of inflation, but he thinks the wireless business will prove “resilient”.
As a result of a recent Federal Reserve report showing jumps in debt not seen in recent years, Desroches sees signs that “the consumer is starting to feel the pinch and that [at] These higher interest levels, credit card debt will be very expensive to maintain,” he said at the Morgan Stanley conference on Thursday.
“ “The last thing a consumer is going to turn off is their wireless relationship.” “
“So, all those things cause me to be a little cautious. But frankly, when I think about where we are as an industry and as a company, the last thing a consumer will go for is their wireless relationship,” he said. Speaking about wireless access, he said people “want it to be live” and “want it to work.”
Still, AT&T T,
he has seen some impacts on his business from the current economic situation. Desroches noted a “rise in delinquency” that is “slightly worse than pre-epidemic levels.” That’s not necessarily an “alarming” sign, he noted, but “something we need to keep a close eye on as we look out into the next quarter.”
Desroches commented on recent strong trends across the wireless industry. While some analysts wondered how long companies overall would be able to sustain subscriber growth that far outstrips population growth, he cited some positive dynamics, including that kids are getting younger phones, older people seem to be embracing technology. more because of the pandemic, and recently established small businesses can give workers a second wireless connection.
AT&T has specifically benefited over the past few years from offers aimed at existing customers as well as potential switches. “We wanted to make sure we kept our existing customers because our turnover was historically higher than others,” he said.
See also: AT&T’s ‘much simpler story’ and ‘solid’ dividend earn stock upgrade
The company’s enterprise business could be exposed to greater economic pressure than its consumer business, he said. Although Desroches does not think that the current economic climate has “accelerated” reductions in the wireline segment of AT&T’s business, he admitted that, in the future, “if companies have real economic challenges, they may suddenly decide, ‘you. You know what, this legacy phone line is probably not a priority for me anymore.”
“But so far, we haven’t seen any of that,” he said.