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AT&T to Boost its Prepaid Plan

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AT&T Inc.(T) – the second-largest telecom carrier in the U.S. after Verizon Communication Inc. (VZ), plans to expand in the prepaid mobile market by introducing low-cost service plans through its new wireless subsidiary, Aio Wireless.

Aio Wireless will be providing unlimited talk, text and Internet service plans without any agreement throughout the country contract. The new plan will be starting from as low as $35 to $70 per month.

Initially, Aio will offer its prepaid service from its newly opened stores across three most popular cities, namely, Houston, Orlando and Tampa. These stores are completely separated from the AT&T owned retail outlets.

In the recently concluded quarter, AT&T Inc. lost 184,000 prepaid customers mainly due to  a lack of popularity of its prepaid GoPhone service. Moreover, sale of contract less iPhones along with attractive UnCarrier plan (starting at $50 per month with unlimited calls and 500MB free data) by the fourth-largest carrier in the country – T-Mobile US, Inc. (TMUS) – will further increase subscriber loss in the forthcoming quarters.

Even Leap Wireless International Inc. (LEAP) – one of the leading prepaid carriers in the U.S. – is selling no-contract iPhones to its customers along with attractive $50 Android Muve music plan.

So, to consolidate its position in the prepaid market which mainly comprise price sensitive customers and to counter competition from other prepaid service plans, the company will rollout such attractive plans.

Currently, AT&T Inc. has a Zacks Rank #3 (Hold).

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