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AT&T's Aio Now Online

Zacks Equity Research

AT&T Inc.’s (T) wholly owned subsidiary Aio Wireless is offering a no-contract first-class service plan through its website or from authorized retail outlets, in the  U.S. Customers can also avail this service in the third month of usage if activated by Sep 29.

Aio Wireless was initially rolled out in Florida, Texas and the Metro-Atlanta area and is currently available in Chicago. Through Aio, AT&T offers three unlimited plans that include talk, text, and data ranging $40–$70 per month, inclusive of all taxes. Moreover, Aio customers will have the option to select smartphones, tablets, and feature phones belonging to popular handset manufacturers like Samsung, Nokia Corporation (NOK) and ZTE.

We believe AT&T’s strategy of expanding its no-contract plan across the nation will attract customers who seek an affordable and flexible wireless service. Moreover, the expansion of Aio would also help in countering the rising market penetration by T-Mobile US, Inc. (TMUS) in the no-contract space after its takeover of prepaid carrier, MetroPCS.

In the recently concluded second quarter of 2013, AT&T added 551,000 post-paid subscribers and only 11,000 prepaid customers while during the same period the company’s closets rival Verizon Communications Inc. (VZ) gained 941,000 post-paid subscribers and 59,000 prepaid customers.

In order to fortify their foothold in the highly saturated and competitive wireless market in the U.S., large carriers are either targeting the prepaid market or launching attractive plans. T-Mobile US, Inc. has recently launched an array of attractive services, which has already gained huge popularity. Following its footsteps, AT&T and Verizon Wireless are also rolling out innovative plans.

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

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