AT&T is continuing to see a concerning pattern of customer behavior amid tougher competition from its top rivals. As a result, the phone carrier is betting big on a bold strategy to retain its customers.
In its latest earnings report, AT&T revealed that it added 421,000 new postpaid phone customers in the fourth quarter of 2025.
However, its postpaid phone churn, the rate of customers who disconnected their phone service, reached 0.98%, reflecting an increase of 13 basis points, compared to the same time period in 2024.
AT&T also appears to be facing headwinds in its prepaid wireless business. During the quarter, it lost 255,000 prepaid phone customers, pushing its churn in the segment to 2.89%, an increase of 16 basis points year over year.
The increased loss of loyal phone customers comes after AT&T decreased its autopay discount in April last year for customers who pay their monthly bill with a debit card from $10 to $5. It also completely removed that discount for customers who pay with a credit card.
AT&T also faced sharp criticism last year for allegedly surprising customers with higher-than-expected monthly bills after getting them to switch from rival phone carriers with the promise of generous discounts.
In December, AT&T also raised its Administrative & Regulatory Cost Recovery fee from $3.49 to $3.99 per line, a charge that phone customers pay on their monthly bills.
These pricing changes were risky for AT&T as more of its customers across the country are considering switching phone carriers as they grow sick of high monthly bills, a survey from Market Force Information found last year.
How U.S. consumers feel about AT&T’s wireless service:
- Approximately 65% of consumers use phone services from the “Big 3” carriers: Verizon, T-Mobile, and AT&T, spending over $100 per month on their wireless services.
- On average, AT&T customers pay about $153 per month for service.
- About 34% of AT&T customers are considering switching to another carrier in the next year or two, citing better pricing, promotions and coverage as the primary reasons.
- AT&T scored 32.8% in overall brand performance across customer experience metrics.
- Smaller wireless carriers such as Consumer Cellular and Mint Mobile scored 73% and 65.8%, respectively.
Source: Market Force Information
“There’s a clear shift in the market towards smaller, more agile wireless carriers who are delivering superior customer experiences,” said David Murray, senior director of client strategy at Market Force Information, in a press release.
AT&T hopes a clever tactic will keep customers away from rivals
During an earnings call on Jan. 28, AT&T CEO John Stankey said that there has been a lot of “switching activity that’s occurring between competitors.”
“Are there macro factors that are slowing incremental new entrants into the traditional postpaid voice? Certainly, there is some aspect to that,” he said.
Despite AT&T facing headwinds from this consumer trend, the company is confident in its strategy to reduce its postpaid phone churn by continuing to promote offers that bundle its phone and internet services, a tactic that has so far been successful.
“We estimate that our share of postpaid phone subscribers is 10 percentage points higher in areas where we offer fiber than in areas where we don’t,” said Stankey. “The power of our converged offers is evident across our business.”
This is a move that has worked for cable companies such as Spectrum and Comcast, which have actually been luring phone customers away from AT&T, Verizon and T-Mobile with bundled phone, internet and TV service promotions.
Related: AT&T to launch new service for customers as it takes on T-Mobile
For example, during the first quarter of 2025, Spectrum, Comcast and Altice USA added 886,000 new phone customers, up from the 804,000 they added during the same quarter in 2024, according to data from MoffettNathanson, which was shared by Light Reading.
Tying phone and internet services can be especially beneficial for AT&T, as the move comes amid increased demand for its fiber and 5G home internet services. During the fourth quarter, the phone carrier added 283,000 new AT&T Fiber customers and 221,000 AT&T Internet Air (its 5G home internet) customers.
The rapid influx of internet customers reflects a growing trend in which consumers are ironically cutting the cord on internet service provided by cable companies as they face higher monthly bills, leading them to explore internet options from phone carriers.
This shift in consumer behavior has contributed to Spectrum losing 109,000 internet customers during the third quarter of 2025, while Comcast lost 104,000.
As this trend gains momentum, AT&T expects its wireless revenue to grow over time as it continues to expand its fiber and 5G home internet footprint and double down on bundled phone and internet offers.
“We expect total wireless service revenue growth in the 2% to 3% range annually over the next three years,” said AT&T Chief Financial Officer Pascal Desroches during the earnings call. “The primary driver of this outlook is growth in consumer and customer relationships as we continue to gain wireless subscriber share through convergence in areas where we offer fiber and fixed wireless Internet services.”
AT&T plans to expand its fiber internet footprint by 5 million locations annually through the end of this decade.
“We expect this to drive rapid expansion of our opportunity to sell fiber and 5G together, to both households and businesses at unmatched scale,” said Stankey during the call.
AT&T’s increased reliance on bundling comes with risks
While AT&T has high hopes that bundling phone and internet services will reduce churn, RTMNexus CEO Dominick Miserandino believes that it is only a short-term solution in a highly competitive environment.
“Bundling phone and internet can absolutely slow churn in the short term because it raises the friction to leave,” said Miserandino in a statement to TheStreet. “You are no longer switching one service, you are unwinding a relationship. The risk is that customers are increasingly savvy and have more options than ever.”
More Telecom News:
- Verizon cracks down on internet customers violating key rule
- DirecTV makes harsh move as customers keep leaving
- AT&T to launch new service for customers as it takes on T-Mobile
Also, in an analyst note, Morningstar analyst Michael Hodel said that while AT&T’s internet services have given the phone carrier a competitive edge, it is crucial for the company to maintain “pricing discipline” to stand out from its rivals.
He noted that “irrational pricing and promotion” is a “risk” as “the shape of the telecom industry changes.”
“We believe AT&T’s investment in its fiber and 5G wireless networks has strengthened its competitive position,” wrote Hodel. “These investments don’t come cheap, however. Maintaining pricing discipline will be crucial to earning attractive returns on capital, but competitive intensity is ratcheting up, with firms pushing to maintain growth as the wireless and broadband markets rapidly mature.”
Related: Verizon makes key policy change to slow down fleeing customers
