AT&T CFO warns it could raise prices again if inflation persists

AT&T just hiked prices for certain fixed and wireless subscribers last month, but more price increases may be on the way. Speaking at a Credit Suisse investor conference, CFO Pascal Desroches said persistent inflation could force it to repeat the move.

Desroches noted AT&T planned for a “fairly healthy” level of inflation when it set its 2022 budget at the end of last year. However, he said the inflationary environment is “running hotter” than anticipated, meaning AT&T is facing increased costs for labor, supplies, energy and transport.

The CFO said he expects inflation to remain elevated “for the foreseeable future.” If his prediction holds, “we’re going to have to look at pricing again as potential leverage to help offset that.”

“Inflation is probably the area I worry the most about,” Desroches said.

His comments come after AT&T raised prices for wireless subscribers on certain legacy plans by as much as $6 for individuals and $12 for families in May. At the same time, it also hiked prices for AT&T Internet customers (former U-verse subscribers) by $3 per month. Recon Analytics founder Roger Entner told Fierce at the time the latter move would likely not result in significant customer losses.

Indeed, Desroches said consumers up to this point have been “pretty resilient” and demand for its services has remained healthy. That said, though, he noted it has seen involuntary churn – which was at record low levels during the pandemic thanks in part to government subsidy programs – tick back up to 2019 levels.

“As I look at the inflationary expectation over the next several quarters, it’s hard for me to envision that that’s not going to impact the consumers negatively,” he said. “We and others will see some pressure.”

AT&T is not alone in using product pricing to combat rising business costs. In May, Verizon bumped up wireless pricing for consumers via a fee increase of $1.35. And Altice USA increased its promotional pricing for new customers by $10.

Desroches said if AT&T does have to pull the cost lever again, it will “try to be smart about it. We’re going to try to do it in a way that delivers more value to the customer.”