AT&T Inc. Chief Financial Officer Pascal Desroches says it’s “only a matter of time” before consumers start to “really” feel the impact of inflation, but he believes the wireless business will prove “resilient.”
In the wake of a recent Federal Reserve report that showed jumps in debt not seen in years, Desroches sees signs that “the consumer is starting to feel the pinch and that [at] These higher interest rates, credit card debt is going to be very expensive to maintain,” he told a Morgan Stanley conference Thursday.
“ “The last thing a consumer is going to turn off is their wireless connection.” “
“Well, all these things make me somewhat wary. But honestly, when I think about where we are as an industry and as a company, the last thing a consumer is going to turn off is their wireless connection,” he added. Speaking about wireless access, he said people “need it to live” and “need it to work”.
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has seen some impact on its operations from the current economic situation. Desroches has observed an “increase in delinquent liabilities” that is “slightly worse than pre-pandemic levels”. That’s not necessarily a “worrying” sign, he noted, but rather “something to watch closely as we look to the next few quarters.”
Desroches commented on the strong recent trends across the wireless industry. While some analysts have questioned how long the companies as a whole will be able to sustain subscriber growth that far outpaces population growth, he pointed to several positive dynamics, including that children are getting phones at younger ages, older people seem to are embracing technology more because of the pandemic, and newly formed small businesses can give workers a second wireless connection.
AT&T in particular has benefited in recent years from promotions aimed at current customers as well as potential switches. “We wanted to make sure we kept our existing customers because our churn has historically been higher than others,” he said.
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The company’s business operations could be more exposed to financial pressures than its consumer operations, he said. While Desroches doesn’t believe the current economic climate has “accelerated” declines in AT&T’s wireline business, he acknowledged that, going forward, “if companies face real financial challenges, they may suddenly decide, ‘you know what, that legacy phone line is probably no longer a priority for me.”
“But so far, we haven’t seen any of that,” he said.