Installment plans for cellphones are starting to squeeze out the time-honored practice of paying a subsidized price up front, AT&T says. Buying installments is catching on in a big way, according to AT&T’s first-quarter financial results Tuesday. About 2.9 million people signed up for the carrier’s Next plan, in which subscribers pay for a phone in monthly installments and can trade it in for a new model after a year. That was more than 40 percent of AT&T’s postpaid customer additions or upgrades for the quarter.
AT&T Inc on Tuesday raised its forecast for full-year revenue growth to reflect its acquisition of LEAP wireless in March and the popularity of a new handset pricing model that charges customers for devices separately from their wireless plans. Like other carriers, AT&T is seeking growth in a nearly saturated environment, making strategies such as alternate pricing plans more crucial to attract customers. The company raised its forecast for full-year revenue growth to at least 4 percent from 3 percent. A higher-than-expected 35 percent of wireless customers transferred to NEXT, its new pricing plan, boosting quarterly revenue 3.6 percent from the year-earlier quarter. “We are very pleased with the take rates,” John Stephens, AT&T’s chief financial officer, said of NEXT in a conference call following the earnings release. “I believe the 35 percent will become a new standard.”
