AT&T exec says “it’s only a matter of time” before people “really” feel inflation

Pascal Desroches, chief financial officer of AT&T Inc., says it’s “only a matter of time” before consumers “really” feel the impact of inflation, but he thinks the wireless business will prove “resilient.”

In the wake of a recent Federal Reserve report that showed debt jumps not seen in years, Desroches sees signs that “consumers are beginning to feel the squeeze and that [at] these higher interest rates, credit card debt will be very expensive to maintain,” he said at a Morgan Stanley conference on Thursday.

“The last thing a consumer is going to turn off is their wireless relationship.”

“So all those things make me somewhat cautious. But honestly, when I think about where we are as an industry and as a company, the last thing a consumer will turn off is their wireless relationship,” he added. Speaking of wireless access, he said people “need it to live” and “need to work”.

Still, AT&T T,
+0.11%
has experienced some impact on its business from the current economic situation. Desroches has noted an “increase in delinquencies” that is “slightly worse than prepandemic levels.” That’s not necessarily an “alarming” sign, he noted, but rather “something we should watch closely as we look out for the next several quarters.”

Desroches commented on strong recent trends in the wireless industry. While some analysts have questioned how long companies in general would be able to keep up with subscriber growth that significantly exceeds population growth, he pointed to several positive dynamics, including children using phones at a younger age. get, seniors seem to be embracing technology more because of the pandemic, and recently established small businesses can give employees a second wireless connection.

AT&T has particularly benefited in recent years from offerings aimed at both current customers and potential switchers. “We wanted to make sure we keep our existing customers because historically our churn has been higher than others,” he said.

See also: AT&T’s ‘much simpler story’ and ‘solid’ dividend give stocks an upgrade

The company’s business activities could be more exposed to economic pressures than its consumer activities, he said. While Desroches doesn’t think the current economic climate has “accelerated” the decline in AT&T’s corporate wireline segment, he acknowledged that, going forward, “when companies face real economic challenges, they might all of a sudden decide, ‘you know what the hell, this old phone line probably isn’t a priority for me anymore.’”

“But so far we haven’t seen any of that,” he said.

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