Research Att

ATT Executive Summary: AT&T, based in Dallas, TX, is the largest provider of local and long distance telephone services in the United States. The company is divided into four divisions: AT&T Wireline (traditional voice and data landline service), Wireless, Advertising and Publishing and Other (includes the business integration software subsidiary). Revenues in 2008 were approximately $123 billion dollars, an increase of 4.3% over 2007. AT&T Wireless is the nation’s second largest carrier by sales and subscriptions, accounting for over 77 million customers and $69.8 billion dollars of revenue. Within AT&T the Wireless division represents the largest area of growth, compensating for customers abandoning traditional Wireline telephone service. AT&T landed a major coup in 2007 when it signed a deal with Apple to be the exclusive U.S. carrier for the iPhone. Not only did AT&T add new customers, it added more profitable customers. AT&T reports that an iPhone customer’s average revenue per user (ARPU) is $105 per month versus $60 for non-iPhone customers. AT&T’s corporate strategy for securing these profitable customers is to align itself with innovative technology, such as the iPhone, and pay a subsidy of $325 to Apple to make the iPhone more affordable for mainstream America, its target market. AT&T recoups the subsidy by locking iPhone customers into a two-year contract averaging $100 per month and maintaining this customer base through an exclusive contract with Apple. Problem Statement: Despite attracting and capturing high revenue subscribers, AT&T is experiencing high customer dissatisfaction due to congested wireless networks. The greatest threat to AT&T Wireless is that iPhone customers will defect in droves if and when AT&T loses its exclusivity contract with Apple. Our analysis will focus on the root of this issue and provide marketing, strategic, operational and financial recommendations