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June 29, 2018
Analyst: Increase in AT&T 'Administrative Fee' Expected to Bring in $800M

AT&T stands to make hundreds of millions from an increased fee on its wireless bills, an industry analyst reported this week.

BTIG’s Walter Piecyk wrote in a note to investors that the carrier more than doubled the “administrative fee” on its monthly bills from 76 cents to $1.99 during the first half of the year.

The company introduced the fee in 2013 to, it said, defray costs to deliver calls to other carriers and rent and maintain cell sites. The charge increased from its initial 61 cents to 76 cents as of early this year, but AT&T raised the fee to $1.26 in April and to $1.99 in June, Piecyk wrote.

The increase, he added, would effectively raise prices by about $1.23 per bill on at least 85 percent of the carrier’s 64.5 million postpaid phone lines. That would translate to $800 million in additional revenue and a boost of about $1 to AT&T’s average revenue per user.

Piecyk noted that 2013 — when the fee was introduced — was the last time AT&T disclosed an increase in postpaid ARPU.

Administrative Fees Increase 300% In 1 Year & Increase Costs By $1.23 / bill - Analyst: Increase in AT&T ‘Administrative Fee’ Expected to Bring in $800M

There are all kinds of creative ways that operators can increase the final price that we as consumers pay. Given the considerable M&A that has historically occurred and the new M&A that is currently occurring around media assets; the Telecom community has wracked up quite a large debt load.

Factor in sales taxes that in some cities/counties can be in excess of 20% the final cost of ownership (don’t forget hardware costs) can be considerably greater than the headline price advertised.

Analyst: Increase in AT&T 'Administrative Fee' Expected to Bring in $800M