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Can AT&T's Flexible DIRECTV Packages Attract Customers?

AT&T Inc. T has started offering two-year guaranteed pricing for its new DIRECTV, home internet and digital phone customers. With the move, AT&T, the country’s largest pay-TV operator eyes expansion of its satellite offering in the residential services segment. In March this year, the telecom giant announced that it will update its U-verse home Internet plans in May to enhance the web experience for its home users.

The Plans

The new triple pay bundle pricing will be made available by AT&T from April 14. The incumbent wireline and wireless customers of AT&T will be able to add basic satellite TV services at $50 per month for two years. Similarly, existing DIRECTV customers can also add home Internet and voice services for an additional lock in rate of $30 per month for 2 years. Also, for customers who purchase AT&T’s triple-play bundle, the pricing of its voice service will be reduced to $9.99 for a guaranteed two years.

Another major cable TV operator, Comcast Corp. CMCSA, introduced similar triple pay packages in order to ramp in more customers. Moreover, the cable giant also partnered with AT&T’s telecom rival Verizon Communications Inc. VZ to provide the Xfinity triple pay bundle in Verizon’s wireless network. 

MLB Broadcast

AT&T also announced that it will be streaming live Major League Baseball (MLB) matches to its DIRECTV customers at a 4K UHD resolution. This is the first time that a live baseball match will be broadcasted in 4K resolution in the U.S. MLB is one of America’s favorite sporting events and AT&T will be hoping to leverage this 4K broadcasting to lure more customers to switch to its triple pay bundle service.

The Bottom Line

We believe, with AT&T’s position as the largest pay-TV operator in the U.S., the competitive offering of its triple pay bundle will bode well for the company. However, the pay TV industry is in a transition phase and is facing pressure from video streaming operators like Netflix.com Inc. NFLX). It remains to be seen whether AT&T’s DIRECTV can outscore such video streaming service providers, going ahead.

AT&T currently has a Zacks Rank #3 (Hold).

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